Automating revenue recognition for better compliance
Revenue recognition standards have changed
Updates to revenue recognition standards represent the biggest changes in recent history in nonprofit accounting.
Nonprofits with diverse revenue sources should reevaluate internal accounting processes considering recent changes to revenue recognition from FASB. Both ASU 2018-08 and ASC Topic 606 bring a need to assess how nonprofit finance teams account for revenue and apply compliant practices, especially when organizations have a material deferred revenue amount outstanding at year-end.
With ASC Topic 606, FASB seeks to bring US GAAP standards for revenue recognition into closer alignment with international standards (IRFS), so there is greater clarity and consistency in treatment across nations, industries, and markets. ASU 2018-08 improves and clarifies the scope and existing prior guidance (from ASU 2014-09) around revenue from contributions.
