If you perform accounting for nonprofits, it’s time to read up on the latest FASB updates, FASB ASU 2014-09 Revenue from Contracts with Customers. Although they’ve extended the deadline for a year, putting into place a series of steps to conform to the new standard is going to take some time, and time is ticking away towards the implementation deadline.
In case you missed the 2015 report, FASB 2014-09 seeks to clarify revenue recognition and develop a common revenue standard for US GAAP and IFRS. Although at first it might seem as if nonprofits don’t need to pay attention to this statement, if you transact business with customers, you should get your plans together now to follow the ruling.
What’s a business transaction for a nonprofit? While you may give your services away, you may also be selling courses, books, membership and conference fees and other similar items. These are all considered “revenue transactions” with customers and will fall under the new ruling. Accounting for nonprofits must consider each of these revenue transactions which meet the definition in the new ruling.
There’s no need to reinvent the wheel when you’re gearing up for a change. Instead, the AICPA offers a good head start with their New Revenue Recognition Accounting Standard—Learning and Implementation Plan. It’s a seven-step plan that offers a reasonable and measured response to the changes.
Accounting for nonprofits can be a tricky topic, and it can be difficult to stay abreast of all the changes. Fortunately, FASB has granted an extension on this one, and they may grant even more time as we get closer to the second 2018 deadline. Stay tuned for more.
It’s important to keep up-to-date on FASB accounting changes. That’s where nonprofit accounting software can provide a huge benefit. RBP Methods offers solutions with regular updates that meet government regulations. We are a business partner that you can trust—let us help you determine your nonprofit accounting system needs.