Accounting Standards for Private Sector Not-for-Profit Organizations

Contributions – Revenue Recognition and Related Matters

Summary

This project is being undertaken in response to the feedback from private sector stakeholders to the April 2013 AcSB/PSAB joint Statement of Principles, “Improvements to Not-for-Profit Standards.”

Staff Contact(s)

Grace Lang, CPA, CA, CPA (Illinois)

Principal, Accounting Standards Board

Project Status

  • Information gathering

    Completed prior to May 2015

  • Approving project

    The AcSB approved the project in May 2015

  • Consulting stakeholders

    Public outreach has occurred since June 2013 and is continuing

    Consultation with the AcSB’s Not-for-Profit Advisory Committee began in January 2016 and is continuing

  • Deliberating feedback
  • Final pronouncement

Meeting & event summaries


January 15, 2019

AcSB Decision Summary – January 15, 2019

The AcSB continued discussing the topics to consider in the development of the consultation paper. The Board considered its Not-for-Profit Advisory Committee’s feedback and discussed alternatives regarding the following contribution types:

  • capital asset contributions;
  • endowments;
  • pledges; and
  • bequests.

The AcSB also discussed a proposed project timeline and will continue its discussions at its May 2019 meeting.

November 14, 2018

Not-for-Profit Advisory Committee Meeting Notes – November 14, 2018

The Committee gave input on the current practice issues, the need for additional guidance, and the various options to account for capital contributions, endowments, pledges, bequests, and contributed materials and services. The AcSB will consider this input in its development of a consultation paper and will discuss at its January 2019 meeting.

October 9, 2018

AcSB Decision Summary – September 20-21, 2018

The Board agreed that input should be sought from stakeholders on the following topics for the consultation paper:

  • restricted contributions;
  • endowment contributions;
  • pledges;
  • bequests;
  • contributed materials and services;
  • $500,000 capital assets size exemption; and
  • presentation.

September 10, 2018

Not-for-Profit Advisory Committee Meeting Notes – September 10, 2018

The Committee agreed with the information on a chart that staff provided, summarizing the types of contributions and their characteristics commonly seen in practice. The Committee gave the staff some editorial suggestions. The AcSB will be discussing this chart at its September meeting. This information will be used to develop further the proposed alternative for the AcSB’s consideration.

July 5, 2018

Not-for-Profit Advisory Committee Meeting Notes – July 5, 2018

The Committee received an overview of the activities completed for the Contributions project to date. The staff informed the Committee that the AcSB plans to issue a consultation paper. The staff noted that:

  • the consultation paper will include the Board’s preliminary views on the issues related to the accounting for contributions and how those issues could be addressed;
  • the consultation paper is not an exposure draft. Rather, its purpose is to obtain input from not-for-profit stakeholders on alternatives that the Board is considering on the accounting for contributions that NFPOs receive; and
  • ·once stakeholder input has been received and analyzed and the Committee’s advice has been sought, the Board will be in a position to determine whether amendments to the contributions standards are necessary. Any proposed amendments to existing standards would then be exposed for comment.

The Committee discussed one proposed alternative the staff proposed for the Board’s consideration: to account for the contribution based on its characteristics. The staff will receive further input from the Committee on additional types of contributions commonly seen in practice and their characteristics. This information will be used to develop further the proposed alternative for the Board’s consideration.

The Committee agreed that any proposed alternative to account for restricted contributions should result in financial statements that are helpful to users. The Committee will continue to discuss proposed alternatives at its next meeting.

January 31, 2018

AcSB Decision Summary – January 18, 2018

The Board considered the research results, which consisted of the following:

  • An analysis of NFPOs’ financial statements to understand the types of contributions organizations receive and the types of organizations that use the deferral method or the restricted fund method.
  • Consultations with NFPOs to understand the terms and conditions of the various types of contributions received and why they use the deferral method or the restricted fund method to account for those contributions.
  • Consultations with individuals that use not-for-profit financial statements, including foundations, government funders, a lender and not-for-profit directors, to understand what information they need to make decisions.

The Board directed staff to begin developing a consultation paper for consideration at a future meeting.

