NFPO Combinations – Initial Measurement and Related Disclosures [Completed]

 

Effective date:

The new Section 4449 applies prospectively to annual financial statements relating to fiscal years beginning on or after January 1, 2022. Earlier application is permitted.

Last updated:

March 2021

Overview

At its meeting on June 19, 2018, the AcSB approved a project to provide guidance on the initial measurement of a not-for-profit organization (NFPO) combination and the relevant disclosures.

The project explored the accounting for combinations completed by:

  • NFPOs applying Part III of the CPA Canada Handbook – Accounting; and
  • to the extent transactions with similar characteristics exist, for-profit enterprises applying Part II of the Handbook.

The Board consulted its Not-for-Profit Advisory Committee, Private Enterprise Advisory Committee and other stakeholders that have completed combinations as part of developing the proposals.

On January 15, 2020, the AcSB released an Exposure Draft seeking feedback on its proposals to introduce new guidance on the accounting for a combination of not-for-profit organizations.

The proposals in the Exposure Draft are as follows: (i) the scope of Section 4449 would include a combination involving two or more NFPOs that are unrelated parties or related parties; (ii) the Section would include a set of criteria to determine when a combination is accounted for as a merger or as an acquisition; (iii) the Section would include initial and subsequent measurement, presentation and disclosure guidance on how to account for a merger or acquisition; and (iv) the Section would apply on a prospective basis for combinations occurring on or after January 1, 2022 with early application permitted.

At its meeting on October 27, 2020, after reviewing the feedback on its Exposure Draft, the AcSB approved a new standard, Section 4449, Combinations by Not-for-Profit Organizations. This new Section provides the accounting requirements for the recognition, initial measurement and disclosure of a combination by not-for-profit organizations. The main features of Section 4449 are as follows: (i) the scope of the Section includes combinations involving two or more not-for-profit organizations that are unrelated parties or related parties; (ii) a set of criteria to determine when a combination is accounted for as a merger or as an acquisition; and (iii) guidance on how to account for a merger or an acquisition. Section 4449 applies prospectively to annual financial statements relating to fiscal years beginning on or after January 1, 2022. Earlier application is permitted.

 On March 1, 2021, Section 4449 was added to Part III of the CPA Canada Handbook. 

 

 

Other developments

March 2021

On March 1, 2021, Section 4449 was added to Part III of the CPA Canada Handbook.

April 2020

On April 1, 2020, in light of the evolving uncertainties created by the global COVID-19 crisis and its effects in Canada, the AcSB announced that it has extended the deadline to submit a comment letter from April 14 to May 15, 2020.

January 2020

On January 15, 2020, the AcSB released an Exposure Draft seeking feedback on its proposals to introduce new guidance on the accounting for a combination of not-for-profit organizations. Comments are requested by April 14, 2020.

July 2019

In July 2019, the AcSB staff updated this project to note that the Board expects to issue an Exposure Draft in Q1/2020.

June 2018

At its meeting on June 19, 2018, the AcSB approved a project to provide guidance on the initial measurement of a combination and the relevant disclosures.

 

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.