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FASB Nonprofit Consolidation Guidance Changes Proposed

Seeking to clarify consolidation guidance for nonprofits with respect to the effective date of Accounting Standards Update (“ASU”) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, the Financial Accounting Standards Board (“FASB”) has issued the proposed ASU, Not-for-Profit Entities – Consolidation (Subtopic 958-810): Clarifying When a Not-for-Profit Entity That Is a General Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity.

The proposed amendments would retain the consolidation guidance under Subtopic 810-20 by adding it to Subtopic 958-10. Per the proposal, nonprofits acting as general partners will continue to be assumed to oversee a for-profit limited partnership irrespective of ownership interest unless that assumption is overcome. Guidance would also be added to Subtopic 958-810 regarding when a nonprofit limited partner must consolidate a for-profit limited partnership.

Comments on the nonprofit consolidation guidance proposal are due Monday, October 3.

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