CPA Exam - FAR (Financial Accounting and Reporting)Not-for-Profit EntitiesMedium
A not-for-profit entity relies heavily on volunteers for its administrative and program services. Which of the following volunteer services would most likely be recognized as a contribution and recorded at fair value?
- AStudents assisting with general office duties, such as filing and answering phones, under supervision.
- BCommunity members participating in a weekend park cleanup event.
- CVolunteers helping with a one-day fundraising gala, serving food and greeting guests.
- DA retired CPA performing monthly bookkeeping services that would otherwise be paid for.
Show answer & explanationAnswer & explanation
Correct answer: D. A retired CPA performing monthly bookkeeping services that would otherwise be paid for.
Volunteer services are recognized as contributions if they (1) create or enhance nonfinancial assets or (2) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. A retired CPA performing bookkeeping services meets the specialized skills criterion.
Why the other options are wrong
- A. These are general administrative duties that do not require specialized skills and are often performed by entry-level staff or interns, not necessarily requiring purchase if not donated.
- B. These are general services that do not require specialized skills nor create or enhance nonfinancial assets for the NFP.
- C. These general services do not require specialized skills and would likely not be purchased if not donated.
Recognized Volunteer Services
Volunteer services that are recorded as contributions and expenses by a not-for-profit organization because they meet specific criteria.
- Must create or enhance nonfinancial assets.
- OR require specialized skills (e.g., accounting, legal, medical).
- AND would typically be purchased if not donated.
Memory trick: Skills or Stuff: if it's either, it's recorded.