Joint Not-for-Profit Review

BACKGROUND

The Accounting Standards Board (AcSB) and Public Sector Accounting Board (PSAB) are working together to improve not-for-profit standards to better meet users’ needs.

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Certain not-for-profit standards have requirements that differ from the conceptual frameworks on which Part III of the CPA Canada Handbook – Accounting and the CPA Canada Public Sector Accounting (PSA) Handbook are based. As a result, the two Boards established a Joint Not-for-Profit Task Force to review the standards in the 4400 series of Sections in Part III of the CPA Canada Handbook – Accounting (applicable for not-for-profit organizations in the private sector and established by the AcSB) and the PS 4200 series of Sections in the PSA Handbook (applicable to government not-for-profit organizations and established by PSAB).  

The joint review will result in recommended improvements to those accounting standards, which are used by not-for-profit organizations in both the private and public sectors.

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PROJECT NEWS

PSAB Decision Summary – March 19-20, 2015
PSAB held a discussion with the Accounting Standards Board to consider a number of fundamental issues needing to be addressed prior to initializing specific project-related work. The Boards discussed:

  • the various types of not-for-profit organizations and their diversity within the not-for-profit sector;
  • whether financial statements within the not-for-profit sector need to be comparable regardless of whether the organization operates in the private or public sector;
  • the different priorities facing each Board; and
  • whether they should address the issues raised by respondents together.

The Boards are committed to continuing to provide ongoing communications to inform stakeholders of developments. The AcSB plans to agree on the next steps it will undertake in respect of the standards for not-for-profits in the private sector at its meeting in May 2015.

AcSB Decision Summary – March 18-19, 2015
The AcSB held a discussion with the Public Sector Accounting Board to consider a number of fundamental issues needing to be addressed prior to initializing specific project related work.  The Boards discussed:

  • the various types of not-for-profit organizations and their diversity within the not-for-profit sector;
  • whether financial statements within the not-for-profit sector need to be comparable regardless of whether the organization operates in the private or public sector;
  • the different priorities facing each Board; and
  • whether they should address the issues raised by respondents together.

The Boards are committed to continue to provide ongoing communications to inform stakeholders of developments.  The AcSB plans to agree on the next steps it will undertake in respect of the standards for not-for-profits in the private sector at its meeting in May 2015.

AcSB Decision Summary – February 11, 2015
The AcSB continued its discussion of the key issues raised by respondents to the April 2013 joint AcSB/PSAB Statement of Principles, "Improvements to Not-for-Profit Standards." The AcSB discussed:

  • various approaches for addressing each of the principles; and
  • the next steps to be undertaken, including collaboration with the Public Sector Accounting Board on this topic.

No decisions were made. The AcSB will continue its discussion with the Public Sector Accounting Standards Board in a joint meeting in March 2015.

PSAB Decision Summary – December 15-16, 2014
PSAB discussed the appropriate approach regarding this project from the perspective of serving the public interest. PSAB will continue its discussion with the Accounting Standards Board in a joint meeting in March 2015.

AcSB Decision Summary – December 10, 2014
The AcSB continued its discussion of the key issues raised by respondents to the April 2013 joint AcSB/PSAB Statement of Principles, "Improvements to Not-for-Profit Standards." The AcSB discussed further:

  • the process for addressing each of the principles; and
  • the next steps to be undertaken, including collaboration with the Public Sector Accounting Board on this topic.

No decisions were made.

Webinar – Improvements to Not-for-Profit Standards: Stay Up-to-Date on the Process!
October 29, 2014.  Tune in to this AcSB and PSAB joint webinar on December 2, 2014 (English) or December 11, 2014 (French) to understand the views of stakeholders relating to the Statement of Principles that was issued in April 2013.

PSAB Decision Summary – September 15-16, 2014
PSAB considered key issues raised by public sector stakeholders in their responses to its Statement of Principles, “Improvements to Not-for-Profit Standards.” PSAB also discussed the issues identified in the June 2014 joint meeting with the Accounting Standards Board.

