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Section 1501 - First-time adoption by not-for-profit organizations

Effective date:

January 1, 2012, except for subsequent amendments.

Published by the AcSB:

December 2010


Section 1501 First Time Adoption by Not-for-Profit Organizations, provides guidance on preparing the first set of financial statements under Part III of the Handbook - Accounting Standards for Not-For-Profit Organizations (ASNPO). The overall approach under Section 1501 is to apply ASNPO on a fully retrospective basis. This means that all comparative amounts presented in the first set of financial statements prepared under ASNPO have to be restated in accordance with the new standards and presented as if the entity had always applied these standards.

In some cases, the costs of full retrospective application may outweigh the benefits. As a result, Section 1501 provides some specific "exemptions" from the retrospective application requirement. An organization may elect to apply one or more of these exemptions. The exemptions available relate to standards dealing with:

  • business combinations
  • fair value
  • employee future benefits
  • cumulative translation differences
  • financial instruments and 
  • asset retirement obligations

Section 1501 also contains certain "exceptions" or specific prohibitions from retrospective application of some aspects of other standards. These are for areas that would involve hindsight. These exceptions relate to: de-recognition of financial assets and liabilities, hedge accounting, estimates and non-controlling interests.

To ensure that users can understand the changes when the new standards are adopted, Section 1501 requires an organization to present an "opening balance sheet" at the date of transition (i.e. the beginning of the earliest period for which an organization presents full comparative information under ASNPO). An organization shall use the same accounting policies in its opening statement of financial position and throughout all periods presented in its first financial statements presented using ASNPO, being those standards in effect at the end of the year of adoption.

Section 1501 prescribes that when an organization has to change its accounting in order to conform with the ASNPO standards, it records an adjustment for the difference directly in net assets at the date of transition. In the year the ASNPO standards are adopted, the organization discloses the amount of each charge to net assets at the date of transition, the reason for the charge as well as a reconciliation of the excess of revenue over expenses in the mostly recent previously issued financial statements to its excess of revenues over expenses under ASNPO for the same period.

History of Section 1501




December 2010

Part III of the CPA Canada Handbook  issued

Effective for fiscal years beginning on or after January 1, 2012. Earlier application permitted.

February 2011

New optional accounting policy

Paragraph .15 has been amended to permit an organization that accounts for its defined benefit plans using the deferral and amortization approach described in Section 3461, Employee future benefits, in Part II of the Handbook, to carry forward at the date of transition to accounting standards for not-for-profit organizations any unrecognized actuarial gains and losses and past service costs that were determined previously in accordance with Section 3461, Employee future benefits, in Part V of the Handbook, or an equivalent basis of accounting such as IAS 19, Employee Benefits in Part I of the Handbook.

Effective for fiscal years beginning on or after January 1, 2012.

This has been superseded the December 2013 amendment.

March 2012

Annual improvements

This Section has been amended as follows:

  • The paragraphs related to business combinations have been deleted (paragraph .11) or amended (paragraph .12) as a result of Section 1582, Business Combinations, in Part II of the Handbook, which does not apply to a combination between not-for-profit organizations, nor does it apply to the acquisition of a profit-oriented enterprise by a not-for-profit organization. Until further guidance is issued that addresses combinations of, or acquisitions by, not-for-profit organizations, other sources of GAAP that specifically relate to such matters may be applied as described in Section 1101, Generally Accepted Accounting Principles.
  • Paragraph .12(e) has been added to provide an exemption from retrospective restatement of goodwill at the date of transition.
  • Paragraph .19 has been amended to permit an organization that has a cumulative translation difference for domestic operations to deem that cumulative translation difference to be zero at the date of transition.

Effective for fiscal years beginning on or after January 1, 2012

December 2013


On the issuance of Section 3463, Section 1501 was amended to permit a first-time adopter to apply the transitional provisions in new Section 3463 and eliminate some exemptions for employee future benefits relating to deferred recognition that are no longer necessary. Section 3463 and the consequent amendment to Section 1501 is effective for annual financial statements relating to fiscal years beginning on or after January 1, 2014, with early application permitted.

Note: The above summary does not include details of consequential amendments made as the result of other projects.

Correction list for hyphenation

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