In April 2013 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-06, Not-for-Profit Entities (Topic 958) - Services Received from Personnel of an Affiliate >>
The amendments in ASU 2013-06 provide guidance for not-for-profit entities to apply in recognizing and measuring services received from personnel of an affiliate. The amendments apply to not-for-profit entities, including not-for-profit, business-oriented healthcare entities that receive services from personnel of an affiliate that directly benefit the recipient not-for-profit entity and for which the affiliate does not charge the recipient not-for-profit entity.
The ASU establishes that a recipient not-for-profit entity should recognize all services received from personnel of an affiliate that directly benefit the recipient not-for-profit entity. Those services should be measured at the cost of the affiliate for the personnel providing those services. If measuring the services received from personnel of an affiliate at cost will significantly overstate or understate the value of the service received, the recipient not-for-profit entity may elect to recognize that service received at either: (a) the cost recognized by the affiliate for the personnel providing that service or (b) the fair value of that service.
The amendments in the ASU do not address transactions between affiliates for which the affiliate charges the recipient not-for-profit entity at least for the approximate amount of direct personnel costs or the approximate fair value of the services provided.
The guidance in ASU 2013-06 is effective prospectively for fiscal years beginning after June 15, 2014, and interim and annual periods thereafter. A recipient not-for-profit entity may apply the amendments using a modified retrospective approach under which all prior periods presented upon the date should be adjusted, but no adjustment should be made to the beginning balance of net assets of the earliest period presented. Early adoption is permitted.
For more information on this or other accounting and auditing matters applicable to healthcare providers, please contact one of Plante Moran’s healthcare professional standards team members.
