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Donated supplies (or materials), services and facilities require additional discussion. If the organization is using the American Institute of Certified Public Accountants (AICPA) Health Care Audit Guide, supplies are recorded at fair market value and reported as non-operating gains (or other operating revenues if material in amount). Under the same Guide, professional services may be recorded at fair market value and reported as non-operating gains (or other revenues) if the services are significant and would be performed by salaried personnel (if not for the volunteer), are subject to the usual employer-employee relationship, and are subject to an objective valuation. The fair market value of donated facilities (e.g., rent-free building) is recognized when placed in service. If a fixed asset is donated, then the timing of revenue and gain recognition is a function of either unrestricted use by the governing board or use by donor-specified restricted purposes. Unrestricted revenues and gains are recognized on an accrual basis while assets restricted for specified purposes are realized in the period they are used for the restricted purpose. If the organization is reporting as a non-government Voluntary Health and Welfare Organization (VHWO), then guidance comes from the Financial Accounting Standards Board, Statement of Financial Accounting Standards No. 116, "Accounting for Contributions Received and Contributions Made," (June 1993). The fair market value of significant donated materials or facilities or other assets used is reported as a contribution when received and as an expense when used or sold. Donated services are reported as contributions and expenses (or assets) if the service (1) created or enhanced a nonfinancial asset or (2) required specialized skills (e.g., accounting, medicine, pluming) provided by individuals with those skills and would have to be purchased typically if the services were not donated. These strict criteria preclude most volunteer services, for example in assisting staff work with agency clients.
Frontier Mental Health Resource Network
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