Section PS 4260 - Disclosure of related party transactions by not-for-profit organizations
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Effective date: |
January 1, 2012 |
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Published by the PSAB: |
December 2010, except for subsequent amendments |
Overview
This Section establishes disclosure standards for related party transactions in the financial statements of not-for-profit organizations. The measurement of related party transactions is not dealt with in this Section.
Related parties exist when one party has the ability to exercise, directly or indirectly, control, joint control or significant influence over the other. Two or more parties are related when they are subject to common control, joint control or common significant influence. Two not-for-profit organizations are related parties if one has an economic interest in the other. Related parties also include management and immediate family members.
A related party transaction is a transfer of economic resources or obligations between related parties, or the provision of services by one party to a related party, regardless of whether any consideration is exchanged. The parties to the transaction are related prior to the transaction. When the relationship arises as a result of the transaction, the transaction is not one between related parties.
An organization should disclose the following information about its transactions with related parties:
- a description of the relationship between the transacting parties;
- a description of the transaction(s), including those for which no amount has been recorded;
- the recorded amount of the transactions classified by financial statement category;
- the measurement basis used for recognizing the transaction in the financial statements;
- amounts due to or from related parties and the terms and conditions relating thereto;
- contractual obligations with related parties, separate from other contractual obligations;
- contingencies involving related parties, separate from other contingencies.
In September 2016, the PSAB approved the withdrawal of Section 4260. The PSAB intends that, for NFPOs that apply the PSA Handbook with Sections PS 4200 to PS 4270 to prepare their financial statements, Section 2200 would apply to fiscal years beginning on or after April 1, 2017. Earlier adoption is permitted. Section PS 2200 is to applied prospectively.
History of Section PS 4260
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Date |
Development |
Comments |
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December 2010 |
New Section |
This new Section is part of the new accounting standards for government not-for-profit organizations establishing recognition, measurement and disclosure standards. Sections 4200 to 4270 are effective only for government not-for-profit organizations that elect to follow the standards for not-for-profit organizations in the CPA Canada Public Sector Accounting Handbook and are effective for fiscal periods beginning on or after January 1, 2012. |
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September 2016 |
The PSAB intends that, for NFPOs that apply the PSA Handbook with Sections PS 4200 to PS 4270 to prepare their financial statements, Section PS 2200 will apply to fiscal years beginning on or after April 1, 2017. Earlier adoption is permitted. Section PS 2200 is to be applied prospectively. The PSAB issued the filing instruction to withdraw Section PS 4260 from the PSA Handbook in December 2016. |
Note: The above summary does not include details of consequential amendments made as the result of other projects.