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On May 20, the Financial Accounting Standards Board (FASB) approved its proposed Accounting Standards Update, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities. As a result, all not-for-profit (NFP) colleges and universities with public or conduit debt will have the option of postponing the implementation of new lease requirements (Topic 842) by one year, until FY21. NFP institutions without public or conduit debt can postpone implementation until FY23.

In light of COVID-19, NACUBO asked for one-year postponements of both revenue recognition under Topic 606 and grant and contribution revenue recognition under Topic 958 (ASU 2018-08) for NFPs without public or conduit debt. FASB approved an optional one-year implementation delay for Topic 606 but decided to retain the effective of date for ASU 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made.

Although affected colleges and universities will have to implement ASU 2018-08 in FY20, the silver lining is consistency. Applying ASU 2018-08 in FY20 will result in a consistent application of conditional contribution guidance for revenue recognition between CARES Act grants, the Paycheck Protection Program, all other grants, contributions, and promises to give in the same fiscal year.  


Sue Menditto

Senior Director, Accounting Policy


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