Not-for-Profit Organizations in the Private Sector

Transcription

1 Not-for-Profit Organizations in the Private Sector Accounting Standards Exposure Draft Linda Mezon, FCPA, FCA Chair, Accounting Standards Board

2 Agenda Background AcSB s strategy for private sector NFPOs Proposals in recently issued NFP Exposure Draft Next steps

3 Background NFP accounting standards originally adopted AcSB & PSAB issued Exposure Drafts outlining strategies for NFPOs AcSB formed NFP Advisory Committee AcSB issued Exposure Draft proposing amendments to 4400 Series of Handbook AcSB & PSAB issued Joint Statement of Principles (SOP) AcSB issued NFP Exposure Draft of Accounting Standards Improvements 3

4 AcSB s Strategy for NFPOs AcSB will continue to improve accounting standards for NFPOs in private sector Cost/benefit considerations Maintain separate standards that address specific needs of users of NFPO financial statements For transactions and circumstances not unique to NFPOs, direct NFPOs to Part II of the CPA Canada Handbook Accounting Important to monitor Part II

5 AcSB s Strategy for NFPOs Symmetry with public sector NFP standards is desirable when user needs are aligned Doesn t preclude AcSB from improving private sector NFP standards on timely basis PSAB staff observe NFP Advisory Committee meetings Continue to look at global environment for NFP sector and examine best practices in response to request for harmonized standards Attending international meetings Participating in NFP working group International Forum of Accounting Standard Setters (IFASS)

6 NFP Exposure Draft Issued February 1, 2017 All NFPOs in the private sector that own tangible capital assets, intangible assets or collections may be affected Submit comment letters by May 31, 2017

7 NFP Exposure Draft Proposals Replace in Part III of Handbook Section 4431, Tangible Capital Assets Held by NFPOs, with Section 4433 Section 4432, Intangible Assets Held by NFPOs, with Section 4434 Section 4440, Collections Held by NFPOs, with Section 4441 New Sections 4433, 4434 and 4441 based on existing Sections amended to add ED proposals

8 Exposure Draft Proposals- Tangible Capital Assets and Intangible Assets Remove redundancies between Parts II and III of Handbook Eliminate duplicative guidance in Part III Direct NFPOs to apply Part II for guidance on tangible and intangible assets that is not unique to NFPOs Need to consider Part II guidance on componentization E.g., separating a furnace from a building» Could highlight potential maintenance issues

9 Exposure Draft Proposals- Tangible Capital Assets and Intangible Assets continued Retain current NFP specific guidance Contributed assets Clarify what is included in cost of contributed tangible capital asset Recognize partial impairments Include guidance in Sections 4433 and 4434 Write down to fair value or replacement cost when conditions indicate: asset no longer contributes to NFPOs ability to provide goods and services; or value of future economic benefits or service potential of asset is less than net carrying amount

10 Exposure Draft Proposals- Tangible Capital Assets and Intangible Assets continued Indicators of impairment Include list in new Sections 4433 and 4434 Provide examples of impairment conditions Similar to list in Section 3063, Impairment of long-lived Assets, in Part II but proposed to add decrease in service potential as another indicator Presentation and disclosure Direct NFPOs to Section 3063 in Part II Add disclosure whether impairment is measured at asset s replacement cost or fair value Prospective application

11 Exposure Draft Proposals- Tangible Capital Assets and Intangible Assets continued Transition relief Allocate costs of tangible capital assets to component parts based on: cost or fair value at date assets acquired; or fair value or replacement cost at date Section first applied. Adjust opening net assets for partial impairments of tangible capital assets and intangible assets existing at date Section is first applied Only applies in first fiscal year in which Section 4433 and 4434 are effective

12 Exposure Draft Proposals- Works of Art, Historical Treasures and Similar Items Not Part of a Collection Continue to account for items based on intended use Tangible capital assets Intangible assets Investments Inventory items Need to consider partial write-downs as a result of tangible and intangible asset proposals

13 Exposure Draft Proposals- Collections Recognize on statement of financial position Record at cost or nominal value Accounting policy choice Same choice applied to all collections Guidance added for determining cost Recognize partial impairments For collections recorded at cost Write down to fair value or replacement cost Whenever events or changes in circumstances indicate net carrying amount may exceed fair value

14 Exposure Draft Proposals- Collections continued List of impairment indicators added to new Section 4441 Provides examples of conditions that may be present to indicate impairment Disposal guidance added Items contributed with external restrictions (e.g. donor specifies the item be part of a specific collection) Recognize gain or loss in accordance with Section 4410, Contributions Revenue Recognition Items with no external restrictions Recognize gain or loss in statement of operations

15 Exposure Draft Proposals- Collections continued Presentation and Disclosure Retain current disclosures Add a requirement to present the amount recognized as a collection on a separate line in statement of financial position Add disclosure requirements consistent with those in Section 3063, Impairment of Long- Lived Assets, in Part II

16 Exposure Draft Proposals- Collections continued Retrospective application Transition relief (if record collections at cost) Capitalize items acquired in previous periods at cost or fair value at date of acquisition at fair value or replacement cost at date Section is first applied Measure items in a collection at nominal value when cost cannot be reasonably determined Adjust opening net assets for partial impairments existing at date Section 4441 is effective

17 Exposure Draft Proposals- Effective Date January 1, 2019 proposed effective date (with early application permitted) ED seeking input on April 1 effective date NFPOs with March 31 st year-ends Same result with January 1 or April 1 March 31, 2020 first year proposals apply NFPOs with December 31 st year-ends January 1, 2019 effective date December 31, 2019 first year proposals apply April 1, 2019 effective date December 31, 2020 first year proposals apply

18 Provide Feedback on Proposals Let us know what you think of the proposals Submit a comment letter by May 31, 2017 deadline Helps ensure NFPO standards meet needs of users and preparers of NFP financial statements

19 Next Steps AcSB will redeliberate proposals taking into account comment letters and stakeholder consultations consultations with NFPAC Monitor AcSB decision summaries and Project Page for updates

20 Next Steps continued Issue new Sections 4433, 4434 and 4441 Expected in second quarter 2018 Assuming no significant changes required to the proposals

21 Stay Up-to-Date Website 21

22 Stay Informed Website updates Tailor your subscription 24

23 THANK YOU NFP Project Team Contact Grace Lang, Principal, AcSB Phone: +1 (416)