Accounting Standards Board
May 15, 2018
This summary of Accounting Standards Board (AcSB) decisions has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussion on projects, which may change after further deliberations by the AcSB. Decisions to publish Handbook material are final only after a formal ballot process.
The Board received an update on the implementation of IFRS 17 Insurance Contracts, including a summary of the AcSB Insurance Transition Resource Group meeting of April 25, 2018. The Board also discussed a demographic overview of Canadian and foreign insurance entities operating in Canada, including type of entity (life, property, casualty, etc.), size (revenues, assets) and accounting frameworks applied. The Board made no decisions.
Standards for Private Enterprises
Private Enterprise Advisory Committee
The Board received feedback on the discussions at a recent Private Enterprise Advisory Committee meeting. The topics covered included:
- proposals to make narrow-scope amendments to Section 3465, Income Taxes;
- feedback from comment letters on the Exposure Draft, “Retractable or Mandatorily Redeemable Shares Issued in a Tax Planning Arrangement”;
- feedback from comment letters on the Exposure Draft, “Financial Instruments – Narrow-scope Amendments”;
- the characteristics of combinations of private enterprises; and
- the effects of different revenue frameworks on complex revenue arrangements.
The Board discussed the current draft of the exposure draft, and decided to clarify:
- the application of the accounting policy choice to measure agricultural inventories at cost, or net realizable value when certain conditions are met;
- that a productive biological asset is tested for impairment when its carrying value may not be recoverable, consistent with guidance in Section 3063, Impairment of Long-lived Assets;
- that a product may meet the condition of a reliable, readily determinable and realizable market price if a quoted price for a similar product is observable; and
- that the transition relief to not account for agricultural inventories and productive biological assets under the new section applies to any asset derecognized during the first year of application or in the prior year.
The Board directed the staff to proceed to ballot and plans to issue the exposure draft in July 2018, with comments requested by October 31, 2018.
Financial Instruments – Narrow-scope Amendments
The Board continued discussing feedback from stakeholders and the recommendations from its Private Enterprise Advisory Committee on its Exposure Draft, “Accounting for Related Party Financial Instruments and Significant Risk Disclosures (Proposed amendments to Financial Instruments, Section 3856).”
The Board considered proposed drafting changes relating to:
- the initial measurement of various elements in a related party transaction, including both financial and non-financial assets and liabilities;
- the accounting for differences in the amounts recorded for the consideration exchanged in a related party transaction involving financial instruments; and
- the impairment of related party financial instruments.
The Board will continue deliberating the feedback received in its June 2018 meeting and plans to issue the final amendments no later than the fourth quarter of 2018.
Retractable or Mandatorily Redeemable Shares Issued in a Tax Planning Arrangement
The Board continued discussing feedback from stakeholders and the recommendations from its Private Enterprise Advisory Committee on its Exposure Draft, “Retractable or Mandatorily Redeemable Shares Issued in a Tax Planning Arrangement.” The Board decided:
- to provide an option to present the effect of liability classification of retractable or mandatorily redeemable shares in either retained earnings or a separate component of equity;
- no additional transitional relief is necessary for the application of substantive rights guidance;
- additional guidance on determining the related party unit of account is necessary and provided feedback on an initial draft of the guidance;
- to provide guidance on assessing whether a tax planning arrangement undertaken in a series of steps should be viewed as one tax planning arrangement; and
- to clarify whether the decision tree in Financial Instruments, paragraph 3856.A29 also applies to retractable or mandatorily redeemable shares issued in a tax planning arrangement.
The Board will issue final amendments no later than the fourth quarter of 2018 in conjunction with the narrow-scoped amendments to Section 3856.
Enhancing the Relevance of Financial Reporting
Framework for Reporting Performance Measures
The Board discussed a draft Framework for Reporting Performance. The Framework is designed to help all parties in the financial reporting process – management, directors, contributors, owners, lenders, investors, auditors, regulators and others – improve the reporting of performance measures outside of financial statements. The Board is leading this first step to enhance the quality of financial and non-financial information that users rely on to make decisions to contribute, invest and lend funds to entities. The Board directed the staff to develop the draft Framework to apply to not-for-profit organizations, private enterprises and public companies.
To start a conversation with all parties involved in the financial reporting process, the draft Framework will be issued for public comment on June 14, 2018. The Board plans to seek feedback through discussions, surveys and responses to make the Framework a more useful tool for developing and reporting performance measures.
AcSB Due Process
The Board approved a report to the Accounting Standards Oversight Council on its compliance with due process.
Read about Board recommendations made to influence the development of IFRS® Standards and enhance the global comparability of financial reporting outcomes, including U.S. GAAP, in the Board’s Responses to IASB® Documents for Comment and Responses to Other Documents for Comment.