A moment of background, which I know is the completely wrong way to start a blog post – The Journal of Accountancy is one of the major publications in the accounting world. It is the lead magazine of the American Institute of Certified Public Accountants, the largest trade association for CPAs. The AICPA also has significant self-regulatory authority for large parts of the CPA profession.
You might want to get a fresh cup of coffee – this will be a long post.
In its August 2013 edition, the JofA published a major article on valuing donated goods: Gifts-in-kind: What are they worth? How to avoid pitfalls of GIK valuation. The article is by Jennifer Brenner,
…an associate director for financial accounting and operations for World Vision, a relief, development, and advocacy organization that works to fight poverty.
She blogs here. She is speaking on her own behalf, not as a representative of her employer.
I have two general comments before I get into discussing specific ideas mentioned in the article.
First, the article is superb. It provides a very good description of the accounting rules regarding GIK valuation. It uses precise, technical wording while providing a great explanation. If you want to understand the rules for valuing GIK, please study the article.
Second, the article addresses most of the issues that are getting attention in the NPO community. If you want to learn the accounting words you can use to criticize the valuations currently in use, you would do well to study the article. The ironic thing is this article provides a superb path to frame up criticisms of the valuations used today and in the past.
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