As the COVID-19 crisis postpones the Olympics, the Tony Awards, the Kentucky Derby and more, the Financial Accounting Standards Board (FASB) also determined a deferral of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers’ effective date was in order. FASB is proposing that private not-for-profit entities and private companies that have not issued financial statements would not have to adopt the revenue recognition standards for another year.
The FASB’s proposal would allow private not-for-profit organizations the option to implement the standard as planned or defer adoption for a year for annual reporting periods beginning after December 15, 2019 and interim reporting periods within annual reporting periods beginning after December 15, 2020.
Final Guidance Still Needed
Not-for-profit leaders are encouraged to monitor guidance from the FASB, as they will likely soon release final standards on the delay in adopting the revenue recognition standards.
No Delay for ASU No. 2018-08
Further, while the FASB debated also delaying the effective date for Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made, or ASU No. 2018-08, they ultimately decided to enforce the current implementation date. According to the FASB, the guidance in ASU No. 2018-08 may benefit not-for-profit entities when determining financial assistance received during the COVID-19 pandemic.
The effective date for private not-for-profit organizations that are resource recipients is for annual periods beginning after December 15, 2018 and interim periods within annual periods beginning after December 15, 2019. Private not-for-profit organizations should apply ASU No. 2018-08 to contributions made to other organizations in annual periods beginning after December 15, 2019 and interim periods within annual periods beginning after December 15, 2020. However, early adoption is permitted so that private not-for-profit organizations can implement the guidance under ASU No. 2018-08 during the same period to transactions in which they are either the resource provider or resource recipient.
While the revenue recognition standard’s effective date is not officially extended, it is expected this will be approved. Our not-for-profit accounting experts are closely monitoring changes and updates that can help your organization. Please contact a member of our team to discuss how these new standards will affect your organization.