Cloud Computing Arrangements – NFPAC

Date recorded:

At its meeting on July 26, 2022, the Not-for-Profit Advisory Committee discussed stakeholder feedback on the Exposure Draft. The Committee supported the AcSB’s tentative decisions at its July 20-21, 2022 meeting, specifically discussing the following: (i) The accounting policy choices in the Guideline should be applied consistently to all cloud computing arrangements. (ii) Adding an example to illustrate the accounting for a software module implemented after access to the software has commenced would be helpful. (iii) Providing additional transition relief to address concerns raised by stakeholders. (iv) Deferring the Guideline’s effective date by one year to apply to annual financial statements relating to fiscal years beginning on or after January 1, 2024. The Committee also considered feedback on the presentation of cloud computing expenditures on the balance sheet. In a software service situation, the nature of expenditures on implementation activities is like an operating expense because the entity does not control the software. However, given stakeholders’ concerns with the proposed prepaid expenses presentation, the Committee thought the Board’s tentative decision to create a new balance sheet caption to present capitalized expenditures on implementation activities is appropriate. The AcSB will consider the Committee’s comments at its meeting on September 14-15, 2022.

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

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