by Brittany Powell
In April 2013, FASB issued ASU 2013-06 – Not-for-Profit Entities (Topic 958): Services Received from Personnel of an Affiliate which requires not-for-profit organizations to recognize contributed services received from an affiliate that directly benefit the not-for-profit entity. This means that a not-for-profit entity may have to record services provided by an affiliate that the affiliate does not charge the recipient not-for-profit entity for. According to ASU 2013-06, contributed services should be recognized if they meet one of the following criteria:
- The services provided “create or enhance nonfinancial assets”, or
- The services provided “require specialized skills, are provided by individuals possessing those skills, and typically need to be purchased if not provided by donations.”
Typically, in accordance with ASU 2013-06, the contributed services should be recorded “at the cost recognized by the affiliate for the personnel providing those services.” However, if recording the services at cost would significantly misstate the value of the services received, ASU 2013-06 allows the not-for-profit entity to elect to record the contributed services at either cost or at fair value.
ASU 2013-06 will be effective for fiscal years beginning after June 15, 2014, or in other words beginning with fiscal year ended June 30, 2015 for not-for-profit entities with a June 30 year-end. Early adoption of ASU 2013-06 is permitted.
With the approaching implementation date of ASU 2013-06, please contact our office with any questions regarding the application of ASU 2013-06 or its applicability to your not-for-profit organization.