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Non-profit implements ASC 326 with help from Solaris, ensuring accuracy and compliance with new standard.
A non-profit company focused on real estate and affordable housing, needed to adopt the new ASC 326/Current Expected Credit Losses (CECL) standard for their 2023 financial year. To ensure accurate compliance and audit readiness, OppCo turned to Solaris for expert guidance.
The Challenge: Tackling Complex Credit Loss Rules
The organization needed to implement ASC 326, which required recalculating how they measured credit losses on accounts receivable and notes receivable. The challenge involved identifying which receivables were impacted by the new standard—particularly distinguishing between third-party and related-party receivables.
They also needed to assess the collectability of receivables from prior periods to establish the correct year-end CECL allowances. With the new standard affecting multiple entities within the company’s group, the process had to be precise and comprehensive to ensure compliance.
The Solution: Expert Analysis and Tailored Implementation
Solaris conducted a thorough review of ASC 326 requirements and determined their applicability across the organization’s group of entities. Focusing on third-party receivables, Solaris analyzed the aging of accounts and notes receivable as of December 31, 2023, and March 31, 2024, to assess collectability. Working closely with the company’s management, Solaris established accurate year-end CECL allowances and prepared a technical memo summarizing the implementation.
"Navigating ASC 326 felt overwhelming, but Solaris made it manageable. Their guidance gave us clarity, and we sailed through the audit with confidence.” - Victoria, Corporate Controller, Non-profit
The Impact: Seamless Compliance and Audit Success
With Solaris’ guidance, the company successfully adopted the ASC 326 CECL model. The implementation was reviewed by management and external auditors, with no corrective actions required. Non-profit’s financial reporting was not only compliant but also better positioned for future audits.
Technical Accounting
Thanks to Solaris’ expert support, the company confidently implemented ASC 326, ensuring accurate financial reporting and a smooth audit process.
