Not-for-Profit Liquidity Disclosures Will Be Flexible
FASB’s ASU 2016-14 is the first major update to financial reporting for not-for-profit entities in more than two decades, and it aims to provide better insight into how an organization operates and manages its finances. One of the biggest changes is a requirement that groups provide more information about liquid cash, and FASB allows for some flexibility in how entities reveal that information. FASB does not think this flexibility should cause a problem. “How do you make sure you have cash to pay the bills?” FASB Supervising Project Manager Richard Cole said on June 22 at the AICPA Not-for-Profit Conference in National Harbor, Maryland, describing how most organizations at least have access to a line of credit in an emergency. “Those are the things you do to help manage your liquidity risk. Take those concepts, put them into a few sentences, and put them into a qualitative disclosure.” ASU 2016-14 goes into effect in 2018.
Proposal to Eliminate Some Implementation Guidance from Policies Standard
On June 21, the IASB agreed to issue a proposal in the next month that will include an elimination of one of the examples from the implementation guidance in IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. The board plans to propose cutting the third implementation example, “Prospective Application of a Change in Accounting Policy When Retrospective Application Is Not Practicable,” because, as the board’s staff said in a memo, the example “is not useful as an illustration of how to distinguish accounting policies and accounting estimates.” The board had agreed earlier this year to issue proposed amendments to IAS 8, and the staff decided to recommend deleting the implementation example while it was writing the exposure draft.
2017 Revenue Recognition Guide Adds Implementation Guidance
On June 23, the AICPA released the 2017 edition of its Audit and Accounting Guide, Revenue Recognition, updated to help accountants and auditors apply FASB’s landmark standard. The 2017 edition adds material for three industries — airlines, telecommunications, and engineering and construction, and it updates the material for securities brokers, gambling companies, healthcare companies, and software developers. When the AICPA released the guide’s first edition in December 2016, it said it “provides in–depth coverage of audit considerations from risk assessment and planning to execution of the audit.” The guide addresses issues auditors have to consider when examining the revenue reported in a client’s financial statements, the internal controls for revenue, the risk of fraud, and the assessment auditors have to make regarding the accuracy of the estimates used by management.