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Strategic Planning — Not-for-Profit Organizations
Status: AcSB Exposure Draft issued with a comment deadline of July 15, 2010.
Background
Activities to Date
Next Steps
Related Information
Contact Information
In its Strategic Plan, issued early in 2006, the AcSB noted that “one size does not necessarily fit all” and decided to pursue separate financial reporting strategies for public and private enterprises and not-for-profit organizations.
As part of the strategy, the AcSB proposed undertaking an examination of the needs of the financial statement users of not-for-profit organizations and, based on its examination, to determine the most appropriate financial reporting approach.
The AcSB has determined to replace Canadian generally accepted accounting principles with International Financial Reporting Standards (IFRSs) for publicly accountable profit-oriented enterprises. These standards are now included in Part I of the CICA Handbook – Accounting (Handbook).
The AcSB has also developed “made in Canada” financial reporting standards for private enterprises. These standards have been issued as Part II of the Handbook and are available for 2009 reporting for entities that choose to adopt them early. The new standards will be mandatory for private enterprises for years beginning on or after January 1, 2011. The development of the standards is reported on more fully on the AcSB webpage “Strategic Planning — Private Enterprises.”
The AcSB agreed that a not-for-profit organization can apply IFRSs if that approach meets the needs of the users of its financial statements. In agreeing to this approach, the AcSB notes that IFRSs do not, and it is expected will not, contain any 4400 series equivalent ‘add on’ for not-for-profit organizations.
The AcSB also agreed to consider permitting not-for-profit organizations to apply the standards for private enterprises, where standards addressing their unique transactions and circumstances do not exist. Accordingly, the needs of not-for-profit organizations were considered in the development of the private enterprise standards.
It remains the responsibility of the Not-for-Profit Organizations Advisory Committee (AdCom) to make recommendations to the AcSB on the suitability of the standards for not-for-profit organizations. The AdCom is currently assisting the AcSB with its strategy for not-for-profit organizations.
In December 2008, the AcSB and the Public Sector Accounting Board (PSAB) issued a joint Invitation to Comment, “Financial Reporting by Not-for-Profit Organizations,” to solicit the views of not-for-profit organizations’ stakeholders with respect to the strategy.
The AcSB considered the comments received on the Invitation to Comment and has issued an Exposure Draft (ED), “Accounting Standards for Not-for-Profit Organizations,” addressing the future direction for setting standards for the not-for-profit sector and the timing of the changeover from the existing standards in Part V of the Handbook.
For not-for-profit organizations that are not subject to the CICA Public Sector Accounting Handbook, the AcSB proposes a free choice of the accounting standards for not-for-profit organizations which include the 4400 series of Handbook Sections and reference to standards for private enterprises when appropriate, or IFRSs. The PSAB proposes that it adopt a version of the 4400 series of Handbook Sections, appropriately modified to fit with public sector standards, and require government not-for-profit organizations to follow public sector standards.
The AcSB also decided that it should work jointly with PSAB to reconsider the current requirements of the 4400 series of Handbook Sections after the two Boards finalize their respective strategic directions for this sector. In this regard, the Boards plan to appoint a joint task force to develop improved standards for the unique transactions and circumstances of not-for-profit organizations in both sectors. The joint task force will be formed and commence meeting in the fall of this year once the Boards have finalized their approaches to future financial reporting by not-for-profit organizations in both sectors. The Boards are seeking expressions of interest from individuals willing to volunteer to serve on the joint task force. The AdCom will be wound up once its recommendations with respect to comments received on the current Exposure Draft have been submitted to the AcSB.
The AcSB also reaffirmed that the existing accounting standards in Part V of the Handbook will be maintained for use by not-for-profit organizations at least until the new direction for setting standards for private sector organizations has been approved.
After receipt and analysis of comment letters, the AcSB will determine the future direction for financial reporting by not-for-profit organizations in the private sector.
- Exposure Draft, “Accounting Standards for Not-for-Profit Organizations”
- Not-for-Profit Organizations — Future Financial Reporting Directions Update
- Responses to the AcSB/PSAB Invitation to Comment are available here.
- Invitation to Comment, “Financial Reporting by Not-for-Profit Organizations"
Brian Barrington, CA
Consultant, Accounting Standards
Telephone: +1 (416) 204-3436
Fax: +1 (416) 204-3412
Canadian Accounting Standards Board
277 Wellington Street West
Toronto ON M5V 3H2 Canada