ASNPO Contributions – Revenue Recognition and Related Matters (Possible Amendments to Sections 4400, 4410 and 4420) [ED]

Comment period ended on September 30, 2023

Next steps:

The AcSB will continue to review the feedback on the Exposure Draft in 2024

Last up­dated:

December 2023

Overview

This project has been 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 project involves:

  1. researching the recognition of revenue from contributions, and
  2. addressing the implications of: (a) eliminating the $500,000 size exemption in Part III of the Handbook that permits non-recognition of tangible and intangible capital assets (Principle 7); and (b) applying the referenced standards in Part II of the Handbook to the presentation of financial statements subject to retaining guidance material in Part III that addresses unique financial statement presentation issues faced by not-for-profit organizations.

On May 19, 2020, the AcSB issued a Consultation Paper to seek input on accounting for contributions and related topics by NFPOs. The existing contributions standards were established in 1996. While the standards have remained largely unchanged since that time, research suggests the landscape for many NFPOs has evolved. This Consultation Paper was issued with an extended comment period to provide stakeholders more time to respond in light of COVID-19. The Board will continue to monitor the environment as it evolves. Stakeholders are encouraged to respond by December 15, 2020. 

On March 30, 2023, theAcSB issued an Exposure Draft entitled “Contributions – Revenue Recognition and Related Matters”.  As detailed in the Exposure Draft, the AcSB proposes to issue a new Section 4411, Contributions Received by Not-for-Profit Organizations and to make amendments to Section 4400, Financial Statement Presentation by Not-for-Profit Organizations, in Part III of the CPA Canada Handbook – Accounting.  Proposed Section 4411 will provide not-for-profit organizations with guidance on accounting for contributions and would replace Section 4410, Contributions – Revenue Recognition and Section 4420, Contributions Receivable. Comments on the Exposure Draft were due by September 30, 2023.

In December 2023, the Not-for-Profit Advisory Committee discussed feedback on the project’s purpose and agreed with keeping the objectives: reducing complexity, enhancing the comparability, and improving the usefulness of not-for-profit financial statements by removing the accounting policy choice for recognition of contributions. The Committee also considered whether these objectives would be best met by a single recognition method or by different recognition methods for types of contributions or types of organizations.

The Not-for-Profit Advisory  Committee discussed the impact of the proposed options to address the feedback on the project timeline. The Committee recommended extending the project timeline to allow sufficient time to undertake further research, which includes examining the needs of financial statement users, and to address the feedback.

 

Other de­vel­op­ments

March 2023

On March 30, 2023, the AcSB issued an Exposure Draft entitled “Contributions – Revenue Recognition and Related Matters”.  Comments on the Exposure Draft are due by September 30, 2023.

December 2020

On December 15, 2020, the Accounting Standards Board (AcSB) extended the deadline to submit a comment letter from December 15, 2020 to December 31, 2020 for the Consultation Paper, Contributions – Revenue Recognition and Related Matters.

May 2020

On May 19, 2020, the AcSB issued a Consultation Paper in respect of this project. Stakeholders are encouraged to respond by December 15, 2020.

October 2019

In October 2019, the AcSB staff updated this project to note that the Board expects to issue a Consultation Paper in Q2/2020.

July 2019

In July 2019, the AcSB staff updated this project to note that the Board expects to issue a Consultation Paper in Q1/2020.

May 2015

At its meeting on May 25-26, 2015, this project was approved by the AcSB which will conduct further research on the recognition of revenue from contributions (Principles 1 to 4).  This project will also address the implications of the deliberations relating to the size exemption for capital assets (Principle 7) and financial statement presentation (Principle 13).

 

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