Contributions
The Not-for-Profit Advisory Committee continued its discussions on the Contributions project. These discussions reflected the AcSB’s decision in March 2024 to develop a new exposure draft that proposes continuing to allow an accounting policy choice for recognizing contributions and that proposes improvements to both methods. Read the Board’s Feedback Statement for more information on this decision.
The Committee received a summary of feedback on the proposals in the 2023 Exposure Draft, “Contributions – Revenue Recognition and Related Matters,” related to contributed materials and services, as well as pledges.
The Committee provided input on the recognition criteria for contributed materials and services. Committee members discussed to what extent the criteria should limit what contributions can be recognized for organizations with a policy to recognize contributed materials and services. The Committee also discussed recognition of contributed materials that will be resold.
The Committee discussed recognition of pledges and bequests and whether separate guidance on recognition of bequests should be provided. Committee members thought that a clearer link to the definition of an asset could be helpful. The Committee also provided examples of situations where contributions are collected through intermediaries.
The AcSB will consider input from the Committee and from other outreach activities at its meeting in September 2024.
Detailed Review of ASPE
The Not-for-Profit Advisory Committee discussed the AcSB’s approach for determining which issues will be addressed through the Detailed Review of Accounting Standards for Private Enterprises (ASPE) project. Committee members generally agreed with the proposed approach for defining the project’s scope, noting it would ensure the project focuses on the most significant and pervasive challenges that can be addressed without negatively impacting the quality of information provided to users.
The Not-for-Profit Advisory Committee also discussed application issues for not-for-profit entities applying the requirements in Section 3031, Inventories, Section 3110, Asset Retirement Obligations, and Section 3856, Financial Instruments, in Part II of the CPA Canada Handbook – ASPE that might be addressed through this project. The AcSB intends to use this feedback to help draft a consultation paper. The Board will discuss this feedback at its September 2024 meeting and will continue discussions on additional topics with the Private Enterprise Advisory Committee, Not-for-Profit Advisory Committee, and Small Practitioners Working Group at the meetings in October and November 2024.
Evaluating the Preface
The Not-for-Profit Advisory Committee received an overview of feedback from the AcSB’s advisory committees and working group regarding its strategic initiative to evaluate the Preface of the Handbook. The Committee provided additional feedback on the financial reporting requirements for certain types of entities, such as social enterprises and sports and social clubs. The Board will discuss the Committee’s feedback at its meeting in November 2024.
Financial Statement Concepts
The Not-for-Profit Advisory Committee received an overview of the AcSB’s project to update Financial Statement Concepts in Parts II and III of the Handbook. This project will focus on:
- clarifying the purpose and intended use of Financial Statement Concepts; and
- ensuring Financial Statement Concepts are appropriate for private enterprises and not-for-profit organizations in Canada.
The Committee discussed the Board’s decision to move Financial Statement Concepts to a separate section within the Handbook outside of accounting standards. This is consistent with the approach used by other national and international standard setters for their conceptual frameworks. Committee members acknowledged that this decision is not likely to alter current practice. However, Committee members noted that it will be critical to retain the importance of Financial Statement Concepts as a foundational tool for understanding financial statements and accounting standards.
In October 2024, the Committee will begin to discuss topics to be updated in Financial Statement Concepts as part of this project.