May 16, 2017

AcSB Decision Summary – May 16, 2017

The Board discussed the feedback received to date from its Not-for-Profit Advisory Committee, including input relating to current practice and various options to account for donor stipulated contributions.

The Board also considered the next steps in carrying out research on the recognition of revenue from contributions. The Board decided to:

  • perform additional research to understand better current practices, such as on the types of not-for-profit organizations that use the deferral method or the restricted fund method and why, and the significance of different types of revenue to those organizations; and
  • consult with a range of users of not-for-profit financial statements, including, but not limited to, foundations, government funders and not-for-profit directors to understand what information they need to make decisions.  

The Board directed the staff to assess how this project should consider the research under way on Section 1000, Financial Statement Concepts and Section 3400, Revenue, in its Consultation on Priorities for Part II of the Handbook, and whether a corresponding review of Section 1001, Financial Statement Concepts for Not-for-profit Organizations, in Part III is needed.

December 20, 2016

Not-for-Profit Advisory Committee Notes – November 17, 2016

These meeting notes provide a summary of discussions held.

September 21, 2016

AcSB Decision Summary – September 21-22, 2016

The AcSB continued its discussions on the Not-for-Profit Advisory Committee’s feedback on the scope and timing of projects subsequent to the Accounting Standards Improvements project.  The AcSB directed the staff to:

  • continue the research on contributions;
  • begin research on reporting controlled and related entities by NFPOs, including gathering information on combinations between NFPOs; and
  • continue to monitor issues and concerns on related party transactions of NFPOs.

March 22, 2016

AcSB Decision Summary – March 22-23, 2016

The AcSB also considered the Not-for-Profit Advisory Committee’s feedback on the scope and timing of projects subsequent to the Accounting Standards Improvements Project.  The AcSB agreed to assess at a future meeting:

  • the timing of subsequent projects on reporting controlled and related entities by NFPOs, and contributions;
  • initiating future projects on related party transactions and combinations between NFPOs; and
  • the need to conduct a post implementation review of Section 4470, Disclosure of Allocated Expenses by Not-for-Profit Organizations.

February 29, 2016

Not-for-Profit Advisory Committee Notes – January 6, 2016

February 29, 2016. These meeting notes provide a summary of discussions held.

May 25, 2015

AcSB Decision Summary – May 25-26, 2015

The AcSB reaffirmed its commitment to continue:

  • to maintain a separate set of standards for not-for-profit organizations in the private sector that addresses transactions and circumstances unique to this sector;
  • with the improvements process to review the standards in Part III of the Handbook and update the standards as necessary; and
  • to work in collaboration with the Public Sector Accounting Board (PSAB), with the objective of achieving consistency between private and public sector standards for not-for-profit organizations when appropriate.

The AcSB approved the creation of a standing not-for-profit organizations advisory committee to assist the Board with its standards improvements initiatives, as well as providing input on other standard- setting matters of interest to private sector not-for-profit organizations.  An invitation soliciting interest will be posted shortly at www.frascanada.ca.

The AcSB approved the following projects to address all of the Principles relating to private sector standards that were proposed in the April 2013 joint AcSB/PSAB Statement of Principles, "Improvements to Not-for-Profit Standards."

Accounting Standards Improvements
The AcSB decided to conduct an accounting standards improvements project in two phases.  The first phase of the project will address whether and how to amend the standards regarding the accounting for capital assets other than the size exemption, but including collections of works of arts and historical treasures and the disclosure of related party transactions and allocated expenses (Principles 5, 6, 8, 9, 12 and 15).

The second phase of the project will address whether and how to amend Section 4450, Reporting Controlled and Related Entities by Not-for-Profit Organizations, regarding how to account for controlled not-for-profit organizations and profit-oriented enterprises (Principles 10 and 11).  This phase of the project would also address the proposals related to the presentation and disclosure of expenses (Principle 14).

Contributions – Revenue Recognition and Related Matters
The AcSB approved a project to conduct further research on the recognition of revenue from contributions (Principles 1 to 4).  This project will also address the implications of the deliberations relating to the size exemption for capital assets (Principle 7) and financial statement presentation (Principle 13).

