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Not-for-Profit Organizations in the
Private Sector
Accounting Standards Improvements
December 4, 2015
Paul Hargreaves, Member, AcSB
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Agenda
• Background
• Recent AcSB developments
• Upcoming projects proposed
• Results of AcSB’s Strategic Plan
consultations
• Next steps
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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)
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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
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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
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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
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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
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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
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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
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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
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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
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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)
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Polling Question
Is consistency needed between private and public
sector NFPO standards?
a) Yes, always
b) Yes, in certain circumstances
c) No
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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
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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
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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
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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
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Next Steps
• Not-for-Profit Advisory Committee
– January 2016
• 1st meeting
• Member orientation
• Start Project 1
• AcSB
– March 2016
– Begin deliberating NFPAC recommendations
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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
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Stay Informed
• Website – www.frascanada.ca/standards-for-not-for-profit-
organizations
• Email updates – www.frascanada.ca/subscribe
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subscription
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THANK YOU
Contacts
Grace Lang, Principal, AcSB
Phone: +1 (416) 204-3478
Email: [email protected]
Brian Barrington, Consultant, AcSB
Phone: +1 (416) 204-3436
Email: [email protected]