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Managing credit losses for not-for-profits

How your NFP might need to record an allowance for trade and financing receivables under ASU 2016-1

Do you have a note receivable with carried amortized cost on your balance sheet?

Have you ever made a loan to officers or employees?

Does your not-for-profit have any leases where you are the lessor?

If you have trade and financing receivables (think accrued interest receivable or note receivable) or any one of these triggers, then you need to be prepared for the new standard for reporting current expected credit losses and applying it now.

Considered one of the most significant accounting changes in decades, current expected credit loss (CECL) standards affect the way organizations evaluate impairment of financial assets such as loans, receivables, and investments in debt securities. All organizations with balances due or that have an off-balance-sheet credit exposure will feel the effects. Organizations can expect major changes through both the changes in loss reserve methodology itself, as well as the associated technological, operational, and reporting advances required for proper implementation.

Explore practical considerations of the new current expected credit loss (CECL) standards required by ASU 2016-13: Financial Instruments – Credit Losses.

© 2024 Baker Tilly US, LLP

Ivan Cilik
Principal
Michael W. Wascura
Principal
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