Accounting Standards for Non-Profit Organizations (ASNPO)

New accounting guideline – Accounting for Life Insurance Contracts with Cash Surrender Value

The AcSB issued new Accounting Guideline AcG-21, Accounting for Life Insurance Contracts with Cash Surrender Value in September 2024. The Guideline provides guidance on recognition and measurement of cash surrender value of a life insurance policy, presentation and disclosure of policy premiums and changes in cash surrender value.

Effective for annual periods beginning on or after January 1, 2026, with earlier application permitted.

Section 1501, First-time Adoption by Not-for-Profit Organizations has been amended to permit a first-time adopter to apply the transitional provisions in AcG-21.

Section 4410, Contributions – Revenue Recognition has been amended to provide an exception to the requirement to measure contributions at fair value when a not-for-profit organization receives a contribution of a life insurance policy with cash surrender value.

Section 1582, Combinations by Not-for-Profit Organizations has been amended to provide an exception to the requirement to measure identifiable assets at their acquisition-date fair values for cash surrender value.

Revised standard – Revenue – Upfront non-refundable fees or payments

The AcSB issued amendments to Section 3400, Revenue to indefinitely defer the effective date of application guidance for upfront non-refundable fees or payments that were issued in December 2019. Earlier application is permitted, including in financial statements not yet authorized for issue.

The amendments also require an enterprise to disclose the nature and amount of upfront non-refundable fees or payments recognized in revenue when the enterprise recognizes the fee or payment in revenue upon entering into the arrangement.

The disclosure requirement is effective for annual financial statements relating to fiscal years beginning on or after January 1, 2025, with earlier application permitted.

New accounting guideline – customer’s accounting for cloud computing arrangements

The AcSB issued new accounting guideline (AcG-20) on accounting for cloud computing arrangements that is applicable to private enterprises and not-for-profit organizations. The guideline provides guidance on:

• accounting for a customer’s expenditures in a cloud computing arrangement; and
• determining whether a software intangible asset exists in the arrangement.

The guideline also includes an optional simplification approach to permit an enterprise to expense as incurred the expenditures related to the elements in the arrangement within the scope of Section 3064, Goodwill and Intangible Assets.

Effective for annual periods beginning on or after January 1, 2024, with earlier application permitted.

Section 1501, First-time Adoption by Not-for-Profit Organizations has been amended to permit a first-time adopter to apply the transitional provisions in AcG-20.

Section 4434, Intangible Assets Held by Not-for-Profit Organizations has been amended to clarify that the application of AcG-20 is required for intangible assets.

Exposure draft – Contributions – Revenue Recognition and Related Matters

The AcSB issued an exposure draft in 2023 proposing to issue new Section 4411, Contributions Received by Not-for-Profit Organizations and accompanying amendments to Section 4400, Financial Statement Presentation by Not-for-Profit Organizations. Proposed Section 4411 provides NFPOs with guidance on accounting for contributions and would replace Section 4410, Contributions – Revenue Recognition and Section 4420, Contributions Receivable.

The proposals would:

• replace the current guidance with a single approach for recognizing revenue from restricted contributions
• provide specific guidance on special types of contributions, including contributed materials and services, capital asset contributions, and endowments and
• amend the current guidance on financial statement presentation and disclosures by NFPOs.

On May 14, 2024 the AcSB issued a feedback statement, discussing how AcSB considered feedback received and, through targeted outreach and consultation with its Not-for-Profit Advisory Committee, explored various options to address the feedback heard on the Exposure Draft. After thorough consideration, the AcSB decided to take the Contributions project in a new direction. In May 2024, the AcSB discussed and approved a revised project plan for a new exposure draft that will continue to allow an accounting policy choice for the recognition of restricted contributions and propose improvements to the two existing methods. This new exposure draft will also incorporate relevant proposals and feedback from the first Exposure Draft.

Additional non-authoritative guidance

To stay ahead of the curve, find additional non-authoritative guidance to help you navigate the application of the Accounting Standards for Not-for-Profit Organizations.

• ASNPO Briefing: Section 4449, Combinations by not-for-profit organizations (CPA Canada, 2022)
• What not-for-profit organizations need to know about annual reporting (CPA Canada, 2020)
• ASNPO Alert: Tangible capital assets, intangible assets and collections (CPA Canada, 2019)
• ASNPO Alert: Accounting Standards applicable to Private Sector Not-for-Profit Organizations (CPA Canada, 2019)

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