December 6, 2013 - Changes to accounting standards for non-profits are in the making and, unless amended, they could have a significant impact on many performing arts organizations.
The Accounting Standards Board (AcSB) and Public Sector Accounting Board (PSAB) have developed a draft set of standards (the Statement of Principles) against which they will develop new “rules” for financial presentation in the nonprofit sector.
The Statement of Principles proposes changes to the accounting rules that could create a significant administrative, and financial, burden on arts organizations and make financial statements harder to understand by funders and board members who have a limited knowledge of accounting practices. Here’s a summary of the main changes:
- Capital and endowment grants and contributions would be recognized as revenues, thereby creating artificial surpluses.
- Organizations with revenues under $500,000 would now need to record and amortize tangible capital assets (they are currently exempted).
- Expenses in the statement of operation would need to be presented both by nature (salaries, rent, overheads) and by function (education, fundraising, marketing).
The Boards have invited individuals, governments and organizations to send written comments on this Statement of Principles.
With the assistance of PACT, with tools developed by Imagine Canada and the Ontario Non-Profit Network, and with the counsel of our Advocacy Committee, CAPACOA prepared a submission explaining our concerns for the performing arts sector.
We’ve been advised that the effective responses are united and many in number. We are encouraging all performing arts organizations to submit their own comments, using our submission as a template. The deadline for the submission of comments is December 15.
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