Accounting standards for not-for-profit organizations may be changing in the near future, and now is the time to give your input. The Accounting Standards Board and the Public Sector Accounting Board of Canada jointly issued a Statement of Principles on April 10, 2013, that proposes to revise Part III in the Canadian Institute of Chartered Accountants (“CICA”) Handbook – Accounting, and the CICA Public Sector Accounting (PSA) Handbook, including the PS 4200 series of Sections, respectively, to improve the existing standards for financial reporting by not-for-profit organizations.
The objectives behind these new standards are to review and amend not-for-profit accounting standards to address transactions and circumstances unique to not-for-profit organizations, and to be more in line with existing reference accounting standards. The proposals are also directed at enhancing the comparability and clarity of the financial statements prepared by not-for-profit organizations.
The proposed improvements would result in changes in how not-for-profit organizations account for and report their revenues from contributions and pledges, capital assets, and expenses. Individuals or organizations interested in commenting on the Statement of Principles may submit comments to the recently amalgamated Chartered Professional Accountants Canada by September 15, 2013.
It will be important for accountants and other persons knowledgeable in accounting matters involving the not-for-profit sector to carefully review and comment on the Statement of Principles to ensure that the final revisions adopted will reflect the unique reality of the law that guides organizations within the not-for-profit sector, such as the need to physically segregate externally restricted funds from general funds of a charity. As such, this initiative will be of significant interest to the broader not-for-profit sector.
The AcSB/PSAB Statement of Principles, which includes information on how to provide comment, is available online here.
Terrance S. Carter is the managing partner with Carters Professional Corporation, and counsel to Fasken Martineau DuMoulin LLP on charitable matters. Contact him by email.