PSAB recognized that some of the issues raised by respondents are not unique to government not-for-profit organizations and require broader public sector considerations. There are areas where improvements can be made. PSAB noted that it needs to consider fundamental questions in the context of the public interest.

AcSB Decision Summary – September 3-4, 2014
The AcSB continued its consideration of written responses to the April 2013 joint AcSB/PSAB Statement of Principles, "Improvements to Not-for-Profit Standards." The Board discussed:

  • overarching principles and questions to be considered and additional information to be gathered as the project progresses; and
  • next steps to be undertaken, including collaboration with the Public Sector Accounting Board on this topic.

No decisions were made.

AcSB and PSAB Decision Summaries – June 17, 2014
The AcSB and PSAB met together to begin the process of jointly considering written responses to their April 2013 Statement of Principles, “Improvements to Not-for-Profit Standards.”  The Boards:

  • began the process of assessing the overarching principles and questions that need to be considered and additional information that should be gathered as the Boards progress with the project; and
  • discussed next steps and how they can continue to collaborate on this topic.

No decisions were taken.  The Boards will provide ongoing communications to inform stakeholders of developments.

AcSB Decision Summary – May 14-15, 2014
The AcSB began its consideration of written responses to the Statement of Principles, “Improvements to Not-for-Profit Standards.”  No decisions were taken. The AcSB plans to meet with the Public Sector Accounting Board in June 2014 to identify how the Boards might proceed jointly on future work on not-for-profit organization issues.

AcSB Decision Summary – March 18-19, 2014
Staff provided the AcSB with an update on:

  • the program of outreach activities undertaken in conjunction with the joint AcSB/PSAB Statement of Principles, “Improvements to Not-for-Profit Standards,” including a series of 13 roundtable meetings held across Canada;
  • the nature of the feedback received at the AcSB’s roundtables;
  • consultations to gain a better understanding of who uses the financial statements of not-for-profit organizations and how financial statement information is used; and
  • the possible next steps in the joint project.

The AcSB will begin its consideration of written responses to the Statement of Principles at its May meeting. The AcSB plans to meet with PSAB in June 2014 to identify how the Boards might proceed jointly on future work on not-for-profit organization issues.

AcSB Decision Summary – January 15, 2014
The comment period for the joint AcSB/PSAB Statement of Principles, “Improvements to Not-for-Profit Standards,” closed on December 15, 2013.

The AcSB and PSAB received a substantial number of responses from a broad variety of stakeholders in the private and public sectors. Stakeholders have provided the Boards with a variety of carefully considered positions on each of the principles described in the Statement of Principles. Out of the 290 comment letters received to date, approximately 190 provided responses to the AcSB, 45 to PSAB and 55 to both Boards. It will take some time for the Boards to analyze the responses fully, confer with the AcSB/PSAB Joint Not-for-Profit Task Force, determine what other outreach may be needed to ensure a full understanding of the comments received and make any decisions as to future directions that each Board may wish to take with respect to next steps. Given the volume of input received, this is not expected to occur until later this year.

Roundtable Discussions – Stakeholders’ Views Sought on Proposals on Improvements to NFPO Standards
October 21, 2013. Register to attend the AcSB’s roundtable discussions this fall to share your views on the Statement of Principles, “Improvements to Not-for-Profit Standards,” issued jointly by the AcSB and the PSAB.  The proposed changes are significant and will affect a wide range of stakeholders.

Statement of Principles – Improvements to Not-for-Profit Standards
July 15, 2013. The deadline for comments has been extended to December 15, 2013 from September 15, 2013 to allow sufficient time for consultation with stakeholders.

AcSB Decision Summary – July 10, 2013
In conjunction with the Public Sector Accounting Board, the AcSB decided to extend the comment period on the Statement of Principles, “Improvements to Not-for-Profit Standards” to December 15, 2013 from September 15, 2013 to allow sufficient time for consultation with stakeholders.

