Not-for-profit accounting: In the spotlight

Not-for-profit accounting is getting some attention. Globally, there are many opportunities for jurisdictions that want to develop high-quality standards for NFPOs to collaborate and learn from each other.

In Canada, private sector not-for-profit accounting is a point of focus for the Accounting Standards Board (AcSB).

In 2015, the AcSB put together the Not-for-Profit Advisory Committee, which will:

  • play a key role in advising the AcSB on Canada’s NFPO accounting standards’ needs
  • assist the board with the maintenance and improvement needs of these standards

HOW EXACTLY DOES THE NOT-FOR-PROFIT ADVISORY COMMITTEE WORK?

The committee is tasked with a variety of responsibilities to support the AcSB in its work. As an advisor to the board, it:

  • identifies and recommends topics that should be added to NFPO accounting standards and changes that should be made to existing standards
  • develops proposed changes to the standards
  • provides advice on managing NFPO accounting standards overall
Its responsibilities reflect the goal of ensuring that the standards meet the needs of users of NFPO financial statements and the organizations that apply them.

HOW WILL THE COMMITTEE CARRY OUT THESE RESPONSIBILITIES?

As an example, the committee will assess various options and then make a proposal to the AcSB that is practical to implement. As part of this process, the committee would advise the AcSB on whether the costs of implementing a change exceed the benefits of that change.

In the case of a change to a standard, the committee will provide the AcSB with advice on when to time the changes and how to communicate those changes to stakeholders. The goal in this case would be to help manage the initial application of the updated standards, and to ensure that everyone knows what is happening and considers how to handle the effects of the changes.

REPRESENTATION FROM ACROSS THE SECTOR

With a highly-qualified group of professionals sitting on the inaugural rendition of the committee, the AcSB is in a great position to ensure Canada’s private sector NFPO issues are considered during the standards’ development and improvement processes.

Besides the accounting practitioners who specialize in this sector, members include preparers from a large charity, a theatre, a university and a member association. Users are represented by charities that distribute funds, a community foundation, an arts council and an NFPO management consultant.

Stay tuned for the committee’s meeting summaries and upcoming meetings.

About the Author

Grace Lang, CPA, CA, CPA (Illinois)


Grace is a principal with the Accounting Standards Board (AcSB). She is the lead project manager on such accounting standards development projects as not-for-profit organizations (NFPOs), leases, and joint arrangements. She also leads the recently established AcSB Not-for-Profit Advisory Committee, which acts in an advisory capacity to the AcSB and assists the board in maintaining and improving accounting standards for NFPOs in the private sector. Grace previously studied at the University of Saskatchewan and articled at EY in Calgary before joining the AcSB staff in July 2006.

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