Income recognition template designed for not for profits
Thursday, 25th July 2019 at 7:30 am
HLB shares a new template to help not for profits comply with complex new accounting standards and find a process to determine how and when to recognise income.
To assist not-for-profit organisations comply with the new Australian Accounting Standards we have held a number of workshops and seminars as the new standards have significantly changed how and when NFPs record income.
- from 1 January 2019 for 31 December year ends (i.e. five months ago); and
- from 1 July 2019 for 30 June year ends (i.e. a few weeks ago).
Our discussions with members of the NFP community tell us that most organisations are well behind in determining how to comply with the new standards, and that many boards or other governing bodies have not yet set plans for the significant work involved.
The new standards are complex and, in many cases, not easy to follow. To make the process easier, we have developed the HLB Not-for-Profit Income Recognition Template.
We have produced a short tutorial that outlines how the template works. It will navigate you through the requirements of the new standards, and give you a process to determine how and when to recognise income.
Not-for-profit entities should document how they comply with the new standards. A number of decisions will need to be made – some of which require an educated judgement. These judgements should also be documented, and the template gives you space for this.
This template provides a way to document your compliance and your revenue recognition policies. The completed template should then be approved by your board or other governing body.
AASB 1058 and AASB 2016-8: Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Entities both include a number of examples of different types of income to demonstrate how to apply the new standards.
We have also prepared an “example” version of the template which includes each of the examples in AASB 1058 and in AASB 2016-8, as well as some other examples of membership organisation fees, to demonstrate how to use the template, and to provide guidance in working out how to recognise your income.
If you wish to use the HLB Not-for-Profit Income Recognition Template for your organisation please contact your local HLB firm here.