September 14, 2021

The FASB Not-for-Profit Advisory Committee (the Committee) held its semiannual meeting on Tuesday, September 14, 2021. Because of the COVID-19 pandemic, the meeting was held via video conference. Topics discussed included the following:

Revenue—Post-Implementation Review—FASB staff solicited feedback from Committee members on their implementation experience with and the costs and benefits of Topic 606, Revenue from Contracts with Customers, and on the post-implementation review (PIR) plan for NFPs. Many Committee members noted that the educational resources, including those provided by both the FASB and the American Institute of Certified Public Accountants (AICPA), were helpful. Generally, Committee members did not find the standard difficult to implement but noted that because of the optional one-year deferral granted by the FASB last year, some NFPs still are in the process of implementing Topic 606. Committee members noted no significant changes in the amount of revenue recognized under Topic 606 in most cases and indicated that many NFPs without public debt have opted to apply the disclosure exemptions available to them. Overall, Committee members stated that the costs, which primarily related to existing staff efforts, were manageable.

Initial Post-Implementation Discussion on 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—Committee members discussed the implementation of the amendments in Update 2018-08, providing feedback to the FASB members and staff about the experience and results of implementing the standard, including lessons learned from applying the guidance to COVID-related assistance. Committee members also discussed the costs and benefits experienced in practice.

Committee members spoke positively of the implementation of the amendments in Update 2018-08 and noted that the FASB’s resources were useful in implementing the standard. Many members highlighted that the flowcharts and practical examples in Update 2018-08 as well as the FASB Staff Q&A, Subtopic 958-605: Application of the Limited Discretion Indicator and Accounting for Cost-Sharing Provisions in a Grant Agreement, aided their understanding of the standard. Some Committee members stated that certain one-time systems changes were required but agreed with the broader group of Committee members that the costs of implementation were as expected. Several members noted the strong communication among auditors, grantors, and NFPs while implementing the standard. Members also noted some minor concerns including the diversity in disclosures resulting from the principles-based approach and no requirement to disclose policies for evaluating barriers to entitlement, but members did not recommend any specific changes to Subtopic 958-605, Not-for-Profit Entities—Revenue Recognition, at this time. Committee members agreed that the amendments in Update 2018-08 were timely in accounting for COVID-related assistance. Overall, they agreed that most implementation issues arose from uncertainty in the terms of those grant arrangements, especially from evolving guidance by the federal agencies involved, rather than the overall application of the standard.

NFP Reporting of Gifts-in-Kind (Accounting Standards Update No. 2020-07, Not-for-Profit Entities (Topic 958): Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets)—FASB staff provided an overview of the amendments in Update 2020-07 and summarized stakeholder questions received during recent conferences and webcasts. Committee members discussed implementation, agreed that the standard was easily understood, and noted that implementation questions largely stem from a general misunderstanding of the definition of nonfinancial assets.

Implementation of Other Standards—FASB staff provided updates on its monitoring of the implementation of Topic 842, Leases, and Topic 848, Reference Rate Reform, and summarized follow-up standard-setting activities by the Board since the March 2021 NAC meeting, including the issuance of Accounting Standards Update No. 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments, and proposed Accounting Standards Update, Leases (Topic 842): Discount Rate for Lessees That Are Not Public Business Entities.

Other Projects in Progress—FASB staff provided an update on identifiable intangible assets and subsequent accounting for goodwill, conceptual framework: elements and presentation, disclosure framework: disclosures—interim reporting, and agenda consultation projects.

Current Financial Reporting Issues—COVID-19-Related Matters—A Committee member discussed the upcoming release of an AICPA Technical Question and Answer document on accounting for donated medical supplies and pharmaceuticals, which also could be helpful in considering when to account for COVID vaccines supplied by the federal government as in-kind revenue versus agency transactions. Some members noted the ongoing challenges with reporting health care provider relief funds.


FASB Not-for-Profit Advisory Committee Meeting Recaps are provided for those interested in following the activities of the Not-for-Profit Advisory Committee. More details on the Not-for-Profit Advisory Committee’s input on the FASB’s projects can be found within the meeting minutes, which will be published on the FASB website in the coming weeks.