News


January 15, 2019

Meeting Summary

AcSB Decision Summary – January 15, 2019

The AcSB continued discussing the topics to consider in the development of the consultation paper. The Board considered its Not-for-Profit Advisory Committee’s feedback and discussed alternatives regarding the following contribution types:

  • capital asset contributions;
  • endowments;
  • pledges; and
  • bequests.

The AcSB also discussed a proposed project timeline and will continue its discussions at its May 2019 meeting.

November 14, 2018

Meeting Summary

Not-for-Profit Advisory Committee Meeting Notes – November 14, 2018

The Committee gave input on the current practice issues, the need for additional guidance, and the various options to account for capital contributions, endowments, pledges, bequests, and contributed materials and services. The AcSB will consider this input in its development of a consultation paper and will discuss at its January 2019 meeting.

October 23, 2018

News

Webinar – AcSB Domestic Standards Update

October 23, 2018. Are you a Canadian private enterprise or not-for-profit organization, an advisor to one, or a user of financial reports? Learn about upcoming and future changes to Part II and Part III of the CPA Canada Handbook. Tune in on October 30, 2018 (French) or October 31, 2018 (English).

October 9, 2018

Meeting Summary

AcSB Decision Summary – September 20-21, 2018

The Board agreed that input should be sought from stakeholders on the following topics for the consultation paper:

  • restricted contributions;
  • endowment contributions;
  • pledges;
  • bequests;
  • contributed materials and services;
  • $500,000 capital assets size exemption; and
  • presentation.

September 10, 2018

Meeting Summary

Not-for-Profit Advisory Committee Meeting Notes – September 10, 2018

The Committee agreed with the information on a chart that staff provided, summarizing the types of contributions and their characteristics commonly seen in practice. The Committee gave the staff some editorial suggestions. The AcSB will be discussing this chart at its September meeting. This information will be used to develop further the proposed alternative for the AcSB’s consideration.

July 5, 2018

Meeting Summary

Not-for-Profit Advisory Committee Meeting Notes – July 5, 2018

The Committee received an overview of the activities completed for the Contributions project to date. The staff informed the Committee that the AcSB plans to issue a consultation paper. The staff noted that:

  • the consultation paper will include the Board’s preliminary views on the issues related to the accounting for contributions and how those issues could be addressed;
  • the consultation paper is not an exposure draft. Rather, its purpose is to obtain input from not-for-profit stakeholders on alternatives that the Board is considering on the accounting for contributions that NFPOs receive; and
  • ·once stakeholder input has been received and analyzed and the Committee’s advice has been sought, the Board will be in a position to determine whether amendments to the contributions standards are necessary. Any proposed amendments to existing standards would then be exposed for comment.

The Committee discussed one proposed alternative the staff proposed for the Board’s consideration: to account for the contribution based on its characteristics. The staff will receive further input from the Committee on additional types of contributions commonly seen in practice and their characteristics. This information will be used to develop further the proposed alternative for the Board’s consideration.

The Committee agreed that any proposed alternative to account for restricted contributions should result in financial statements that are helpful to users. The Committee will continue to discuss proposed alternatives at its next meeting.

January 31, 2018

Meeting Summary

AcSB Decision Summary – January 18, 2018

The Board considered the research results, which consisted of the following:

  • An analysis of NFPOs’ financial statements to understand the types of contributions organizations receive and the types of organizations that use the deferral method or the restricted fund method.
  • Consultations with NFPOs to understand the terms and conditions of the various types of contributions received and why they use the deferral method or the restricted fund method to account for those contributions.
  • Consultations with individuals that use not-for-profit financial statements, including foundations, government funders, a lender and not-for-profit directors, to understand what information they need to make decisions.

The Board directed staff to begin developing a consultation paper for consideration at a future meeting.

December 11, 2017

News

Webinar – Not-for-Profit Accounting Update

December 11, 2017. Do you represent or advise a Canadian not-for-profit organization, or are you a user of not-for-profit entities’ financial reports? If so, get to know the latest financial reporting developments that may change your financial statements. Tune in on January 23 (English) or January 24 (French).

May 16, 2017

Meeting Summary

AcSB Decision Summary – May 16, 2017

The Board discussed the feedback received to date from its Not-for-Profit Advisory Committee, including input relating to current practice and various options to account for donor stipulated contributions.

