Alert: Collections Held by Not-for-Profit Organizations

Alert: Collections Held by Not-for-Profit Organizations

In March 2018, the Accounting Standards Board (AcSB) issued Section 4441 Collections Held by Not-for-Profit Organizations in Part III (Accounting Standards for Not-for-Profit Organizations) of the CPA Canada Handbook – Accounting. Section 4441 replaces the existing Section 4440 Collections Held by Not-for-Profit Organizations which contained only disclosure standards for collections. The scope of new Section 4441 was expanded to provide guidance on recognition, measurement and disclosure of collections with the objective of increasing the consistency among not-for-profit organizations (NFPOs) for reporting collections held.

The definition of a collection in Section 4441 is unchanged and is defined as works of art, historical treasures or similar assets that are:

  • Held for public exhibition, education or research;
  • Protected, cared for and preserved; and
  • Subject to an organizational policy that requires any proceeds from their sale to be used to acquire other items to be added to the collection or for the direct care of the existing collection.

When not part of a collection, works of art, historical treasures and similar assets are accounted for based on their intended use, in accordance with the applicable sections of Part III and Part II of the Handbook.

The key concepts of this new Section are:

Recognition and Measurement

  • Collections must now be recorded at either nominal value or cost on the statement of financial position. All collections must be accounted for using the same method.
    • Where collections are accounted for at cost, and the cost of a contributed item or collection cannot be reasonably determined, the items are recorded at nominal value. This exemption does not preclude other items and collections from being recorded at cost.
  • For contributed items recorded at cost, cost is deemed to be fair value at the date of contribution, plus all costs directly attributable to the acquisition.
    • Fair value may be estimated using either market values or appraisals.
  • For purchased collections and collection items, cost is made up of the purchase price of acquired items plus all other costs directly attributable to the acquisition of the collection items.
    • Items in a collection that are purchased substantially below fair value are recognized at fair value with the difference reported as a contribution in accordance with Section 4410 Contributions – Revenue Recognition in Part III of the Handbook.
  • For purchased collection items recorded at nominal value, the difference between the purchase price and the nominal value, as well as the costs attributed to the purchase of the collection item, are recorded as an expense in the statement of operations.
  • The costs incurred to protect and preserve collection items are recognized as repairs and maintenance in the statement of operations in the period the expense is incurred.
  • Collections are not amortized as they are to be preserved in perpetuity by an NFPO and therefore have an unlimited useful life.

Partial Impairment

  • A write-down of a collection, or collection item, recorded at cost is required when events or changes in circumstances indicate its net carrying amount exceeds fair value. The net carrying amount of the collection, or the item in the collection, is written down to either its fair value or replacement cost, as determined on an item-by-item basis.
    • Write-downs of an item in a collection, or a collection in its entirety, are recorded as an expense on the statement of operations and are not reversed.
    • Write-downs of a collection in its entirety are allocated between the items in the collection recorded at cost on a pro rata basis using the relative carrying amounts of the individual items.


  • The accounting for disposals depends on whether or not the collection items are subject to external restrictions.
    • Externally restricted items within a collection that are disposed of are recognized in accordance with Section 4410 Contributions – Revenue Recognition when the net proceeds exceed the net carrying amount.
    • Externally restricted items within a collection where the net carrying amount exceeds the net proceeds are recognized in the statement of operations.
    • Items within a collection that are not externally restricted are recognized in the statement of operations.
    • Net proceeds are the proceeds from disposal net any costs directly attributable to the disposal of the item.

Presentation and Disclosure

  • Collections are presented on a separate line in the statement of financial position.
  • An NFPO that accounts for collections at cost discloses a description of any items or collections that are recorded at nominal value.
  • When disposing of a collection or collection items, an NFPO discloses:
    • The proceeds from any disposals in the period and how the proceeds were used;
    • The amount of any proceeds from prior periods spent during the current period, and how the proceeds were used; and
    • The total amount of proceeds not yet spent at the end of the reporting period and, if not separately presented on the face of the statement of financial position, the caption in the statement of financial position that includes the proceeds not yet spent.
  • In the period in which a write-down is recognized, an NFPO discloses:
    • A description of the facts and circumstances leading to the write-down;
    • The amount of the write-down measured using each fair value and replacement cost; and
    • If not separately presented in the statement of operations, the amount of the impairment loss from the write-down and caption in the statement of operations that includes that loss.
  • All other disclosure requirements from Section 4440 were carried forward to Section 4441.

Section 4441 is effective for annual periods beginning on or after January 1, 2019. Earlier application is permitted. NFPOs apply Section 4441 retrospectively, with the following simplifications to full retrospective application available only in the year Section 4441 is first applied:

  • NFPOs are permitted to capitalize retrospectively the items in a collection acquired in previous periods and held at the date Section 4441 is applied at their:
    • Cost or fair value at the date of acquisition; or
    • Fair value or replacement cost at the date Section 4441 is first applied.
  • An NFPO uses whichever value is most readily determined. The items may be recorded at a nominal value when the cost cannot be reasonably determined.
  • An adjustment to opening assets may be recognized at the date Section 4441 is first applied to reflect partial impairments of collections existing at that date.

These transitional provisions are also available to an NFPO adopting Accounting Standards for Not-for-profit Organizations for the first-time in accordance with Section 1501 First-Time Adoption by Not-for-Profit Organizations.

The Basis for Conclusions that summarizes the AcSB’s key considerations in reaching its conclusions on this project can be accessed here. The CPA Canada ASNPO Alert on this topic can be accessed here.


This comunication contains a general overview of the topic and is current as of April 17, 2019. 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 2019. All rights reserved.

Contact a member of MNP's Financial Reporting Team

Michelle Balmer

Michelle Balmer CPA, CA

Vice President, Assurance

Michelle Balmer, CPA, CA, is a Senior Assurance Services Partner with MNP. With 14 years of experience in public practice, Michelle helps a broad range of public and privately held companies in a variety of industries. She also works on special projects, including costing studies, benchmarking and best-practice studies, operational analyses, litigation support and due diligence.

As a key member of MNP's Assurance team, Michelle has played an instrumental role in assurance policy development, implementing accounting and assurance standards firm-wide and educating assurance practitioners regarding methodologies and new pronouncements. She also provides technical advice and consultation on accounting and assurance issues, as well as on rules of professional conduct issues, to all MNP practitioners.

Michelle was certified a Chartered Accountant (CA) after obtaining a Bachelor of Commerce degree from the University of Alberta. She has been actively involved with the Institute of Chartered Accountants of Alberta, including the Chartered Accountants School of Business, in an instructional and marketing capacity. An avid volunteer, she has assisted numerous groups such as the Easter Seals of Alberta, Paralympic Sports Association and Junior Achievement of Northern Alberta.