Not-for-profits experienced relatively few changes impacting accounting and tax reporting in 2014. It seems 2015 will not be as quiet based on items proposed and those expected to be proposed for the future. With the consolidation of the OMB Circulars, new revenue recognition standards and FASB’s financial statement project, not-for-profits and educational organizations should keep an eye on how these items may impact measurement, management and disclosures. Some of the key items that should be on your radar are as follows:
ASU 2013-06, Services Received from Personnel of an Affiliate
This accounting update affects fiscal year ends ending June 30, 2015 and later. It requires not-for-profits to recognize services provided by their affiliated entities effectively at the cost of those services. If recognizing at cost will significantly overstate the value of the services received, then the not-for-profit may elect to recognize at either the cost recognized by the affiliate for the personnel providing the service, or the fair value of the service. While this will not affect the bottom line, it will provide more transparency relative to dependence on such services and their magnitude. While many organizations have long billed for such services, this requires those who did not book such to reflect the economics.
Most entities getting such services will increase contribution revenue and a corresponding expense with healthcare organizations taking a somewhat different approach.
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