Accounting Standards Update for
Private and Public Sector NPOs
Presented by: Erica Teklits, Partner and National Leader, NPO Sector
November 12, 2013
Overview
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2012 brought ASNPO for private sector NPOs as well as public sector accounting
standards with Section 4200 for GNPOs
The Accounting Standards Board (AcSB) and Public Sector Accounting Board
(PSAB) are working together to improve not-for-profit standards to better meet
users’ needs
Jointly issued Statement of Principles in the summer of 2013
Proposed changes to the 4400/4200 series of Accounting Standards for Not-forProfit Organizations and Public Sector NPOs
Not all changes are the same for private and public NPOs, but the most
significant changes harmonize many aspects
Proposal includes some significant changes to measurement, presentation and
disclosure for NPOs
Accounting Standards Update for Private and Public Sector NPOs – November 12, 2013
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The Process
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Statement of Principles (current step)
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Includes all proposed amendments to standards at a high level perspective
All parties are invited to comment
Deadline is December 15, 2013
• Exposure Drafts
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Consider comments from responses to Statement of Principles
Release exposure drafts for each proposed change to a standard (separately)
Comments will again be invited
Will include transitional provisions and possible exemptions
• New Standards
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Exposure drafts become new standards, subject to any changes based on comments
• Lengthy Process (3-5 years?)
Accounting Standards Update for Private and Public Sector NPOs – November 12, 2013
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Key Areas of Change
Accounting Standards Update for Private and Public Sector NPOs – November 12, 2013
Joint AcSB / PSAB Project
Statement of Principles – Improvements to Not-for-Profit Standards
• Main features that affect both private and public sector NPOs:
• A contribution would be recognized as an asset, when the NPO has control
of the contribution, would exercise that control if necessary and can
reasonably estimate the amount to be received
• A contribution would be revenue, except when the contribution gives rise
to an obligation that meets the definition of a liability
• The proposals replace the deferral and restricted fund methods
• The proposals could also have a significant impact on the accounting for
contribution pledges and endowment contributions
Accounting Standards Update for Private and Public Sector NPOs – November 12, 2013
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Joint AcSB / PSAB Project
Statement of Principles – Improvements to Not-for-Profit Standards
• Main features that affect both private and public sector NPOs:
• A capital asset would be recognized by an NPO on its statement of
financial position regardless of the size of the NPO (i.e. removing the size
exemption currently available)
• The proposals would require expenses to be presented by both function
and object (nature) rather than on one of the two bases
• Controlled NPOs would be consolidated, subject to an exclusion for a large
number of individually immaterial organizations, and controlled profitoriented enterprises would be accounted for by the equity method
Accounting Standards Update for Private and Public Sector NPOs – November 12, 2013
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Controlled Entities
Type of Entity
Current Standard
Proposed Standard
Controlled NPO
Consolidate OR
disclose
Consolidate
Controlled for profit
Consolidate OR
modified equity
method *
Modified equity
method *
Jointly controlled
entity
modified equity
method * OR
proportionate
consolidation **
Proportionate
consolidation **
*Modified equity method = cost of investment +/- income or loss annually (no
adjustment to conform with GAAP or controller)
**Proportionate consolidation = consolidate your % ownership of the entity
Accounting Standards Update for Private and Public Sector NPOs – November 12, 2013
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Joint AcSB / PSAB Project
Statement of Principles – Improvements to Not-for-Profit Standards
• Main features that affect private sector NPOs only:
• The accounting for tangible capital assets by a private sector NPO would
follow the standards for private enterprises under ASPE
• The proposals would add guidance on accounting for partial write-downs
for both tangible and intangible capital assets
• Collections of works of art and historical treasures would be accounted for
at either cost or nominal value in the statement of financial position
Accounting Standards Update for Private and Public Sector NPOs – November 12, 2013
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Statement Of Principles Summary
• The Statement of Principles contains other
modifications
• Stakeholders have to comment before
December 15, 2013 to make their opinions
heard
• Inaction may be interpreted as acceptance
of the “improvements”
• The real world consequences need to be
made known to the AcSB and PSAB
Accounting Standards Update for Private and Public Sector NPOs – November 12, 2013
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2013 ASNPO UPDATE
Exposure Drafts and Projects
Accounting Standards Update for Private and Public Sector NPOs – November 12, 2013
EXPOSURE DRAFT
Section 3463, Employee Future Benefits
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The main features of proposed Section 3463 are as follows:
• Remeasurements and other items would be:
• recognized directly in net assets in the statement of financial
position, rather than in the statement of operations; and
• presented as a separately identified item in the statement of
changes in net assets
• Remeasurements and other items would not be reclassified from net
assets to the statement of operations in a subsequent period.
• Retrospective application would generally be similar to the requirements
in Section 3462 with additional guidance related to the different
recognition and presentation of remeasurements and other items
• An NPO would apply all the other requirements in Section 3462
Effective Date: Years beginning on or after January 1, 2014
Accounting Standards Update for Private and Public Sector NPOs – November 12, 2013
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QUESTIONS
Accounting Standards Update for Private and Public Sector NPOs – November 12, 2013
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Erica Teklits
National Not for Profit Industry Leader
eteklits@bdo.ca
905-272-7809
Accounting Standards Update for Private and Public Sector NPOs – November 12, 2013