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In May 2020 the Accounting Standards Board (AcSB) issued a Consultation Paper (CP) to gather feedback for the development of an updated contributions standard that will address the specific restrictions, requirements or complexities of modern contribution agreements since the issuance of the standard in 1996.
Since its issuance, the contributions standards have remained largely unchanged. In May 2015, the AcSB approved a research project on accounting for contributions that considered the stakeholder feedback in response to the joint AcSB and Public Sector Accounting Board (PSAB) Statement of Principles, “Improvements to Not-for-Profit Standards.” The Board conducted further research to understand current Canadian and international practices for recognizing revenue from contributions.
Current guidance provides NFPOs with an accounting policy choice for recognition of revenue from restricted contributions. Respondents to the Statement of Principles indicated that the current accounting policy choice for recognizing revenue works well and meets the needs of their users. However, it also adds complexity to NFPO financial statements in an environment where financial statements are already becoming more complex due to the nature of the transactions being undertaken. In addition to the complexity, the current accounting policy choice results in a lack of comparability of NFPO financial statements as identical transactions can be recognized and presented differently depending on the accounting policy choice applied.
The purpose of the current CP is to obtain broad input and data from NFPO stakeholders, including users, preparers and practitioners on the accounting for revenue from contributions and on related matters. This feedback will help the Board decide on the project’s direction related to accounting for contributions.
As part of this CP, AcSB has requested feedback on the following areas:
The CP also covers additional topics closely related to accounting for contributions that the Board is seeking input on:
Comments for this CP are due December 15, 2020. The AcSB will consider the input received in response to this CP and use it to determine the next steps for this project.
Full details on the project can be found here.
For more information on the financial reporting library, contact a local MNP Assurance Professional, or Jody MacKenzie, Director, Assurance Professional Standards.
This communication contains a general overview of the topic and is current as of September 22, 2020. The application of the principles addressed will depend upon the particular facts and circumstances of each individual case. Accordingly, this publication is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional who can address any variance that may be required to reflect your circumstances. Please contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2020. All rights reserved.
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