At its meeting on February 25, 2021, the Not-for-Profit Advisory Committee (NFPAC) received an update on the AcSB’s recent discussions on the accounting for cloud computing arrangements. The Committee noted that the guidance needs to be clarified for both the customer’s accounting for fees paid in a cloud computing arrangement and the related implementation costs because NFPOs refer to financial statement concepts to determine the accounting in the absence of specific guidance.

The Committee also noted that some cloud computing contracts are complex, and the terms and conditions of the arrangement may not be transparent or may change as the cloud computing solution is implemented. The Committee also provided feedback on the staff’s analysis of different approaches to account for implementation costs incurred in a cloud computing arrangement that is a service contract. The AcSB will consider the Committee’s feedback, as well as feedback from its Private Enterprise Advisory Committee, in March 2021.

Review the summary of discussions on the AcSB's Web site.

At its meeting on February 25, 2021, the Not-for-Profit Advisory Committee (NFPAC) received an update on stakeholder feedback received on the Consultation Paper. The Committee discussed feedback from the Consultation Paper on the topic of asset recognition, including pledges and the capital asset recognition exemption. Regarding pledges, the Committee advised the AcSB:

1. Most NFPOs are not currently recognizing pledges. The ones that do have a history of collection and can estimate a provision for uncollectable amounts;
2. The nature of the pledge may affect whether it is recognized as an asset; and
3. Disclosure of additional information related to pledges may be useful to users; however, this information could be provided in documents other than the annual financial statements.

Regarding the capital asset recognition exemption, the Committee advised the Board:

1. Removing the capital asset recognition exemption would have disproportionately negative impacts on smaller NFPOs;
2. If the capital asset recognition exemption is retained, the information that is required to be disclosed about capital assets is sufficient;
3. If the capital asset recognition exemption is retained, it should be based on revenue, but the current threshold should be adjusted for inflation; and
4. A simplified transitional provision would be helpful for organizations that previously applied the exemption and are recognizing assets for the first time.

The AcSB will consider the Committee’s comments at the Board meeting on March 23-24, 2021.

Review the summary of discussions on the AcSB's Web site.