Accounting Standards for Ontario Nonprofits and Charities: Key Updates for 2025–2026

Ontario nonprofits and registered charities operate under the Accounting Standards for Not-for-Profit Organizations (ASNPO), published in Part III of the CPA Canada Handbook. The Accounting Standards Board (AcSB) has been actively updating these standards — and 2025 and 2026 bring changes that directly affect how your organization recognizes revenue, reports assets, and prepares financial statements.

This article covers the key updates your organization needs to know, including standards already in effect and important changes on the horizon.

What Are the Accounting Standards for Not-for-Profit Organizations (ASNPO)?

ASNPO is the accounting framework that governs financial reporting for private sector not-for-profit organizations in Canada, including registered charities in Ontario. It sits in Part III of the CPA Canada Handbook, alongside Part II (Accounting Standards for Private Enterprises, or ASPE) and Part I (International Financial Reporting Standards, or IFRS).

Private sector NFPs can choose to follow either ASNPO or IFRS — but the vast majority of Ontario nonprofits and charities use ASNPO because it is designed specifically for organizations without a profit motive.

ASNPO covers revenue recognition, financial statement presentation, capital assets, fund accounting, contributions, and more. The standards are maintained by the Accounting Standards Board (AcSB) under Financial Reporting and Assurance Standards (FRAS) Canada.

Section 4400 — Updated Financial Statement Presentation (Effective January 1, 2026)

One of the most immediate changes for Ontario nonprofits is the amended Section 4400, Financial Statement Presentation by Not-for-Profit Organizations. The amendments are effective for fiscal years beginning on or after January 1, 2026, with earlier application permitted.

These changes affect how NFPs structure and present their financial statements, and they work alongside the proposed new Section 4411 on contribution revenue recognition (covered in the next section). If your organization's fiscal year begins on or after January 1, 2026, you need to review your current statement formats before your next reporting period.

What to review:

• How your statement of financial position (balance sheet) is formatted and what it discloses
• How restricted and unrestricted net assets are presented
• Whether your notes to financial statements meet the updated disclosure expectations
• Consistency between how you present contributions and how you recognize them

The Coming Overhaul of Contribution Revenue Recognition (Section 4411)

Revenue recognition for contributions is one of the most complex — and soon to be significantly changed — areas of ASNPO. The existing guidance under Section 4410 (Contributions – Revenue Recognition) and Section 4420 (Contributions Receivable) has remained largely unchanged for over 25 years, even though contribution agreements have become far more complex in the modern fundraising environment.

What the AcSB Proposed

The AcSB issued an exposure draft proposing a new Section 4411, Contributions Received by Not-for-Profit Organizations, which would replace both Section 4410 and Section 4420. The draft proposed a single approach for recognizing restricted contributions, replacing the current policy choice between the deferral method and the restricted fund method. It also proposed new definitions, changes to pledge and endowment guidance, and enhanced disclosure requirements.

Why the AcSB Changed Direction

After extensive stakeholder consultation, the AcSB determined that a single recognition method may not meet the diverse needs of the NFP sector. Rather than replacing both existing methods, the Board is now working to improve and refine both approaches, while also enhancing presentation and disclosure requirements. A new exposure draft is expected in the second half of 2026.

This means the deferral method and the restricted fund method both remain acceptable for now — but changes are coming, and your organization should be preparing.

How Contribution Types Are Treated Today vs. What May Change

Ontario nonprofits should monitor the FRAS Canada website for updates on the new exposure draft and begin assessing now which recognition method they use and whether their policies are well-documented.

AcG-21 — New Guidance on Life Insurance Policies with Cash Surrender Value (Effective January 1, 2026)

This is one of the most specific and actionable changes for Ontario charities in 2025–2026. In September 2024, the AcSB issued new Accounting Guideline AcG-21, providing guidance on the recognition and measurement of cash surrender value of a life insurance policy, as well as the presentation and disclosure of policy premiums and changes in cash surrender value. The guideline is effective for annual periods beginning on or after January 1, 2026, with earlier application permitted.

