Not-for-profits – Are you ready?
Ready, set, go – we are now at the ‘go’ stage in applying the new accounting standards relevant for not-for-profit entities (NFPs) for December 2019 year ends.
In brief
- New income, revenue and leases standards apply for NFPs December 2019 reporting
- These changes may have significant impacts, depending on the nature of the entity
- CA ANZ has an updated Enhancing Not-for-Profit Reporting Guide to assist NFPs with the changes
The new standards impacting NFPs for years commencing on or after 1 January 2019 are:
- AASB 1058: Income of Not-for-Profit Entities
- AASB 15: Revenue from Contracts with Customers
- AASB 16: Leases
These standards will likely change the way NFPs currently account for such arrangements, which may have significant impacts, depending on the entity involved and the nature of their operations. To assess this impact, NFPs will need to undertake a review of all existing contractual arrangements/agreements in respect of both revenue/income and lease transactions.
NFPs will need to exercise judgement in applying the new standards in determining fair values, lease terms, incremental borrowing rates for leases, and performance obligations attached to funding arrangements. Such judgements should be disclosed appropriately.
In this article, Melissa Alexander CA, Partner – Pitcher Partners and Kerry Hicks FCA, Director, Technical Standards – Pitcher Partners explain some key aspects of the changes.
