United States

Changes to revenue recognition for not-for-profit organizations


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In May 2014, the Financial Accounting Standards Board (FASB) issued new revenue recognition guidance that will, upon its effective date, replace most pre-existing revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles (GAAP). Implementation of the new guidance must occur no later than the quarter and year beginning January 1, 2018, for public entities with a calendar year end. Public entities include: (a) public business entities, (b) not-for-profit organizations that have issued, or are conduit bond obligors for, securities that are traded, listed or quoted on an exchange or an over-the-counter market and (c) certain employee benefit plans. For all other entities with a calendar year end, implementation must occur no later than the year ending December 31, 2019.

The new guidance applies to contracts with customers. As such, it only affects the accounting for exchange transactions entered into by not-for-profit organizations that are otherwise within the scope of the new guidance. The legacy GAAP related to accounting for contributions received, which is included in Subtopic 958-605, “Not-for-Profit Entities – Revenue Recognition,” of the FASB’s Accounting Standards Codification, remains in place along with the guidance related to distinguishing between exchange transactions and contributions. While only the exchange transactions of not-for-profit organizations will be affected by the new guidance, such organizations should not delay their implementation activities given that the effects of the new guidance could still be significant. In our white paper, Changes to revenue recognition for not-for-profit organizations, we discuss the following topics:

  • Scope: Exchange transaction or contribution?
  • Scope: Contracts that include exchange transaction and contribution components
  • Subscriptions and membership dues
  • Tuition and housing fees
  • Assets and liabilities recognized under the new guidance
  • Disclosure requirements

With over three years having passed since initial issuance of the new guidance, not-for-profit organizations should be well on their way to assessing how it will affect their accounting for and disclosure of exchange transactions and developing an implementation plan. This is particularly true for those not-for-profit organizations that are considered public entities, those that plan on electing the full retrospective transition method and those that have multi-year contract terms with their customers.


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