Accounting

(Cross-posted from my other blog, Nonprofit Update, since this discussion will be of interest to readers here.)

Gary L. Krausz, CPA, CFF, is an audit and accounting services partner in the Los Angeles accounting firm, Gursey | Schneider LLP. Mr. Krausz works with many not-for-profit agencies and private foundations in Southern California. The firm’s website is http://www.gursey.com. Mr. Krausz offers the following guest post as an overview to help the not-for-profit community understand the major changes about to take place in accounting and financial reporting for not-for-profit organizations.

By Gary L. Krausz, CPA, CFF

This past Thursday, August 18, 2016, the Financial Accounting Standards Board (FASB) approved the long-awaited first step in changes to the financial reporting model for not-for-profit organizations by releasing Accounting Standards Update No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. These changes, when effective, will result significant reporting improvements for most not-for-profit organizations including our clients with such diverse operations such as (1) schools, (2) community agencies, (3) private foundations, (4) associations, and (5) religious organizations. The proposed changes will be effective for years beginning after 12/15/2017 (which means calendar years ending on 12/31/2018 and fiscal years ending during the calendar year 2019). Early adoption is permitted.

To highlight just a few of the improvements in Phase I of FASB’s plan:

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Guest post: Overview of Changes to NFP Accounting RulesRead More »

On 8/18, FASB published a massive overhaul to the accounting rules for not-for-profit organizations. The release is ASU No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, which you can find here.

(Cross-post from my other blog, Nonprofit Update.)

Effective date

ASU 16-14 will be effective for fiscal years beginning after December 15, 2017.

Let’s translate that… it will first be effective for calendar year December 31, 2018 financial statements. For NPOs with fiscal year ends, it will be effective for 6/30/19 or 9/30/19.

Since 6/30/16 audits are underway, for a rough ballpark figure three years from now for required implementation.

Early application is permitted.

Really fast intro

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FASB releases major change to nonprofit accounting rules: ASU 16-14Read More »

In about three years there will be a complete overhaul of the accounting rules for leases.

For a quick introduction to the changes, here are a few of the comments in a recent AICPA webinar.  I will keep this nontechnical.

(Discussion cross-posted from my other blog, Nonprofit Update, because this discussion will be a good intro for CPAs.)

“Right of use” asset

The basic concept is that a lease contract gives you the right to control the use of property, equipment, office space, or some other identified asset for a specific period of time. The economic substance is that the asset is yours to use for the term of the lease.

By creating a “right of use”, the lease contract gives you an asset that needs to be reflected on the balance sheet. In addition the liability for future payments needs to be recognized.

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Overview of new lease accounting rulesRead More »

The rules describing how to account for all leases were drastically revised on February 25, 2016. That is when the accounting rule setters, FASB, issued their document called Accounting Standards Update 2016-02 – Leases (Topic 842).

You will be hearing a lot more about these changes over the next few years.

(Cross post from my other blog, Nonprofit Update. Although written for an audience of charity finance staff and senior leadership, this is a helpful headsup notice for CPAs.)

Highlights

In extremely brief summary, the new rules require all entities preparing financial statements (including nonprofit organizations) to record all leases as an asset and liability. The assets will be called right to use assets and will be amortized over the life of the lease. An offsetting liability will be recorded. Whether the asset will be reported at the sum of total future payments or at the discounted present value of future payments would depend on the nature of the lease.

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Lease accounting rules overhauledRead More »

A major rewrite of how NPOs present their financial statements is under consideration by FASB. An exposure draft was released in April 2015.

(Cross-post from my other blog, Nonprofit Update.)

December FASB meeting

FASB has broken the project into two parts. One will move forward on a timely basis and the other will be postponed for reconsideration.

Here is a high-level summary of key components discussed at their December 11, 2015 meeting,

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Update on overhaul of not-for-profit financial statement presentationRead More »