Perkins Program Update
In September 2019, the Department of Education (the Department) released notification that the institutional share of the Perkins Loan fund will be reimbursed to institutions later in the year. In connection with this, the Department notified institutions that they can begin requesting the return of the Federal share of the loan fund. The department will require assignment of certain loans as part of the wind-down of the Perkins Loan program, including loans that have been in default for more than two years without documentation of reasonable collection efforts.
GLBA Compliance Requirements
The Uniform Guidance Compliance Supplement was released in July 2019, effective for institutions with years ending after May 31, 2019. The Compliance Supplement requires that auditors test certain aspects of an institution’s compliance with the Gramm Leach Bliley Act. For institutions with fiscal years ending May 31, 2019 and prior, the requirements will not be effective until the fiscal 2020 single audit. Auditors will request that an institution demonstrate that it has:
- designated an individual to coordinate the institution’s information security program;
- performed a risk assessment that addresses the following three areas:
- employee training and management
- information systems, including network and software design, as well as information processing, storage, transmission and disposal
- detecting, preventing and responding to attacks, intrusions or other system failures; and
- has documented safeguards for those identified risks.
ASC 842: Lease Accounting
In October 2019, the Financial Accounting Standards Board (FASB) voted unanimously to delay the effective date of several significant accounting standards, including ASC 842, Lease Accounting, for not-for-profit entities that are not conduit bond obligors (CBO). The delay is one year. Note that the effective date remains unchanged for not-for-profit entities that are CBOs, therefore these institutions with fiscal years ending in 2020 will still need to adopt the new lease standard. Final rules will be issued mid-November according to FASB discussions.
ASU 2017-07: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
This ASU will require organizations that present a measure of operating income in the statement of activities to include only the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs) and record the other components of net benefit cost, including amortization of prior service cost/credit and settlement and curtailment effects as non-operating expenses.
This standard is effective for reporting periods beginning after December 15, 2018 (fiscal years ending in 2020).
ASU 2018-08: Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made
This ASU provides a framework for evaluating whether transactions should be accounted for as contributions or exchange transactions and distinguishes between conditional and unconditional contributions. Since it is to be adopted on a modified prospective basis, only new grants and contributions will need to be evaluated under this guidance.
For resource recipients that are conduit bond obligors, this standard was effective for the June 30, 2019 fiscal year end. All other colleges and universities will be required to adopt this standard for their 2020 fiscal year end. Early adoption is permitted.
ASU 2016-18: Statement of Cash Flows- Restricted Cash
This ASU requires that all restricted cash and cash equivalents be included with cash and cash equivalents when reconciling beginning and ending cash on the Statement of Cash Flows. This includes cash and cash equivalents that are classified as escrow, sinking funds, debt service funds and other restricted cash accounts.
This standard is effective for reporting periods beginning after December 15, 2018 (fiscal 2020 year-end) for not-for-profit institutions.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.