March 4-5, 2019

The FASB Not-for-Profit Advisory Committee (the Committee) held its regular semiannual meeting on March 4 and 5, 2019. 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—The Committee discussed the two main implementation issues that have been raised to the FASB staff since the issuance of the final Update in June of 2018:
 
Issue 1:  How to account for cost-sharing provisions when applying ASU 2018-08 and when to recognize revenue

Issue 2: Whether and how to apply the limited discretion indicator to various requirements, especially to provisions about budgets
 
The Committee concluded that significant judgment exists in analyzing both cost-sharing provisions and budget requirements within the context of the indicators provided in the standard. The Committee recommended to the Board that the staff issue implementation guidance, such as a FASB Staff Q&A.

Implementation Issues—The Committee discussed implementation issues relating to ASUs:
  • No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities
  • No. 2014-09, Revenue from Contracts with Customers (Topic 606), and follow-up ASUs
  • No. 2016-02, Leases (Topic 842), and follow-up ASUs
  • No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and follow-up ASUs, and
  • No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.  
No major new issues were discussed.  The Topic 606 discussion included an update from a Committee member on the activities of the Healthcare Financial Management Association (HFMA) to provide supplemental revenue recognition guidance for the healthcare sector.
 
Updating the Definition of Collections—FASB staff provided an update on the Board’s redeliberation decisions on the proposed ASU, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections. The staff summarized the external review comments received on a draft of the final Update and described a final sweep issue to be brought to the Board on March 6, 2019.

Extending Private Company Alternatives on Certain Identifiable Intangible Assets and Goodwill to Not-for-Profit Entities—FASB staff provided an update on the proposed ASU, Intangibles—Goodwill and Other (Topic 350), Business Combinations (Topic 805), and Not-for-Profit Entities (Topic 958): Extending the Private Company Accounting Alternatives on Goodwill and Certain Identifiable Intangible Assets to Not-for-Profit Entities, and discussed the overall positive feedback received from comment letter respondents.

Updates on Other Recently Issued/Soon-to-Be Issued ASUs and Other Projects in Process—FASB staff provided updates on recent ASUs and ongoing projects, including Identifiable Intangible Assets and Subsequent Accounting for Goodwill, Reference Rate Reform: Facilitation of the Effects of the Interbank Offered Rate Transition on Financial Reporting, Balance Sheet Classification of Debt, Financial Performance Reporting, and the Disclosure Framework Initiative, and a participating observer provided updates on the AICPA’s projects on management discussion and analysis (MD&A) and cryptocurrency.

The Committee discussed how the FASB is monitoring reference rate reform, with the aim of ultimately limiting the accounting impact to instances in which there are changes in existing debt, hedging, and other agreements that go beyond mere substitution of economically equivalent rates and spreads.  The Committee discussed the Board’s alternatives related to the contractual linkage of debt agreements and financing arrangements for Balance Sheet Classification of Debt. Committee members generally expressed a preference for linking the arrangements if specific criteria are met, indicating that the linkage is more relevant to financial statement users because it better reflects the underlying economics of the redeemable debt arrangement.

Other—Other topics discussed included:
  • International NFP activities
  • Recent trends, concerns, and observations in the NFP sector.