Webinar – Improvements to Not-for-Profit Standards 
June 5, 2013. Tune in to this webinar on June 25 (English) or July 11 (French) to get details about the AcSB and PSAB’s jointly-issued Statement of Principles on not-for-profit standards. The webinar will help you prepare your response to the proposals, due September 15, 2013.

Statement of Principles – Improvements to Not-for-Profit Standards
April 10, 2013. The AcSB and PSAB have issued a Statement of Principles that proposes to improve the existing standards for financial reporting by NFPOs in their respective Handbooks.  Stakeholders are encouraged to submit their comments, on the form provided, by September 15, 2013.

PSAB Decision Summary – December 13-14, 2012
PSAB reviewed a second draft of a statement of principles for changes to the standards for not-for-profit organizations in the “PS 4200 series” of Sections. Both the Accounting Standards Board and PSAB agree with the principles but requested that further work on the supporting text be provided. The proposed principles for not-for-profit organizations in the public sector:

  • recognize contributions consistent with the liability definition;
  • provide guidance on recognition and disclosure of contributed materials and services;
  • report tangible capital assets consistent with Section PS 3150, Tangible Capital Assets, including removal of the size exemption for reporting tangible capital assets;
  • account for controlled entities consistent with Section PS 1300, Government Reporting Entity;
  • present financial statements in accordance with Section PS 1201, Financial Statement Presentation; and
  • report intangibles, works of art and historical treasures (including collections), and economic interests consistent with the PS 4200 series until further consideration can be performed by PSAB on these matters.

The Boards expect to approve the final text in early 2013.

AcSB Decision Summary – December 12, 2012
Employee Future Benefits
The AcSB considered comments relating specifically to not-for-profit organizations (NFPOs) on its January 2012 Exposure Draft, “Employee Future Benefits.” The AcSB decided that NFPOs should apply the new standard, when issued, except that they should:

  • present remeasurement and other items as a separate component of changes in net assets; and
  • continue to make disclosures substantially similar to the disclosures required by Section 3461, Employee Future Benefits, in the pre-changeover standards in Part V of the Handbook. 

The AcSB plans to issue an exposure draft on these matters in 2013.

In the interim, the AcSB has decided to provide NFPOs applying Part III of the Handbook with the option to continue to apply the requirements in Section 3461, Employee Future Benefits, in Part V. That Section will be included in Part III of the Handbook by reference for that purpose. Organizations choosing to adopt the corresponding standard in Part II of the Handbook would likely be required to make further changes when the AcSB adopts a final standard on reporting employee future benefits by NFPOs. Accordingly, the AcSB encourages NFPOs to continue to provide the full disclosures required by Section 3461 in Part V.

Proposed Amendments to Not-for-Profit Accounting Standards
The AcSB completed its discussion of a statement of principles proposing changes to the current standards dealing with the unique circumstances of not-for-profit organizations. The main topics covered by the statement of principles are:

  • contributions;
  • tangible capital assets;
  • intangible assets;
  • tangible and intangible capital assets size exemption;
  • works of art, historical treasures and similar items;
  • controlled and related entities; and
  • financial statement presentation.

The statement of principles is being developed jointly with the Public Sector Accounting Board, which also completed its discussion of the document at its December 13-14, 2012 meeting.

The two Boards are proceeding to develop covering material for the statement of principles and expect to approve the final text in early 2013, after which it will be issued for public comment. The statement of principles will be issued as a comprehensive package but the AcSB will consider subsequently how the resulting proposed standards should be developed and phased in.

