Staying up to date with accounting standards and auditing updates is essential for nonprofit organizations to remain compliant and prepared.

This article highlights key updates from the Office of Management and Budget (OMB), the Financial Accounting Standards Board (FASB), and recent Statements on Auditing Standards (SAS) that may impact nonprofits in 2025.

We know this information can be highly technical, and its implications may not be immediately clear. If you have any questions about how these changes affect your nonprofit’s operations or reporting, please reach out to your Wegner CPAs advisor for personalized guidance.

Revisions to OMB’s Uniform Guidance

On April 22, 2024, the Office of Management and Budget issued revisions to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). The government-wide effective date of the revisions is October 1, 2024; however, federal agencies may elect to implement the revisions as early as June 21, 2024. The increase in the audit threshold from $750,000 to $1,000,000 is effective for auditee fiscal years beginning on or after October 1, 2024.

Accounting Standards Updates

The following Accounting Standards Updates issued by the Financial Accounting Standards Board (FASB) since January 1, 2023, may be relevant to certain not-for-profit entities:

• Update No. 2023-01, Leases (Topic 842): Common Control Arrangements, is effective for fiscal years beginning after December 15, 2023. This Update responds to issues related to applying Topic 842 to related party arrangements between entities under common control.
• Update No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The amendments in this Update affect a variety of Topics in the FASB Codification and apply to all entities within the scope of the affected Topics unless otherwise indicated. Amendments that may be relevant to not-for-profit entities include requirements to disclose assets mortgaged, pledged, or otherwise subject to lien; amounts and terms of unused lines of credit; and where cash flows associated with derivative instruments and their related gains and losses are presented in the statement of cash flows. The effective date for each amended Topic is dependent on the U.S. Securities and Exchange Commission (SEC) removing the related disclosure or presentation requirement from its existing regulations. If by June 30, 2027, the SEC has not removed the applicable requirement from its regulations, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity.
• Update No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, is effective for fiscal years beginning after December 15, 2024. This Update improves the accounting for and disclosure of crypto assets and applies to all entities holding crypto assets that meet certain criteria.
• Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, is effective for entities other than public business entities, including not-for-profit entities, for fiscal years beginning after December 15, 2025. This Update enhances the transparency and decision usefulness of income tax disclosures.

Statements on Auditing Standards

• Statement on Auditing Standards (SAS) No. 147, Inquiries of the Predecessor Auditor Regarding Fraud and Noncompliance With Laws and Regulations, is effective for audits of financial statements for periods beginning on or after June 30, 2023. This SAS narrowly revises auditing standards to specifically require an auditor, once management authorizes the predecessor auditor to respond to inquiries from the auditor, to inquire of the predecessor auditor regarding identified or suspected fraud or noncompliance with laws or regulations.
• Statement on Auditing Standards No. 149, Special Considerations — Audits of Group Financial Statements (Including the Work of Component Auditors and Audits of Referred-to Auditors), is effective for audits of group financial statements for periods ending on or after December 15, 2026. This SAS supersedes the extant group audits standard and amends other auditing standards to conform to the group audits standard. This SAS strengthens the auditor’s approach to planning and performing a group audit, as well as improves the overall quality of group audits, by introducing a principles-based approach focused on identifying, assessing, and responding to the risk of material misstatement of the group financial statements.

We’re here to help.

The updates discussed above may impact your organization’s financial statements, audit requirements, or reporting processes in the coming years. If you’re unsure how these changes apply to your nonprofit, don’t hesitate to contact your Wegner CPAs advisor. Our team is here to help you interpret these updates and ensure your organization is fully prepared.