Not-for-Profit Organizations in the

Private Sector

Accounting Standards Improvements

December 4, 2015

Paul Hargreaves, Member, AcSB

Agenda

• Background

• Recent AcSB developments

• Upcoming projects proposed

• Results of AcSB’s Strategic Plan

consultations

• Next steps

Background

1996

NFP accounting standards originally adopted

2007

AcSB issued Exposure Draft proposing

amendments to 4400 Series of Handbook

2010

AcSB & PSAB issued Exposure Drafts

outlining strategies for NFPOs

2013

AcSB & PSAB issued Joint Statement

of Principles (SOP)

Progress Made

• Analyzed and deliberated comments on

Joint SOP

– Tremendous response received

• 292 comment letters

• Cross Canada roundtables

• International research

– Global environment for NFPO accounting

standards

• Private vs public sector

Recent AcSB Developments Relating to NFPOs

• AcSB will continue to improve accounting

standards for NFPOs in private sector

• Symmetry with public sector standards is

desirable when user needs are aligned

• Continue to look at global environment for

NFPO sector and examine best practices

Not-for-Profit Advisory Committee

• New permanent AcSB committee

– Advisory role

– Paul Hargreaves, AcSB member, appointed

as Chair

• Recruitment process

– Online solicitation for members

• 65 applications received

– Associates list for candidates not selected

Not-for-Profit Advisory Committee

• Responsibilities

– Re-examine current NFPO environment

– Identify new topics

– Recommend changes to existing NFPO

standards to meet users needs

– Develop proposed changes for approval by

AcSB

– Provide advice to AcSB

Not-for-Profit Advisory Committee

• AcSB approved range of 15-20 members,

plus Chair

• Balance of member backgrounds:

– users that provide resources to not-for-profit

organizations

– preparers and auditors of not-for-profit

financial statements

– mix of geography and gender

Not-for-Profit Advisory Committee Members

Paul Hargreaves (Chair) -BC Dairy Association

Sally An Lynne Hately

- PWC - Nature Conservancy of Canada

M. Denise Arsenault Pierre G. Piche

- Toronto Foundation - University of Toronto

C. Mary H. Best Roy Reeves

- Arsenault Best Cameron Ellis - Shaw Festival Theatre

Pat Bradley Michel Rioux

- Ontario Arts Council - Deloitte

Diana Brouwer Brian Szabo

- Ernst & Young - KPMG

Andrew Cawse Erica Teklits

- Law Society of Upper Canada - BDO Canada

Stephanie Chung Deryck Williams

- Pennylegion Chung - Grant Thornton

Betty Ferriera Jocelyn Zurakowski

- ReStructure Consulting - United Way Saskatoon & Area

Process for Modifying NFP Standards in Part III

• Maximum benefit to users at minimum cost to preparers

• Developed based on Part II of Handbook

• Part III requires application of Part II for topics not

addressed in Part III

• Any change to Part II must be assessed

AcSB Strategic Plan

• Maintain separate set of standards to

address specific needs of NFPOs

– “One size does not fit all”

• Direct NFPOs to Part II for items not

specific to NFPOs

• Continue with improvements process to

review Part III standards and update as

necessary

Results of AcSB Strategic Plan Consultations

• AcSB proposal for NFPOs

– Asks whether there is a need for consistency

between private and public sector NFPO

accounting standards

• Feedback from public consultations and

comment letters

– Views are fairly evenly split

– Consistency appropriate in certain circumstances

but not always (depends on users needs)

Polling Question

Is consistency needed between private and public

sector NFPO standards?

a) Yes, always

b) Yes, in certain circumstances

c) No

Standard-setting Process for Upcoming Projects

Initial Research

Discussion Paper

Adding a standards-

level project to the work

plan

Develop standard: Exposure

Draft

Final Standard

Post-implement-

ation Review

3rd

Project

1st and

2nd

Project

s

Upcoming NFPO Projects

• Project 1 (Short-Term) – Recognize partial write-downs of tangible and

intangible assets

– Recognize collections at cost or nominal value

– Maintain Part III standards for:

• Works of art, historical treasures etc. not part of a collection

• Related party transactions

• Allocated expenses (fundraising and general support costs

Upcoming NFPO Projects

• Project 2 (Medium-Term)

• Requires more work on whether and how to proceed

– Consolidate controlled NFPOs

– Equity account for controlled profit oriented enterprises

– Present expenses by function and disclose by object

– Present total fundraising and support expenses or disclose in notes

Upcoming NFPO Projects

• Project 3 (Long-Term)

– Contributions- Revenue Recognition and Related Matters

– Research project to obtain understanding of current requirements in other jurisdictions and any options proposed.

– Also includes capital asset size test exemption and financial statement presentation

Next Steps

• Not-for-Profit Advisory Committee

– January 2016

• 1st meeting

• Member orientation

• Start Project 1

• AcSB

– March 2016

– Begin deliberating NFPAC recommendations

Recent Changes to Part II

• 2015 Annual Improvements – Final amendments issued October 1, 2015

– Disclosures • Business Combinations

• Investments and Leases

• Property, Plant and Equipment

– Employee Future Benefits

• Keep up-to-date on Part II – www.frascanada.ca/standards-for-private-

enterprises • November 18, 2015 webinar

Stay Informed

• Website – www.frascanada.ca/standards-for-not-for-profit-

organizations

• Email updates – www.frascanada.ca/subscribe

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THANK YOU

Contacts

Grace Lang, Principal, AcSB

Phone: +1 (416) 204-3478

Email: glang@cpacanada.ca

Brian Barrington, Consultant, AcSB

Phone: +1 (416) 204-3436

Email: bbarrington@cpacanada.ca