FASB Revenue Recognition Will Affect Your CHC

Thoughtware Article Published: Feb 01, 2018
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Among the many challenges community health centers (CHC) face, a new accounting standard isn’t one many are eager to tackle. Unfortunately, as federal grantees, CHCs are required to follow generally accepted accounting principles. We recognize such significant and fundamental changes are never easy.

The model for revenue recognition is changing with the Financial Accounting Standards Board’s (FASB) May 28, 2014, release of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). The standard is commonly referred to as the “revenue recognition” standard. The ASU eliminates most of the existing industry-specific guidance and significantly expands revenue recognition disclosures. More than 600 pieces of current revenue recognition guidance are replaced with an overriding principle and a five-step model. The standard requires entities to make more estimates and use more judgment than under current guidance.

FASB Revenue Recognition Will Affect Your CHC Steps


Because revenues are a critical financial measure for CHCs, this 156-page ASU will affect your organization through the investment of time and energy to understand, develop and update policies for and implement the standard.

Effective Dates

For public entities, the standard is effective for interim and annual reporting periods beginning after December 15, 2017. All other entities have an additional year for annual reports and two years for interim reporting.

FASB Revenue Recognition Will Affect Your CHC Steps Entities

Although it’s easy to assume you get an extra year to implement since your CHC is a not-for-profit entity, CHCs also can be conduit debt obligors and, thus, public entities. If your CHC has bonds or other securities that could potentially be traded, listed or quoted on an exchange or over-the-counter market, be sure to read our BKD Thoughtware® article covering these important considerations.


To help ease the pain of adoption, our CHC advisors have invested significant time researching the standard to offer you CHC-specific educational opportunities. We’ve developed a series of complimentary webinars designed to help you navigate the essential elements of the ASU as you implement revenue recognition for your CHC. Here’s a quick look at what our webinar series has to offer:

Interested in attending our upcoming webinars? Subscribe to BKD Thoughtware to get the invitations sent straight to your inbox or contact David for more details.

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