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Exposure Draft – Withdrawal of Disclosure of Related Party Transactions by Not-for-Profit Organizations, Section PS 4260

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Jan 21, 2016

On January 21, 2016, the Public Sector Accounting Board (PSAB) issued an Exposure Draft proposing to withdraw Section PS 4260, Disclosure of Related Party Transactions by Not-for-profit Organizations, and add a transitional provision to Section PS 2200, Related Party Disclosures. Stakeholders are encouraged to submit their comments by April 29, 2016.

Principle 12 of the Statement of Principles, “Improvements to Not-for-Profit Standards,” jointly issued by PSAB and the Accounting Standards Board in April 2013, states that a not-for-profit organization (NFPO) applying the PSA Handbook including the guidance specific to not-for-profit organizations (the PS 4200 series) should continue to apply Section PS 4260, pending completion of PSAB’s Related Party Transactions project.

PSAB’s Related Party Transactions project was completed and Section PS 2200, Related Party Disclosures, was issued in March 2015. Sections PS 2200 and PS 4260 are very similar. While some minor terminology differences exist, the basic intent of each Section is the same.

While Section PS 2200 does not include the notion of significant influence or economic interest, NFPOs that apply the PSA Handbook including the PS 4200 series can find similar disclosure requirements for these concepts in Section PS 4250, Reporting Controlled and Related Entities by Not-for-profit Organizations.

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 January 1, 2018.  Earlier adoption would be permitted. The Section would be applied prospectively.

Review the Exposure Draft on the PSAB's Web site.

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