By Keoni Moniz, CPA, Assurance Senior
In 2016, FASB issued ASU 2016-13, Financial Instruments-Credit Losses, also known as Current Expected Credit Losses (CECL). Effective for all fiscal years beginning after December 15, 2022, this standard will be applicable for all non-profit organizations. While primarily directed at financial institutions, any organization that holds financial assets not accounted for at fair value may be affected. Most common examples of these financial instruments that may have an impact on not-for-profit reporting are: notes receivable, held to maturity debt securities, and grant and trade receivables. Promises to give (contributions and pledges) will not be impacted by this standard and are scoped out. The objective of this standard is to consider expected losses over the contractual term of a financial asset, usually upon initial recognition. This replaces the prior standard where losses are recognized only as they become probable. (more…)