Health Care Entities Expert Panel

Listen to a Podcast Discussion on FASB Accounting Standards Update No. 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made

FASB ASU No. 2018-08 was issued in June 2018 and included rapid adoption dates to align as closely as possible to the new revenue recognition adoption requirements. The standard was issued to make it easier for not-for-profit and other organizations, including healthcare entities, to evaluate whether gifts, grants or contracts should be accounted for as contributions—subject to FASB Accounting Standards Codification (ASC) 958, Not-for-Profit Entities—or as reciprocal (exchange) transactions accounted for under other topics such as FASB ASC 606, Revenue from Contracts with Customers. Further, the standard provides additional considerations for determining if a contribution is conditional. Listen to a discussion on the standard, including some questions and observations that have come up specific to the healthcare industry’s adoption of this clarified guidance around grants and contributions.

FASB Accounting Standards Update 2016-14, Presentation of Financial Statements of Not-for-Profit Entities, Replaces the Not-for-Profit Reporting Model That Has Existed for 20 Years

After more than three years of debate, comment, and revision, FASB ASU No. 2016-14 was released in August 2016. The ASU will change the way all not-for-profits (NFPs) classify net assets and prepare financial statements. To view the standard in its entirety, visit the FASB's website here.

Adoption of FASB ASU No. 2016-14 will result in significant changes to financial reporting and disclosures for NFPs. FASB believes the update will improve NFP financial statements and provide more useful information to donors, grantors, creditors, and other financial statement users. The standard is effective for annual financial statements issued for fiscal years beginning after December 15, 2017 and for interim periods within fiscal years beginning after December 15, 2018.

Firms, NFPs, and their boards of directors will soon see some changes to NFP financial statements as a result of recent FASB ASU No. 2016-14. This ASU was presented to simplify the net asset classification requirements and improve the information presented in financial statements and notes about an NFP’s liquidity, financial performance and cash flows. More information is available in the Exploring FASB’s Not-for-Profit Financial Reporting Standard: ASU 2016-14 Toolkit.

Also, the following supplemental health care disclosure examples are provided for your information:

• Liquidity and Availability
• Natural and Functional Class Presentation
• Net Asset Presentation

Conduit Debt Obligations: Is Your Not-for-Profit Scoped In or Out of Accelerated Effective Dates?

NFPs with conduit bonds are often subject to the accelerated effective dates and expanded disclosure requirements required of public entities under certain FASB standards. This article discusses recent Technical Questions and Answers (TQAs) that clarify certain terms related to the definition of public business entity, as not all conduit bonds fit the characteristics that subject NFPs to these requirements.