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Not-for-Profit Advisory Committee Notes – July 21, 2020

The Not-for-Profit Advisory Committee’s purpose is to assist the Accounting Standards Board (AcSB) on maintaining and improving the accounting standards for not-for-profit organizations (NFPOs) in Part III of the CPA Canada Handbook – Accounting and in identifying the need for non-authoritative guidance about the standards. The Committee makes recommendations to the AcSB but is not authorized to interpret or provide authoritative guidance on accounting standards for NFPOs.

This document has been prepared by the staff of the AcSB and is based on discussions during the Committee’s meeting. The meeting notes do not necessarily represent the views of the AcSB and nothing in them constitutes authoritative guidance on acceptable or unacceptable application of accounting standards for NFPOs. Only the AcSB can make such a determination.

Implementation of Accounting Standards for Not-for-Profit Organizations (NFPOs) during the COVID-19 Pandemic 

The Not-for-Profit Advisory Committee discussed financial reporting issues related to the effects of COVID-19 including accounting for lease modifications, impairment, and other issues. The Committee did not recommend any standard-setting action at this time. In addition, the Committee advised the Board of the following:

  • COVID-19-related rent concessions are not expected to place a significant financial reporting burden on NFPOs as capital leases are not common in practice unlike for private enterprises.
  • Organizations may face challenges in assessing impairment and this may be an item for the Committee to discuss at a later date.
  • Disclosure related to the effects of the COVID-19 pandemic is an area where implementation support could be beneficial.

The AcSB will consider the Committee’s comments at the Board meeting on September 9, 2020.

Cloud Computing Arrangements

The Committee provided feedback to the AcSB on the issues to be addressed relating to cloud computing arrangements. The Committee also discussed the research findings on accounting for these arrangements in other jurisdictions.

The AcSB will consider the Committee’s comments, as well as comments received from its Private Enterprise Advisory Committee, at the Board meeting on September 9, 2020.


The Committee discussed stakeholder feedback on the Exposure Draft, “Combinations – Initial Measurements and Related Disclosures.” The Committee advised the AcSB to:

  • add a reference to Section 1582, Business Combinations, to account for a for-profit enterprise contributed to a NFPO and to clarify if goodwill is recorded;
  • provide an exception from the acquisition method when NFPOs under common control combine; and
  • require measurement of deferred contributions and deferred capital contributions at fair value for an acquired NFPO.

The Committee also recommended the AcSB revise the criteria to distinguish a merger from an acquisition and the related illustrative examples by amending:

  • criterion (b) to include that all parties have meaningful participation in negotiations;
  • criterion (e) to reflect that if all parties have a significant decline or planned significant decline in client communities served, the combination can still be accounted for as a merger;
  • Illustrative Example 2 to demonstrate that internal communications are relevant in assessing if either party to a combination is characterized as the acquirer or acquiree; and
    Illustrative Example 3 to demonstrate how consideration can flow to a third party.

The AcSB will consider the Committee’s comments at the Board meeting on September 9, 2020.

Other Topics

The Committee also discussed the results of its member-feedback survey for the 2019-2020 fiscal year to assess the volunteer’s level of satisfaction. The survey results indicated an improvement compared to the previous year. No further comments were raised by Committee members.