FYI Article – Change Is Coming to Accounting Standards for Not-for-Profit Organizations
The Accounting Standards Board (AcSB) has been busy since issuing the April 2013 joint AcSB/Public Sector Accounting Board (PSAB) Statement of Principles, “Improvements to Not-for-Profit Standards.” For example, the AcSB:
- carried out extensive consultations to reach its stakeholders, including several cross-county roundtable meetings as well as various private meetings with interested groups;
- developed its 2016-2021 Strategic Plan, which reaffirms its commitment to retain and improve accounting standards for not-for-profit organizations in Part III of the CPA Canada Handbook – Accounting;
- established its Not-for-Profit Advisory Committee, which provides expertise and input to the AcSB on issues relating to accounting standards for private sector NFPOs; and
- approved three projects: Accounting Standards Improvements for Not-for-Profit Organizations (NFPOs), Contributions — Revenue Recognition and Related Matters, and Reporting Controlled and Related Entities by NFPOs.
These projects address all of the principles relating to private sector standards that were proposed in the Statement of Principles.
As a result of all this activity, the AcSB recently issued its Exposure Draft, “Accounting Standards Improvements for Not-for-Profit Organizations.” The proposals relate to tangible capital assets, intangible assets, works of art, historical treasures and similar items not part of a collection, and collections held by NFPOs.
Who Will the Proposals Affect?
All NFPOs in the private sector that own tangible capital assets, intangible assets or collections may be affected. For example:
- all tangible capital assets, intangible assets, and collections need to be assessed and, if impaired, written down to reflect the decline in their value;
- all collections need to be recorded on the statement of financial position at cost or at nominal value; and
- NFPOs must now consider the guidance on componentization in Section 3061, Property, Plant and Equipment.
The Exposure Draft is open for comment until May 31, 2017. Comments, with specific reasons for the support or objection to the proposals, are especially important.
As always, the AcSB will redeliberate the proposals in light of comments received. Part of the deliberation process includes consultations with its Not-for-Profit Advisory Committee.
Get more information on this project and keep up to date on its developments via Accounting Standards Improvements for Not-for-Profit Organizations project page.
Grace Lang, CPA CA
Principal, Accounting Standards Board
Phone: +1 (416) 204-3478