FASB Clarifies Accounting Guidance for Contributions
FASB has updated U.S. GAAP to determine when a contribution to a not-for-profit organization should be accounted for as a contribution or an exchange and also to decide when a contribution has conditions attached to it. FASB says the accounting changes will resolve inconsistent reporting practices for cash payments and asset donations to not-for-profit groups by the recipients and the businesses, government bodies, and not-for-profit groups that made them. “The amendments in this update should be applied only to the portion of revenue or expense that has not yet been recognized before the effective date in accordance with current guidance,” the update says. “No prior-period results should be restated, and there should be no cumulative-effect adjustment to the opening balance of net assets or retained earnings at the beginning of the year of adoption.”
Minor Changes Planned for Insurance Standard
On June 21, the IASB agreed to propose several propose minor revisions to its insurance accounting standard ahead of the 2021 effective date. The changes are considered narrow enough to be included in the board’s annual improvements cycle and, in the board’s view, do not warrant a separate exposure draft for public comment. “To me, it’s very clear reading this paper this was a clear mistake in the drafting of standard,” IASB Chairman Hans Hoogervorst said of the change to the “coverage period” definition. The IASB’s annual improvements cycle is typically limited to changes that either clarify the wording in a standard or correct relatively minor oversights or conflicts between existing requirements. At least one IASB member, Mary Tokar, asked whether it made sense to propose the insurance clarifications separately, given that the insurance standard has had such prominence, but the rest of the board said one package of proposals made sense.
Proposed Amendments to IFRS Foundation Charter Would Let Next Chair Serve Nine Years
The IFRS Foundation, the IASB’s parent organization, is proposing to amend its charter to let its next chair serve for nine years, instead of the six under the current model. The proposed amendments also include a provision that allows the foundation to select an outsider or one of the foundation’s trustees as chairman. “The changes would provide flexibility in safeguarding the foundation’s stability through the continuity of its leadership, whilst ensuring there is appropriate diversity and independence among the trustees, the foundation said. The foundation’s current chairman, Michel Prada, said in December 2017 that he would remain beyond the end of his second three-year term until a successor is in place. A spokesperson for the IFRS Foundation said Prada’s successor is close to being named and that the amended foundation charter, should it be approved, would make the incoming chair eligible to serve three (three-year) terms.