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Posted by Mark Winiarski on Tue, May 26, 2020 @ 10:37 AM


On May 20, the Financial Accounting Standards Board (FASB) voted to move forward with a deferral of the effective date for the new revenue recognition for private not-for-profits and a leasing standard delay for private and public not-for-profit organizations. Changes to the effective date are designed to provide some relief for organizations and to a not-for-profit sector that may be particularly hard hit by the repercussions from the COVID-19 pandemic.

The FASB’s vote on May 20 was for a ballot to issue a final Accounting Standards Update (ASU) about the deferral. Once the FASB issues the final ASU, we expect that private not-for-profits that have not yet issued the complete annual financial statements in which they were required to adopt ASC Topic 606 (whether that is the Dec. 31, 2019 financial statement or the fiscal year ending June 30, 2020) would be able to elect to defer the adoption of the revenue recognition standard until the period beginning after Dec. 15, 2019. Private not-for-profits can elect to delay the leasing standard until the period beginning after Dec. 15, 2021 (i.e., calendar year Dec. 31, 2022).

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 (i.e., a public not-for-profit) would be able to defer the leasing standard adoption to the period beginning after Dec. 15, 2019 (i.e. calendar year end Dec. 31, 2020). Public not-for-profits that have issued their U.S. generally accepted accounting principles (GAAP)-compliant financial statements that reflect the adoption of Topic 842 would still be eligible to apply for the deferral. For example, if a public not-for-profit entered its interim financial information in the Electronic Municipal Marketplace Access (EMMA) system, it would still be included in the scope of the deferral if its U.S. GAAP-compliant financial statement had not been issued.  

What the Vote Means

It is important to note that just because the option is there does not mean that your organization must exercise the election to defer the leasing or revenue recognition standard effective date. With the proximity to the fiscal year-end, many public not-for-profits may already be advanced in their leasing standard changes, and could find that delaying the standard adoption is more disruptive than beneficial at this point.

Private not-for-profits may be in a similar boat with the revenue recognition standard. Notably, during the same May 20 meeting, the FASB did not approve deferring the effective date of ASU 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. The rejections of the deferral for ASU 2018-08 will create a timing mismatch for the adoption of Topic 606 and the revisions to ASC Subtopic 958-605 for entities electing to defer the adoption of Topic 606. To prevent this mismatch, your organization may find it is best to stay the course with the adoption for the revenue recognition standard for June 30, 2020 financial statements.On Friday, May 15, 2020, the U.S. Small Business Administration (SBA) released an application with instructions for how PPP borrowers can receive forgiveness for a PPP loan. The application addressed mathematical questions and provided some clarity on terms previously undefined, but much remains to be answered. Additional regulations and guidance are anticipated from the SBA to assist in completion of the application. Although the forgiveness application and instructions address some of borrowers’ questions, there are still questions many borrowers are asking themselves.

For More Information

Working with your accounting provider can help you understand how the effective date deferral elections may affect your unique adoption considerations. For more information on COVID-19’s impact on your business, please contact us.  

Looking for more COVID-19 resources? Visit our resource center for expertise on impacts to expect and how your business can respond.



Headshot_Mark Winiarski_2Mark Winiarski is a Financial Services Director in the Kansas City office. He can be reached at 913.234.1656 or




Copyright © 2020 CBIZ & MHM (Mayer Hoffman McCann P.C.). All rights reserved. CBIZ and MHM are separate and independent legal entities that work together to serve clients. CBIZ  is a leading provider of tax and consulting services. MHM is an independent CPA firm providing audit and other attest services. This article is protected by U.S. and international copyright laws and treaties. Use of the material contained herein without the express written consent of the firms is prohibited by law. Material contained in this alert is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their business.

Tags: ASU, GAAP, not-for-profit, FASB, NFP, Financial Accounting Standards Board, ASC Topic 606, U.S. GAAP, COVID-19

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