Revenue recognition standards for nonprofits have undergone significant changes, and these updates bring new challenges and opportunities for organizations. Understanding how to apply the latest guidance is essential for ensuring compliance and maintaining financial integrity.
Sage Intacct helps simplify the process of adapting to these changes, enabling nonprofits to streamline revenue recognition and stay focused on their mission.
Why Are These Changes So Important?
The new standards from FASB, including ASU 2018-08 and ASC Topic 606, have far-reaching implications for nonprofit revenue accounting. These updates require organizations to assess their revenue streams more carefully, ensuring compliance with evolving rules around grants, donations, and contracts.
Key Areas Affected:
- Revenue Streams & Contracts: Differentiate between exchange transactions (subject to ASC Topic 606) and contributions (subject to ASU 2018-08).
- Materiality & Timing: Understanding when revenue needs to be deferred and how to account for it, especially at year-end.
- Donor-Imposed Conditions: Accurately track contributions with conditions or restrictions.
Steps to Comply with New Standards
Successfully navigating these changes requires careful planning and execution. Here’s a streamlined process to get started:
- Study the New Guidance: Familiarize your team with the full scope of the updated standards.
- Brief Leadership & Stakeholders: Ensure key decision-makers understand the impact of the changes.
- Analyze Revenue Streams: Identify which revenue streams are material and apply the correct accounting treatment.
- Consult with Your Auditor: Work with your auditor to ensure proper implementation and documentation.
- Review and Document New Policies: Update your internal accounting processes and policies to reflect the new standards.
- Ongoing Evaluation: After implementation, regularly reassess to ensure continued compliance.
Key Features for Nonprofits Using Sage Intacct
Sage Intacct is designed to simplify the complexities of nonprofit revenue recognition while ensuring compliance. Here’s how we can help:
- Automated Revenue Recognition: Streamline the process of recognizing revenue based on your specific revenue streams—whether it’s exchange transactions or contributions.
- Real-time Reporting: Stay on top of revenue recognition with instant access to accurate, up-to-date financials.
- Compliance Tracking: Easily track donor-imposed conditions and restrictions to ensure you’re meeting all requirements.
- Scalability: Whether you’re a small nonprofit or a large organization, Sage Intacct can scale to meet your needs and help you stay compliant.
This article is posted at sage.com
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