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FASB proposal clarifies Statement no. 116 NPO transfer terms.

FASB Proposal Clarifies Statement no. 116 NPO Transfer Terms

The Financial Accounting Standards Board has proposed an interpretation of FASB Statement no. 116, Accounting for Contributions Received and Contributions Made, that clarifies the terms "agent" "trustee" and "intermediary"

Paragraph 4 of Statement no. 116 says that the statement "does not apply to transfers of assets in which the reporting entity acts as an agent, trustee or intermediary, rather than as a donor or donee." According to Corliss Montesi, FASB assistant project manager, a number of community foundations, foundations related to institutions, federated fundraising organizations and other not-for profit entities had raised questions about the three tern,s. They wanted the FASB to differentiate situations in which an organization acts as an agent, trustee or intermediary from situations in which it acts as a donee and a donor, especially if it solicits and collects cash, products or services and distributes those or income from them to other organizations for charitable purposes.

The exposure draft, Transfers of Assets in Which a Not-for-Profit Organization Acts as an Agent, Trustee, or Intermediary, defines "intermediary" in a narrow sense to refer to situations in which an organization facilitates the transfer of assets between a potential donor and a potential donee but is not itself the recipient of a gift and, therefore, does not record contribution income or expense. According to the ED, "agent" and "trustee" are used to refer to other situations in which an organization acts on behalf of another or for the benefit of another but has not itself received a gift or made a gift. The ED also describes situations in which an organization is presumed to be acting as an agent or trustee.

Although the comment period for this proposal has passed, anyone who wants to know what the FASB has in mind can order copies of the ED (product code no. E135) for $11.50 from the FASB Order Department, 401 Merritt 7, P.O. Box 5116, Norwalk, Connecticut 06856-5116; (203) 847-0700, ext. 555.
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Title Annotation:Financial Accounting Standards Board, not-for-profit organizations
Publication:Journal of Accountancy
Article Type:Brief Article
Date:Mar 1, 1996
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