Does your not-for-profit have the tracking standards in place to meet the Financial Accounting Standards Board’s (FASB) new accounting standards update regarding contributed nonfinancial assets?
To increase transparency around how these assets are measured and used by not-for-profits, the Accounting Standards Update issued by the FASB affects how these assets are presented in the statement of financial position.
Nonfinancial assets include gifts, donations, gifts-in-kind, and donated services. They also include fixed assets such as land, buildings, and equipment, or use of such fixed assets, materials and supplies, intangible assets, and services.
The new requirements apply retrospectively and take effect for annual reporting periods beginning after June 15, 2021, and for interim reporting periods beginning after June 15, 2022.
The amounts of these contributions must be further broken down and disaggregated by category. For each category, the organization must further disclose:
– Qualitative information about whether the contribution was monetized or utilized during the reporting period. If utilized, the ASU also requires a description of the programs that used the contribution.
– The organization’s policy (if you have one) about monetizing versus utilizing contributed nonfinancial assets.
– A description of any donor-imposed restrictions on the assets.
– A description of the valuation techniques and inputs used to arrive at a fair value measure at initial recognition.
– The principal or most advantageous market used in the valuation if it is a market in which there is a donor-imposed restriction on the sale or use of the contribution.
With an entire team dedicated to not-for-profits, Dembo Jones can help your organization develop the tracking process necessary to accommodate the new accounting standards. We also offer a full suite of services to help your not-for-profit maintain the proper financial controls, transparency in governance, and informed leadership that support your goals and mission. Contact us today.