AcSB Decision Summary – November 7-8, 2012
Employee Future Benefits
The AcSB’s January 2012 Exposure Draft, “Employee Future Benefits,” proposed amendments to standards for private enterprises that have the potential to affect some not-for-profit organizations applying Part III of the CICA Handbook – Accounting.  The AcSB considered comments received on the Exposure Draft relating specifically to not-for-profit organizations.  Discussion of the application of the revised standard to not-for-profit organizations will continue at the AcSB’s December 12, 2012 meeting.

Proposed Amendments to Not-for-Profit Accounting Standards
The AcSB held a second discussion of a statement of principles proposing changes to the current standards dealing with the unique circumstances of not-for-profit organizations. The statement of principles is being developed jointly with the Public Sector Accounting Board (PSAB). Discussion will continue at the meetings of the AcSB and PSAB on December 12 and 13, 2012, respectively.

PSAB Decision Summary – September 20-21, 2012
PSAB held its first discussion of a statement of principles proposing changes to the standards for not-for-profit organizations in the “PS 4200 series” of Sections. Discussion will continue at PSAB’s December 2012 meeting. The main topics covered by the proposed statement of principles discussed are:

  • contributions;
  • tangible capital assets;
  • intangible assets;
  • tangible and intangible capital assets size exemption;
  • works of art, historical treasures and similar items;
  • controlled and related entities; and
  • financial statement presentation.

The statement of principles is being developed jointly with the Accounting Standards Board. PSAB agreed in principle with exposing the statement of principles subject to a further articulation of various implementation issues. When the two Boards have approved the statement of principles, it will be issued for public comment.

AcSB Decision Summary – September 5-6, 2012
The AcSB held its first discussion of a statement of principles proposing changes to the current standards dealing with the unique circumstances of not-for-profit organizations. Discussion will continue at the AcSB’s November 7-8, 2012 meeting. The main topics covered by the proposed statement of principles discussed are:

  • contributions;
  • tangible capital assets;
  • intangible assets;
  • tangible and intangible capital assets size exemption;
  • works of art, historical treasures and similar items;
  • controlled and related entities; and
  • financial statement presentation.

The statement of principles is being developed jointly with the Public Sector Accounting Board, which will have its first discussion of the document at its September 20-21, 2012 meeting.

When the two Boards have approved the statement, it will be issued for public comment.

PSAB Decision Summary – March 21-23, 2012
PSAB received an update on the activities of the Joint Not-for-Profit Task Force of the Accounting Standards Board and PSAB. PSAB supported the Task Force continuing to develop a comprehensive approach to soliciting stakeholder input on proposed amendments to the standards for not-for-profit organizations in the PS 4200 series of Sections. The proposed approach will be presented to PSAB later this year.

AcSB Decision Summary – March 20-21, 2012
The AcSB discussed an update on the activities of the Joint Not-for-Profit Task Force of the AcSB and the Public Sector Accounting Board. The AcSB supported the Task Force continuing to develop a comprehensive approach to soliciting stakeholder input on proposed amendments to the standards for not-for-profit organizations. The proposed approach will be presented to the AcSB later this year.

AcSB Decision Summary – May 10, 2011
The AcSB discussed whether to develop guidance for combinations of not-for-profit organizations.

The AcSB noted that Section 1582, Business Combinations, in the pre-changeover standards of the Handbook does not apply to a combination between not-for-profit organizations or an acquisition of a profit-oriented enterprise by a not-for-profit organization.  Part III of the Handbook will be amended to clarify that Section 1582, Business Combinations, in Part II also does not apply to those transactions.

The AcSB decided to ask the AcSB/PSAB Joint Not-for-Profit Task Force to consider combinations of not-for-profit organizations as part of its program of improvements to the existing standards for the not-for-profit sector.  In the interim, the AcSB notes that other sources of GAAP (for example, US and UK accounting literature), include standards that specifically address combinations of not-for-profit organizations. Those other sources of GAAP may be applied in appropriate circumstances pursuant to Section 1100, Generally Accepted Accounting Principles, in the pre-changeover standards of the Handbook.

 

Disclaimer: This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal ballot process.