NonprofitEye

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 ...

The Hazards of Revenue Recognition for Non-profits by pam ashlund "New" nonprofit rules for recognizing revenue were established by the Financial Accounting Standards Board back in 1993 (FASB 116), links summarized in a previous post . Then why now is the subject of Revenue Recognition suddenly so important? File it under “Blame it on Enron”. When this infamous company decided to recognize revenue based on their projection of future sales (NOT completed sales), they opened the door to a previously unimaginable new chapter in the ongoing novel of Fictional Accounting. The guys who came up with this scam were known as " The Smartest Men in the Room ". Were they? The answer is yes (and no) and yes. Madness in the Method? Even though their method was clearly preposterous, the lesson we can learn from their sad example is that accounting is mostly, but not ALL hard science. Many accounting decisions involve significant “management discretion”. Any area of accounting that...

Classic Nonprofit Resources: FASB 116 & 117* by Pam Ashlund 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] The statement radically changed (and standardized) the way nonprofits reflect income. Generally, the statement requires that contributions are recognized in the period received. Why radical? Pre-116, nonprofits received multi-year funding and reflected only the portion for the current fiscal year. The remainder was...