The American Institute of Certified Public Accountants recently issued the following Technical Practice Aids (TPAs) related to certain matters of interest to not-for-profit organizations:

• TIS Section 6140.23 Changing Net Asset Classifications Reported in a Prior Year.  In some circumstances, not-for-profit organizations correct net asset classifications previously reported in prior years’ financial statements.  This guidance concludes that individual net asset classes, rather than net assets in the aggregate (total net assets), are relevant in determining whether a not-for-profit organization’s correction of net asset classifications previously reported in prior years’ financial statements is an error in previously issued financial statements.
• TIS Section 6140.24 Contributions of Certain Nonfinancial Assets, Such as Fundraising Material, Informational Material, or Advertising, Including Media Time or Space for Public Service Announcements or Other Purposes.  In some circumstances, entities other than a not-for-profit organization, use for the nor-for-profit organization’s benefit (or provide at no charge to the organization) certain nonfinancial assets that encourage the public to contribute to the not-for-profit organization or help the organization communicate its message or mission.  Examples of such activities include, among others, a radio or television station giving a not-for-profit organization commercial air time at no charge, or a magazine, newspaper, or internet site giving a not-for-profit organization advertising space at no charge.  In circumstances in which fundraising material, informational material, or advertising, including media time or space for public service announcements or other purposes, is used for the not-for-profit’s benefit (or provided to the not-for-profit organization at no charge) and encourages the public to contribute to a not-for-profit organization or help the organization communicate its message or mission, not-for-profit organizations should consider whether they have received a contribution.  The Financial Accounting Standards Board Accounting Standards Codification (ASC) glossary defines a contribution, in part, as “an unconditional transfer of cash or other assets to an entity or a settlement or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner.”  Accordingly, in circumstances in which fundraising material, informational material, or advertising, including media time or space for public service announcements or other purposes, is used for the not-for-profit organization’s benefit (or provided to the organization at no charge) and encourages the public to contribute to a not-for-profit organization or help the organization communicate its message or mission, the not-for-profit organization may have received an unconditional transfer of other assets in a voluntary nonreciprocal transfer from another entity acting other than as an owner.  If a not-for-profit organization has received a contribution, it should be measured at fair value, pursuant to ASC 958-605-30-2, Not-for-Profit Entities – Revenue Recognition, and the related expense, at the time the expense is recognized, should be reported by function, based on the nature of the contributed item.
• TIS Section 6140.25, Multiyear Unconditional Promises to Give—Measurement Objective and the Effect of Changes in Interest Rates.  This pronouncement states that the measurement objective for multiyear unconditional promises to give (both the revenue and contribution receivable) is fair value at initial recognition, consistent with ASC 958-605-30-2.  The measurement objective for contributions receivable at subsequent measurement depends on whether the not-for-profit organization has elected the fair value option, pursuant to ASC 825-10, Financial Instruments.  If the organization has elected the fair value option, pursuant to ASC 825-10, the measurement objective for contributions receivable at subsequent measurement is fair value.  If the organization has not elected the fair value option, the measurement objective for contributions receivable at subsequent measurement is as described in ASC 958-310-35-4, Not-for-Profit Entities –Receivables.

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