Not-for-Profits' reporting costs of soliciting contributed services clarified. (accounting & auditing news).

Questions have arisen about not-for-profit organizations' reporting the costs of soliciting contributed services that do not meet the recognition criteria for contributions in FASB Statement No. 116, Accounting for Contributions Received and Contributions Made. The AICPA's Accounting Standards Executive Committee developed a prospectus for a proposed Statement of Position to address this issue. At its Mar. 27 meeting, the FASB objected to AcSEC's undertaking the project. As announced in the FASB's Action Alert No. 02-14, the FASB believes a project is not necessary to clarify the existing GAAP that addresses this issue.

The FASB believes that paragraphs 26-28 of FASB Statement No. 117, Financial Statements of Not-for-Profit Organizations, require that information about expenses be reported by functional classification and that fund-raising activities include soliciting contributions of services from individuals, regardless of whether those services meet the recognition criteria for contributions in Statement No. 116. The FASB also observed that the definition of fund-raising activities in paragraph 13.35 of the AICPA Audit and Accounting Guide Not-for-Profit Organizations conforms to paragraphs 26-28 of Statement No. 117 and provides that costs of soliciting donors to contribute services (time) should be reported as fund-raising activities regardless of whether those services meet the recognition criteria for contributions in Statement No. 116. (The FASB observed that that conclusion also is articulated in the Mar. 2000 AICPA Technical Practice Aid No. 6140.11, Costs of Soliciting Contributed Services and Time That Do Not Meet the Recognition Criteria in FASB Statement No. 116.)