Canada:
Proposed Financial Reporting Changes Affect Not-for-Profit Organizations
16 November 2013
Borden Ladner Gervais LLP
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In April 2013, the Accounting Standards Board and the Public
Sector Accounting Board issued a Statement of Principles entitled
"Improvements to Not-For-Profit Standards", which is
available here: http://www.frascanada.ca/standards-for-not-for-profit-organizations/documents-for-comment/item73780.pdf.
If you are a private or public sector not-for-profit organization
("NFP") that uses not-for-profit standards as your
primary source of generally accepted accounting principles, you
should review the changes proposed in the Statement of
Principles.
The Statement of Principles sets out 15 proposed principles
that will be used to develop a new standard of accounting that will
effectively change the way financial reporting is conducted by
NFPs. A few of the proposed changes that may be concerning to
NFPs include:
- Elimination of the current exemption for NFPs with revenues
under $500,000. These smaller sized NFPs will now be required to
incur the additional administrative expense of recording and
amortizing capital assets on its financial statements;
- Elimination of the deferral and restricted fund method of
accounting, thereby affecting the recognition of contributions by
NFPs on its financial statements; and
- Consolidation of financial statements will be required of
controlled and related NFPs, which could become a complicated
process.
NFPs can voice their opinions and concerns on the
proposed changes. All comments are due by December 15, 2013. They
will be posted on the website of each Board, unless you explicitly
request confidentiality in your comments submission.
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