FASB Puts Aside Consolidation Project

FASB Puts Aside Consolidation Project
Nonprofits Should Follow SOP 94-3

The Consolidation Project, FASB’s longest-standing project, has been removed from the Board’s technical projects list and, as of Jan. 29, no date has been set for further discussion, Allen Fetterman reported at the Foundation for Accounting Education’s Nonprofit Conference in January.

Nonprofits are to follow SOP 94-3 requirements until the project is further resolved.

Fetterman’s report focused on several of the Financial Accounting Standards Board’s most recent developments, particularly regarding the Combinations of Not-For-Profit Organizations Project.

Some of the more important considerations FASB is mulling over under the Combinations Project, according to Fetterman, are tentative conclusions to define a combination; to determine a combination as nonreciprocal or reciprocal; to finalize the consideration exchanged in a combination of NPOs; to account for goodwill subsequent to acquisition; and to discuss required disclosures.

More details about these and other FASB projects relevant to the nonprofit sector can be found on the Board’s website, www.fasb.org.

Retired from Loeb & Troper in 2003, Fetterman has lectured throughout the country on accounting and auditing for not-for-profit organizations and is currently vice chairman of the NYSSCPA’s Not-for-Profit Organizations Committee.

Fetterman and other guest speakers—from New York City Comptroller William C. Thompson Jr. to William Josephson, the assistant attorney general for the Charities Bureau—emphasized the importance of reform in the nonprofit sector.

Thompson said his office would reform its contract procurement process to help nonprofit organizations maintain their vital role in the city’s economy. Nonprofits in New York serve 2.2 million people a day, employing another half-million—14 percent of local employment.

Thompson said the comptroller’s office was seeking ways to ease the financial burden on nonprofit organizations, specifically by reforming the city’s procurement process. Nonprofit contractors are often paid as much as 154 days late, Thompson said. Reform of the process might include employing new technology, creating timetables and charging penalties for late payments.

Josephson followed up with a report on enforcement and reform legislation. Josephson said that in addition to the New York State Senate bill 4836–A —legislation introduced by Attorney General Eliot Spitzer last year to reform governance of nonprofit organizations—the Assembly will introduce its own bill in the coming weeks.

Josephson also said that enforcement efforts were working, pointing to arrests in mid-January of health-care workers at a nonprofit clinic in the Bronx for allegedly stealing from the clinic, and the indictment of a career criminal who had bilked money from the public through fraudulent charities.