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Business and Policy Areas
Business and Policy Areas

FASB Issues Proposed Guidance on Personnel Services Received from an Affiliate

August 10, 2012

In an effort to resolve diversity in practice regarding how not-for-profit organizations (NFPs) treat personnel services received from an affiliate, the Financial Accounting Standards Board (FASB) recently issued proposed guidance for public comment.

The proposal, "Personnel Services Received from an Affiliate for Which the Affiliate Does Not Seek Compensation (Topic 958)," would require an NFP to recognize the value of services provided by an affiliate's personnel. The value would equal the cost recognized by the affiliate for the personnel providing the services. The proposed guidance would apply only to the NFP's standalone financial statements.

The key points of the proposed guidance are:

  • The affiliate must directly or indirectly control, be controlled by, or be under common control with the NFP receiving the services.
  • The affiliate must not intend to seek compensation from the NFP for the personnel services provided.
  • The NFP receiving the services must produce standalone financial statements.
  • Services of any nature (administrative, specialized, etc.) must be recognized.

The proposed ASU is not expected to have a significant impact on independent institutions. However, NACUBO would like to hear from institutions that may be affected by the proposed guidance. The comment deadline is September 20, 2012.


Sue Menditto
Director, Accounting Policy