GAAP is amended to clarify some consolidated reporting decisions by not-for-profits

The FASB on Jan. 12, 2017, published Accounting Standards Update (ASU) 2017-02, Not-for-Profit Entities—Consolidation (Subtopic 958-810): Clarifying When a Not-for-Profit Entity That Is a General Partner or a Limited Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity, to clear up some of the consolidated reporting decisions for not-for-profit organizations.

Not-for-profit groups must follow the updated guidance for fiscal years beginning after Dec. 15, 2016, and quarterly periods within fiscal years beginning after Dec. 15, 2017. Early adoption is allowed, including for quarterly reports, the FASB said.

The standard calls for not-for-profit groups that are general partners to follow the guidance in Subtopic 810-20, Consolidation—Control of Partnerships and Similar Entities, formerly Emerging Issues Task Force (EITF) Issue No. 04-05, to determine whether they need to consolidate their holdings in a for-profit limited partnership or similar organization. The update mainly applies to not-for-profit groups involved in certain types of affordable housing arrangements, the FASB said.

The update is a response to questions that arose following the publication of ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, in February 2015. The board heard questions from not-for-profit groups that the 2015 update was not clear about the consolidated reporting requirements for not-for-profit groups that are general partners in a for-profit limited partnership.

The 2015 update superseded some of requirements in Subtopic 810-20, which not-for-profit groups used in their consolidated reporting decisions. The January 12 update essentially allows not-for-profit groups to continue to applying the same accounting guidance they have used for years by moving Subtopic 810-20 to Subtopic 958-810, Not-for-Profit Entities — Consolidation.

“Therefore, under the amendments, NFPs that are general partners continue to be presumed to control a for-profit limited partnership, regardless of the extent of their ownership interest, unless that presumption is overcome,” the update reads.

For more information on this topic, or to learn how Baker Tilly accounting and assurance specialists can help, contact our team.


We have partnered with Thomson Reuters to issue our monthly Accounting insights. Please feel free to contact Baker Tilly at accounting@bakertilly.com if you have any questions related to these articles or Baker Tilly's Accounting and Assurance Services. © 2017 Thomson Reuters/Tax & Accounting. All Rights Reserved.