September 13-14, 2018

The FASB Not-for-Profit Advisory Committee (the Committee) held its regular semiannual meeting on September 13 and 14, 2018. Topics discussed included:

Accounting Standards Update No. 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made—FASB staff provided a brief overview of the main provisions in the Update and discussed feedback received since the Update’s issuance. The staff also solicited feedback from Committee members on implementation of the Update.

The Committee discussed the potential for analogizing to the new guidance by business entities receiving certain transfers of assets from government entities. The staff noted that while those transactions are excluded from the scope of the Update, such analogizing is not prohibited. Other issues discussed included the effect of certain standard terms or clauses within an agreement on the conditionality of that agreement, the timing of recognition for agreements with multiple barriers, the difference between budgets and qualifying expenses, the classification of certain long-term arrangements with the U.S. Department of Housing and Urban Development and other funders that are typically structured as loans but contain forgiveness provisions based on long-term use, and when early adoption of the Update may be desirable for not-for-profits (NFPs) that both receive and make grants.

Implementation Issues—The Committee discussed implementation issues related to Accounting Standards Updates No. 2014-09, Revenue from Contracts with Customers (Topic 606), No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, No. 2016-02, Leases (Topic 842), and No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  The Topic 606 discussion highlighted the facts-and-circumstances-based judgment about cancellability of contracts that underpins the timing of recording of receivables in connection with tuition agreements.

Updating the Definition of Collections—FASB staff provided an update on the proposed Update, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections, and discussed feedback received from comment letter respondents. The Committee discussed the potential consequences of adding a definition and/or other guidance for direct care and the applicability of the proposed amendments to entities besides museums.

Other Recently Issued Accounting Standards Updates and Ongoing FASB Agenda and Research Projects—FASB staff provided updates on recent Updates and ongoing projects, including Accounting for Goodwill and Certain Intangibles, the Disclosure Framework projects (both Entity’s Decision Process and Board’s Decision Process), Financial Performance Reporting, Balance Sheet Classification of Debt, Cloud Computing, Collaborative Arrangements, and Consolidation Reorganization. Committee members supported an option for NFPs to amortize goodwill and discussed possible approaches to determining an amortization period. The Committee also discussed the effect of the Board’s recent decision on unused lines of credit in the Balance Sheet Classification of Debt project and its potential effect on classification of many variable rate demand bonds, especially of health care NFPs.

Other—Other topics discussed included:
  • The FASB’s activities in response to the Tax Cuts and Jobs Act
  • International NFP activities
  • Recent trends, concerns, and observations in the NFP sector.