New Accounting Standards for Grant-Funded Nonprofits: Are You Ready?
How can you be sure your grant-funded nonprofit successfully navigates the new accounting standards? The Financial Accounting Standards Board (FASB)’s new standards for financial statements of grant-funded nonprofits are now in effect, and for nonprofits that manage several grants or rely on grants for a majority of their funding, this new accounting standard requires changing many internal processes.
What’s the Deal with ASU 2018-08?
ASU 2018-08 affects grants and contracts within nonprofit accounting. The standard clarifies the definition of an exchange transaction and elucidates how to determine whether contributions are unconditional or conditional. In the long run, this is intended to reduce the burden of disclosures that nonprofits need to provide for certain types of grants.
Although this new standard is intended to simplify grant accounting, for many nonprofits it has the immediate effect of introducing additional calculations and making spreadsheets more complex. We think this is a great example of the ongoing difficulties posed by ever-changing regulatory standards for nonprofit accounting. Although it’s always possible to create a new spreadsheet, add or change calculations, and adapt, we believe many nonprofits can gain value across their organization by implementing a modern accounting solution to increase efficiency and financial insight.
A scalable accounting system designed for nonprofits will automate many of these processes, and updates will be created to adapt to new standards. With a powerful financial solution, you’ll gain the freedom to work on the more important aspects of your finances rather than spending all your time crunching numbers in spreadsheets, and the assurance that your organization is complying with the most recent FASB guidelines.
Sage Intacct Revenue Recognition for Nonprofits
To give one example of how the right financial solution can continually deliver value to your organization, Sage Intacct is a cloud-based system that released a new module in response to the most recent standards updates.
To help organizations avoid labor-intensive manual processes as they cope with the changes, Sage Intacct released a Revenue Recognition for Nonprofits module, which is designed to help nonprofits meet the new standards with ease. According to Sage Intacct’s announcement regarding the release:
“Sage Intacct Revenue Recognition for Nonprofits streamlines complex and manual-intensive processes by automating revenue recognition for conditional grants and contributions in one central system, eliminating the need to pour over calculations in various spreadsheets. With consistent tracking, it saves time, reduces errors, and empowers nonprofits with the data required to streamline internal workflows, audits, and even board presentations.”
How Will Your Organization Adapt?
Every nonprofit is unique, and each new grant you receive has the potential to change the extent to which your organization is affected by ASU 2018-08. If you’re still creating the processes to comply with these new standards, or you’re not sure you’re ready for them, feel free to contact us to gain some perspective and ideas from a technology partner with 30 years of experience helping organizations like yours.