The Board also considered the next steps in carrying out research on the recognition of revenue from contributions. The Board decided to:

  • perform additional research to understand better current practices, such as on the types of not-for-profit organizations that use the deferral method or the restricted fund method and why, and the significance of different types of revenue to those organizations; and
  • consult with a range of users of not-for-profit financial statements, including, but not limited to, foundations, government funders and not-for-profit directors to understand what information they need to make decisions.  

The Board directed the staff to assess how this project should consider the research under way on Section 1000, Financial Statement Concepts and Section 3400, Revenue, in its Consultation on Priorities for Part II of the Handbook, and whether a corresponding review of Section 1001, Financial Statement Concepts for Not-for-profit Organizations, in Part III is needed.

December 20, 2016

Meeting Summary

Not-for-Profit Advisory Committee Notes – November 17, 2016

These meeting notes provide a summary of discussions held.

September 21, 2016

Meeting Summary

AcSB Decision Summary – September 21-22, 2016

The AcSB continued its discussions on the Not-for-Profit Advisory Committee’s feedback on the scope and timing of projects subsequent to the Accounting Standards Improvements project.  The AcSB directed the staff to:

  • continue the research on contributions;
  • begin research on reporting controlled and related entities by NFPOs, including gathering information on combinations between NFPOs; and
  • continue to monitor issues and concerns on related party transactions of NFPOs.

March 22, 2016

Meeting Summary

AcSB Decision Summary – March 22-23, 2016

The AcSB also considered the Not-for-Profit Advisory Committee’s feedback on the scope and timing of projects subsequent to the Accounting Standards Improvements Project.  The AcSB agreed to assess at a future meeting:

  • the timing of subsequent projects on reporting controlled and related entities by NFPOs, and contributions;
  • initiating future projects on related party transactions and combinations between NFPOs; and
  • the need to conduct a post implementation review of Section 4470, Disclosure of Allocated Expenses by Not-for-Profit Organizations.

February 29, 2016

Meeting Summary

Not-for-Profit Advisory Committee Notes – January 6, 2016

February 29, 2016. These meeting notes provide a summary of discussions held.

May 25, 2015

Meeting Summary

AcSB Decision Summary – May 25-26, 2015

The AcSB reaffirmed its commitment to continue:

  • to maintain a separate set of standards for not-for-profit organizations in the private sector that addresses transactions and circumstances unique to this sector;
  • with the improvements process to review the standards in Part III of the Handbook and update the standards as necessary; and
  • to work in collaboration with the Public Sector Accounting Board (PSAB), with the objective of achieving consistency between private and public sector standards for not-for-profit organizations when appropriate.

The AcSB approved the creation of a standing not-for-profit organizations advisory committee to assist the Board with its standards improvements initiatives, as well as providing input on other standard- setting matters of interest to private sector not-for-profit organizations.  An invitation soliciting interest will be posted shortly at www.frascanada.ca.

The AcSB approved the following projects to address all of the Principles relating to private sector standards that were proposed in the April 2013 joint AcSB/PSAB Statement of Principles, "Improvements to Not-for-Profit Standards."

Accounting Standards Improvements
The AcSB decided to conduct an accounting standards improvements project in two phases.  The first phase of the project will address whether and how to amend the standards regarding the accounting for capital assets other than the size exemption, but including collections of works of arts and historical treasures and the disclosure of related party transactions and allocated expenses (Principles 5, 6, 8, 9, 12 and 15).

The second phase of the project will address whether and how to amend Section 4450, Reporting Controlled and Related Entities by Not-for-Profit Organizations, regarding how to account for controlled not-for-profit organizations and profit-oriented enterprises (Principles 10 and 11).  This phase of the project would also address the proposals related to the presentation and disclosure of expenses (Principle 14).

Contributions – Revenue Recognition and Related Matters
The AcSB approved a project to conduct further research on the recognition of revenue from contributions (Principles 1 to 4).  This project will also address the implications of the deliberations relating to the size exemption for capital assets (Principle 7) and financial statement presentation (Principle 13).

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.