Contributions – Revenue Recognition and Related Matters – NFPAC

Date recorded:

At its meeting on July 26, 2022, the Not-for-Profit Advisory Committee received an update on the AcSB’s recent tentative decisions related to the development of an Exposure Draft on the recognition of contributions and related topics. Specifically, the Committee discussed draft proposals relating to endowments, contributed materials and services, pledges and bequests. The Committee agreed that endowment contributions should be recognized as direct increases to net assets in the period in which the organization is entitled to the contribution. For contributions with externally-imposed requirements specifying that the initial contribution amount must be maintained and invested for a fixed term, the Committee advised that they should be accounted for like other types of restricted contributions and not like endowment contributions. The Committee agreed that organizations should continue to have the option to recognize contributed materials and services when specific criteria are met. The Committee also commented on the draft criteria and disclosure proposals. The Committee agreed that pledges should not be recognized until the contributed assets are received. With regards to bequests, they advised that in some scenarios, an organization could become entitled to the contribution before it is received. The Committee also discussed fund accounting presentation, presentation of net assets, and disclosure of restricted cash. The Committee advised that additional guidance on the application of fund accounting presentation would be helpful. However, it should provide some flexibility to allow organizations to present information in a way that is useful to financial statement users. The Committee also provided input on draft presentation and disclosure proposals. The AcSB will consider the Committee’s feedback at its meeting on September 14-15, 2022.

Review the summary of discussions on the AcSB's Web site.

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