Before AcG-21, there was inconsistency in practice: some organizations recognized cash surrender value as an asset, others did not. AcG-21 standardizes this.

What AcG-21 requires:

• Cash surrender value must be recognized as an asset on the statement of financial position, measured at its cash surrender amount
• Annual changes in cash surrender value, as well as policy premiums, must be recognized on a net basis in income or expense
• New disclosure requirements apply to enhance transparency for financial statement users

Additionally, Section 4410 has been amended alongside AcG-21 to provide an exception to the usual fair value measurement requirement when a not-for-profit organization receives a contribution of a life insurance policy with cash surrender value.

Does this apply to your organization? If your charity holds a life insurance policy where it is both the owner and the beneficiary — a common structure in planned giving and endowment arrangements — AcG-21 applies to you. Review these policies with your accountant before your next fiscal year begins.

Goodwill and Intangible Assets — Proposed Relief for NFPs Involved in Mergers

In October 2025, the AcSB issued an exposure draft proposing amendments to Section 1582 (Business Combinations) and Section 3064 (Goodwill and Intangible Assets). These proposals would allow not-for-profit organizations to amortize goodwill and provide optional relief from recognizing certain intangible assets acquired through a combination or merger.

Under the proposals, organizations could elect to amortize goodwill over a default period of five years, with up to 10 years permitted if justified. This would remove the requirement for complex annual goodwill impairment testing — a process that many smaller nonprofits find costly and difficult to apply.

Entities that elect this optional relief must amortize goodwill. The comment period on the exposure draft closed January 31, 2026, and final amendments are expected to follow.

Who this affects: This is most relevant to Ontario nonprofits and charities involved in combinations, mergers, or acquisitions of other organizations — a scenario that has become more common as the sector consolidates. If your organization has recently merged with or absorbed another NFP, review your current goodwill accounting with your accountant now.

Cloud Computing Arrangements — What Ontario Nonprofits Need to Know

Accounting Guideline AcG-20 addresses cloud computing arrangements, and it now affects nearly every nonprofit that relies on cloud-based tools for accounting, donor management, program delivery, or operations.

Under AcG-20, organizations must determine whether a cloud computing arrangement contains a software licence component (which must be capitalized as an intangible asset) or is purely a service contract (which is expensed as incurred).

For most Ontario nonprofits using SaaS-based platforms — such as QuickBooks Online, Salesforce Nonprofit, Keela, or similar tools — the costs are most likely service contracts and should be expensed. However, this determination must be assessed individually and documented as part of your accounting policies.

Practical steps:

• Review all cloud-based software subscriptions your organization currently holds
• Determine whether any include a software licence component
• Document your accounting policy conclusion for each arrangement
• Apply this consistently across reporting periods

Enhanced Disclosure Requirements — What Has Already Changed

Beyond the upcoming changes, Ontario nonprofits should ensure they are already meeting the enhanced disclosure requirements that came into effect in recent years under ASNPO. These include more detailed breakdowns of:

• Funding sources, including government grants, private donations, and investment income
• Spending by program or activity
• Restrictions on funds and how restricted net assets are managed
• Endowment terms and conditions
• Related party transactions and arm's-length policies
• Going concern assessments, where applicable — updated guidance was issued in 2025 under the revised CAS 570

These disclosures exist to give donors, funders, and regulators a transparent view of how resources are allocated and used. Inadequate disclosure is one of the most common issues identified in charity audits and CRA reviews.

Impairment of Assets — Ongoing Obligations

Ontario nonprofits are required under ASNPO to assess their assets for impairment on a regular basis. If impairment is identified, detailed disclosure is required in the financial statements to accurately reflect the reduced value of the asset.

Common assets that may be subject to impairment review include:

• Capital assets such as buildings, equipment, and leasehold improvements
• Intangible assets, including software licences
• Goodwill arising from combinations
• Long-term receivables where collectability is in question

The proposed amendments to goodwill impairment testing (discussed above) would relieve some of this burden for merging organizations — but for all other assets, regular impairment assessment remains a firm requirement.

