Accounting Standards Board
Decision Summary
June 19, 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.

 

IFRS® Standards

Rate-regulated Activities

The Board received an update on the International Accounting Standards Board’s (IASB’s) Rate-regulated Activities project. The Board discussed the publication date of its research paper on the decision-usefulness of financial information that reflects the economics of rate-regulated activities in light of this update. The Board decided that it will publish its research paper by the end of this year and directed the staff to update the research paper for any additional data that has been collected.

This research paper is one of the first major products of the Board’s new research program, described in its 2016-2021 Strategic Plan.

Academic Advisory Council

The Board received feedback on the discussions at the June 1, 2018 Academic Advisory Council meeting. The topics included the Draft Framework for Reporting Performance Measures, hybrid pension plans, and a research paper on the relevance of financial reporting and the use of non-GAAP information in Australia.

User Advisory Council

The Board received feedback on the discussions at the June 12, 2018 User Advisory Council meeting. The Council received a presentation from, and provided input to, the IASB staff on the IASB’s Primary Financial Statements project. Other topics covered included the Draft Framework for Reporting Performance Measures, blockchain and cryptocurrencies, and the European Commission Fitness Check on the EU Framework for Public Reporting by Companies. The Board encourages interested parties to complete the online questionnaire regarding the Fitness Check.

Standards for Private Enterprises and Not-for-Profit Organizations

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 decided the following:

  • Debt instruments quoted in an active market and with observable inputs, issued or exchanged in a related party transaction, should be initially measured at fair value. The Board also decided to provide an accounting policy choice to subsequently measure these instruments at fair value or amortized cost.
  • Debt instruments not quoted in an active market and without observable inputs, issued or exchanged in a related party transaction, should be initially and subsequently measured at cost.
  • Guidance on the initial and subsequent measurement of indexed related party financial liabilities should be issued.
  • Not-for-profit organizations should recognize the forgiveness of related party financial assets in the statement of operations.

The Board plans to issue the final amendments no later than the fourth quarter of 2018.

Combinations

The Board approved a project to provide guidance on the initial measurement of a combination and the relevant disclosures. The project will explore the accounting for combinations completed by:

  • NFPOs applying Part III of the CPA Canada Handbook – Accounting; and
  • to the extent transactions with similar characteristics exist, for-profit enterprises applying Part II of the Handbook.

The Board will consult its Not-for-Profit Advisory Committee, Private Enterprise Advisory Committee and other stakeholders that have completed combinations as part of developing the proposals. The Board tentatively plans to issue an exposure draft in the second half of 2019, pending finalization of the project’s scope.

Standards for Private Enterprises

Retractable or Mandatorily Redeemable Shares Issued in a Tax Planning Arrangement

The Board continued discussing feedback on its Exposure Draft, “Retractable or Mandatorily Redeemable Shares Issued in a Tax Planning Arrangement.” The Board:

  • confirmed an option to recognize the effect of liability classification in either a separate component of equity or retained earnings; and
  • decided to provide additional transition relief to assist stakeholders with adopting the amendments.

The Board also considered proposed drafting changes relating to determining the related party unit of account and transition guidance. The Board will also consider a draft of the Basis for Conclusions at its next meeting in July 2018.

The Board will issue final amendments no later than the fourth quarter of 2018 in conjunction with the narrow-scope amendments to Section 3856, Financial Instruments.

Section 3056, Interests in Joint Arrangements – Narrow-scope amendments

The Board considered the advice of its Private Enterprise Advisory Committee to clarify the applicability of the cost-method guidance in Section 3051, Investments. The Board decided to propose that paragraph 3051.07A should be applied to interests in jointly controlled enterprises that are accounted for using the cost method.

The Board also considered a communication plan for the forthcoming exposure draft and decided on its outreach activities with stakeholders. The Board directed staff to begin the balloting process for the proposals and plans to issue an exposure draft in September 2018 with comments due in December 2018.

Section 3465, Income Taxes – Narrow-scope amendments

The Board considered the advice of its Private Enterprise Advisory Committee relating to the proposals, and decided:

  • to remove the example in Section 3465, which is no longer applicable given recent changes to the Income Tax Act (Canada); and
  • to require enterprises using the future income taxes method to present future income tax assets and liabilities as non-current and to disclose the amount of future income tax assets and liabilities.

The Board also considered a communication plan for the forthcoming exposure draft and decided on its outreach activities with stakeholders. The Board directed staff to begin the balloting process for the proposals and plans to issue an exposure draft in September 2018 with comments due in December 2018.

Enhancing the Relevance of Financial Reporting

Framework for Reporting Performance Measures

The Board published the Draft Framework for Reporting Performance Measures on June 14, 2018. The Framework is designed to help all parties in the financial reporting process – management, directors, contributors, owners, lenders, investors, auditors, regulators, academics and others – improve the reporting of performance measures outside of financial statements. The Board discussed the outreach activities performed so far to start the conversation, including:

The Board considered the initial feedback received and the consultations planned during the comment period to obtain additional feedback from users and other parties involved in reporting the performance measures of not-for-profit organizations, private enterprises and public companies. The Board emphasized the importance of hearing from those various stakeholder groups to continue to develop the Framework.

All parties involved in the financial reporting by for-profit and not-for-profit entities are encouraged to join this conversation – by completing a forthcoming survey, joining online or in-person discussions that are being planned or providing comments – on the Framework by September 17, 2018.

    

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.