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ASNPO Accounting Standards Improvements for NFPOs (Sections 4433, 4434 and 4441) [Completed]

Effective date:

New  Sec­tions 4433, 4434 and 4441 ap­ply to an­nual fi­nan­cial state­ments re­lat­ing to fis­cal years be­gin­ning on or af­ter Jan­u­ary 1, 2019. Ear­lier ap­pli­ca­tion is per­mit­ted.

Transitional provisions:

Sec­tions 4433 and 4434 are to be ap­plied prospec­tively and Sec­tion 4441 is to be ap­plied ret­ro­spec­tively.

Last up­dated:

March 2018

Overview

This pro­ject was un­der­taken in re­sponse to the feed­back from pri­vate sec­tor stake­hold­ers to the April 2013 AcSB/PSAB Joint State­ment of Prin­ci­ples, Im­prove­ments to Not-for-Profit Stan­dards (the SOP).

The Basis for Conclusions summarizes considerations that were deemed significant by the members of the AcSB in reaching their conclusions in developing the following sections in Part III of the Handbook:

  • Section 4433, Tangible Capital Assets Held By Not-For-Profit Organizations, replaces Section 4431, Tangible Capital Assets Held By Not-For-Profit Organizations
  • Section 4434, Intangible Assets Held By Not-For-Profit Organizations, replaces Section 4432, Intangible Assets Held By Not-For-Profit Organizations
  • Section 4441, Collections Held By Not-For-Profit Organizations, replaces Section 4440, Collections Held By Not-For-Profit Organizations

 

The new Section 4433, Tangible Capital Assets Held by Not-for-Profit Organizations, requires the application of Property, Plant and Equipment, Section 3061, and Asset Retirement Obligations, Section 3110 in Part II of the Handbook for tangible capital assets held by such organizations, and provides guidance on contributed assets and write-downs of assets.

The main changes from Section 4431 are as follows:

  1. tangible capital assets are written down to fair value or replacement cost to reflect partial impairments when conditions indicate that the assets no longer contribute to an organization's ability to provide goods and services, or that the value of future economic benefits or service potential associated with the tangible capital assets are less than their net carrying amounts;
  2. examples describe conditions that may indicate impairment of tangible capital assets; and
  3. disclosure requirements in Impairment of Long-lived Assets, Section 3063 in Part II, are required for impairments of tangible capital assets.

 

The new Section 4434, Intangible Assets Held by Not-for-Profit Organizations, requires the application of Goodwill and Intangible Assets, Section 3064 in Part II of the Handbook for intangible assets held by such organizations, and provides guidance on contributed assets and write-downs of assets.

The main changes from Section 4432 are as follows:

  1. intangible assets are written down to fair value or replacement cost to reflect partial impairments when conditions indicate that the assets no longer contribute to an organization's ability to provide goods and services, or that the value of future economic benefits or service potential associated with the intangible assets are less than their net carrying amounts;
  2. examples describe conditions that may indicate impairment of intangible assets; and
  3. disclosure requirements in Impairment of Long-lived Assets, Section 3063, in Part II, are required for impairments of intangible assets.

 

The new Section 4441, Collections Held by Not-for-Profit Organizations, requires all collections to be recorded on the statement of financial position at either cost or nominal value.

Section 4441 includes the following additional guidance:

  1. how to determine the cost of collections, including contributed items of a collection;
  2. record an item or an entire collection at nominal value when the accounting policy is to measure collections at cost and cost cannot be reasonably determined for one or more contributed items or collections;
  3. write down collections recorded at cost to their fair value or replacement cost to reflect partial impairment of the collections whenever events or changes in circumstances indicate that its net carrying value may exceed fair value;
  4. examples describe conditions that may indicate impairment of a collection;
  5. how to account for the disposal of items in a collection, including the disposal of items contributed to a collection that are subject to external restrictions; and
  6. disclosures regarding the disposal of collection items, the use of the proceeds from disposed items and the partial write-downs of collections are required.

 

Other de­vel­op­ments

March 2018

On March 1, 2018, new Sections 4433, 4434 and 4441, were issued and included in the CPA Canada Handbook – Part III.

On March 1, 2018, the AcSB released the Basis for Conclusions, which sets out how the AcSB reached its conclusions.

February 2017

On February 1, 2017, the AcSB issued an Exposure Draft proposing to revise and replace Section 4431, Tangible Capital Assets held by Not-for-Profit Organizations, Section 4432, Intangible Assets held by Not-for-Profit Organizations, and Section 4440, Collections held by Not-for-Profit Organizations. Stakeholders are encouraged to submit their comments by May 31, 2017.

August 2016

In August 2016, the AcSB staff updated the status of this project to indicate that the AcSB now expects to issue an Exposure Draft in the fourth quarter of 2016.

May 2015

At its meeting on May 25-26, 2015, this project was approved by the AcSB which will address whether and how to amend the standards regarding the accounting for capital assets other than the size exemption, but including collections of works of arts and historical treasures and the disclosure of related party transactions and allocated expenses (Principles 5, 6, 8, 9, 12 and 15 of the SOP).

 

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