Posts

Showing posts from August, 2016

FROM THE TRENCHES - THE IMPACT OF FASB 116 & 117 ON NONPROFIT ORGANIZATIONS

Disclaimer: this is a "from the trenches" opinion piece written by a nonprofit finance director who lived through the transition from pre to post FASB Statements 116 & 117. Please click the "summary" and "status" links to read the full text of the statements and consult your independent auditor for final interpretation. Both Statements were effective December 15, 1994 for nonprofits with over $1 million in annual expenses and over $5 million in total assets. Statement No. 116 Accounting for Contributions Received and Contributions Made (Issue Date 6/93) [Summary] [Status] This Statement radically changed (and standardized) the way nonprofits reflect income. Generally, Statement 116 requires that contributions are recognized in the period received. Why was the change radical? Pre-116, nonprofits received multi-year funding and reflected only the portion for the current fiscal year. The remainder was held in a balance sheet account known as &qu