On February 10, 2020, the Financial Accounting Standards Board issued proposed Accounting Standards Update (ASU), Not-for-Profit Entities (Topic 958): Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets. Contributed non-financial assets can include fixed assets, such as land, buildings, and equipment; materials and supplies, such as food, clothing, and pharmaceuticals; and intangible assets and/or recognized contributed services.
This proposed ASU is intended to improve transparency around how not-for-profit organizations show Gifts in-Kind (GIK) and would require contributed non-financial assets to be presented as a separate line item in the statement of activities, apart from contributions of cash or other financial assets. In addition, organizations would have other disclosure requirements surrounding intended use, description of restrictions, and valuation techniques in accordance with Fair Value Measurement (Topic 820) guidance. Organizations most impacted will be those that receive a significant amount of GIK, GIK with high market values, and GIK with multiple markets that would affect the determined fair value, such as pharmaceuticals received from U.S. donors that will be used overseas.
Not-for-profit finance and compliance staff are encouraged to review and provide input on the proposed update by April 10, 2020, as well as connect with their external auditors to discuss implications at their organization. Click here to download the Exposure Draft. For more information about the project, or to submit comments, visit the FASB Project Update page.
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