Disclosures for financed receivables (i.e. loans) and the allowance for losses will be dramatically expanded by Accounting Standards Update 2010-20, Receivables (Topic 310) – Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.
Trade receivables are excluded from the requirements, so this will apply to relatively few NPOs. Likely biggest impact will be on regional headquarters holding loans to their local churches and colleges with the government funded loans on their books. Extension funds will have to expand their already lengthy disclosures.
This will apply to a local church funding a loan or two for their senior staff. On the other hand, the disclosures won’t have to be all that extensive since there will only be a few loans involved. When there are only a couple loans, there isn’t much disaggregation possible.
Disclosures will be expanded by disaggregating them based on portfolio segments. Credit quality indicators and expanded discussion of the allowance for credit losses will be needed.
The text of ASU 10-20 is rather long at about 28 pages with 10 pages of illustrations. The new requirements are only a fraction of that volume. The reason for so many pages is that large portions of subtopic 310-10 are included in full so the changed sentences and added paragraphs can be shown in context.
Effective date – For nonpublic entities (which will likely be everyone reading this post), the disclosures are effective for periods ending on or after December 15, 2011. The way I translate that is the first time the rules will have to be applied is for December 31, 2011 financial statements. Public entities have an earlier transition.
This post is obviously a very brief overview. The FASB web site has a list of all the ASUs here, including ASU 10-20 here. You can reach those pages without having to register at the FASB Codification web site.