More articles on GIK valuation. The issue isn’t going away.

Image courtesy of Adobe Stock.

Nicola White, writing at Bloomberg Tax, has several articles following up on the GIK valuation issue after the veto of California AB 1181 by the governor. If you have been following the issue, you will want to check her recent writing.

End of this post discusses the departure from FASB of a project manager long involved with nonprofit rulemaking.

The articles, with a few highlights:

11/4/19 – Bloomberg Tax – Small Fixes Eyed for Charity Accounting as California Backs Off – Article describes why FASB is strongly resistant to any change in GIK valuation.

Doing so would involve a change the fair value methodology, which would have ripple effects on other issues where FMV is involved and carry over to many areas involving for-profit businesses.

A good quote is attributed to Rick Cole, former FASB supervising project manager. He makes the analogy of pulling a thread on a sweater – start pulling and you have a big hole. Check out the quote in the article. You will appreciate it.

That the governor vetoed AB 1181 does not take off the pressure of the valuation issue.

Article points out, which is the first time I’ve seen it in print correctly, the location of existing guidance for geographic restrictions from a donor not restricting the market used for valuation (i.e. principal market). That guidance is in a nonauthoritative source. Specifically, the core of the valuation issue is based on a comment in an AICPA audit guide, not the Accounting Standards Codification.

The odd combination of factors is leaving FASB under pressure because of a FinREC comment in an AICPA audit guide, for which FASB has neither responsibility nor authority.

Article goes on to describe the steps FASB might take. Turns out that is exactly what they decided.

Article provides several on-point quotes from a national assurance partner at BDO.

11/6/19 – Bloomberg Tax Rulemaker Aims for More Transparency in Charity Gift Accounting – FASB decided to move forward with a draft that would call for GIK to be listed separately on the statement of activity. Notes will need to provide detail of categories of GIK, donor restrictions, and some detail on valuation methodology.

See yesterday’s post summarizing FASB’s plans.

Article also provides recap of recent actions in California, to include legislature passing AB 1181 which would have required valuation based on overseas pricing and the governor’s veto. Article says this provides FASB some breathing room to address the overvaluation issue.

10/15/19 – Bloomberg Tax – California Seeks New Fix for Charity Accounting Fraud After Veto.  Article behind paywall.

Staff departure from FASB

If you have learned from the Nonprofit conferences or Accounting & Auditing conferences presented by California Society of CPAs over the last few years, you have had the privilege of hearing Rick Cole speak. I’m sure he has spoken at a host of other conferences. He is knowledgeable and is a great speaker.

Mr. Cole has joined the New York office of BKD CPAs & Advisors as a partner. While at FASB serving as a supervising project manager, he was the project manager on ASU 2016-14 (financial statement presentation), ASU 2018-08 (grants/contributions), and ASU 2019-03 (collections).

BKD is quite fortunate to have him on staff.

Some articles on his transition:

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