Whatever their ultimate impact, the Financial Accounting Standard Board’s (FASB) new standards for revenue recognition are here to stay. At CLA’s Fifth Annual National Association Conference in Chicago, Cathy Clarke, CLA’s chief assurance officer, urged associations, membership organizations, and other nonprofits to embrace the FASB guidance and use it for its intended purpose: consistent accounting for revenue transactions across industries.
"The first time you'll report on this is year-end,” says Clarke. “Even if there is no change in how you recognize revenue, there will be change in disclosures, and when your auditors come, they’re going to ask you: ‘How did you determine there was no change?’ They’re going to want proof that you did an assessment.”
Download the full presentation from our Audit and Accounting Revenue Recognition Update.
In a six-minute CLA Talks video, Clarke shares the five steps that associations and membership organizations must take to achieve the core principals of ASU 2014-09 as they relate to dues, sponsorships, meetings, publications, certification, credentialing, and similar revenue streams.
Clarke, a member of FASB’s not-for-profit advisory committee and the AICPA not-for-profit entities revenue recognition task force, made her remarks to nonprofit association leaders from across the country in September 2018. You can download Clarke’s entire presentation and other materials from the National Association Conference.
ASU 2014-09 and 2018-08 effective dates
For nonprofits without conduit debt, the effective date for the new revenue recognition rules is for years beginning on or after December 15, 2018: so, for December 31, 2019, or June 30, 2020, year ends.
For nonprofits with publicly traded conduit debt, the effective date for the new revenue recognition rules is for years beginning on or after December 15, 2017: so, for December 31, 2018, or June 30, 2019, year ends.
Early implementation has been permitted since December 15, 2016.
Since the initial 2014 release of the FASB standards, CLA professionals have spoken and written extensively about the impact of the rules on foundations, health care, and other nonprofit organizations.
View additional installments in the CLA Talks video series.