What Ontario Nonprofits Should Do Now — 2026 Compliance Checklist

Use this checklist to assess your organization's readiness for the current and upcoming ASNPO changes:

✅ Review your financial statement format against the amended Section 4400 before your first fiscal year beginning on or after January 1, 2026

✅ Confirm which contribution recognition method you use (deferral or restricted fund) and ensure it is clearly documented in your accounting policies — changes are coming

✅ Identify any life insurance policies held by your charity and apply AcG-21 for fiscal years beginning on or after January 1, 2026

✅ Audit your cloud computing arrangements and document whether each is a service contract or contains a software licence component under AcG-20

✅ Review goodwill and intangible assets if your organization has undergone a merger or combination, and monitor the final AcSB amendments expected following the October 2025 exposure draft

✅ Check your disclosure notes against current ASNPO requirements, including fund restrictions, endowments, related parties, and going concern language

✅ Monitor the FRAS Canada website for the new contribution revenue recognition exposure draft, expected in the second half of 2026

✅ Book time with a charity accounting professional to assess your specific situation before your next audit or financial statement preparation

Conclusion

Accounting standards for Ontario nonprofits and charities are in a period of meaningful change. With Section 4400 amendments and AcG-21 already effective for fiscal years beginning January 1, 2026, and a major overhaul of contribution revenue recognition on the horizon, now is the right time to review your financial reporting practices and ensure your organization is prepared.

Staying compliant is not just about following rules. Accurate, transparent financial reporting protects your charity's registered status, builds donor and funder confidence, supports good board governance, and positions your organization for long-term sustainability.

Need help navigating ASNPO for your Ontario charity?

B&H Charity Accounting Firm works exclusively with registered charities and nonprofits across Ontario. Our team can review your financial reporting obligations, help you prepare for the 2026 standard changes, and ensure your organization stays fully compliant.

📞 (289) 301-8883 🌐 charityaccountingfirm.ca 📅 Book a free consultation

Frequently Asked Questions

What accounting standards do Ontario nonprofits and charities use? 

Most Ontario nonprofits and registered charities follow the Accounting Standards for Not-for-Profit Organizations (ASNPO), set out in Part III of the CPA Canada Handbook. Some organizations may choose to apply IFRS instead, but ASNPO is the most common framework for private sector NFPs in Ontario.

What is the difference between the deferral method and the restricted fund method?

Under the deferral method, restricted contributions are recorded as liabilities on the balance sheet until the conditions attached to the funding are met, at which point they are recognized as revenue. Under the restricted fund method, restricted contributions are recognized as revenue immediately in the fund established for that restriction. Both methods are currently permitted under ASNPO, though the AcSB is developing new guidance that will refine both approaches.

What is AcG-21 and does it apply to my charity? 

AcG-21 is a new accounting guideline issued in September 2024, effective for fiscal years beginning on or after January 1, 2026. It requires organizations to recognize the cash surrender value of a life insurance policy as an asset, and establishes new disclosure requirements. If your charity holds a life insurance policy where it is both the owner and the beneficiary, AcG-21 applies to you.

Will nonprofits have to change how they recognize donation and grant revenue? 

Possibly, yes — but the final rules are not yet set. The AcSB has moved away from its earlier proposal to impose a single recognition method and is now working to improve both the deferral method and the restricted fund method. A new exposure draft is expected in the second half of 2026. Any final standard would come with transition time before it takes effect.

Does ASNPO apply to charities registered with the CRA? 

Yes. Registered charities in Canada that are private sector organizations typically follow ASNPO. The CRA also requires charities to file the T3010 Registered Charity Information Return annually, and accurate financial statements prepared under ASNPO support that compliance.

What happens if a nonprofit does not follow ASNPO? 

Failing to follow ASNPO can result in inaccurate financial statements, issues during audits or reviews, and potential non-compliance findings from funders, boards, or the CRA. For registered charities, poor financial reporting practices can attract CRA scrutiny and put charitable status at risk.