EIC Abstracts Review — IFRS Adoption
Status: Review completed. Final decisions posted.
The AcSB’s Strategic Plan includes a decision to move financial reporting for Canadian publicly accountable enterprises to a single set of globally accepted, high-quality standards, namely, International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB). This convergence strategy implies that Emerging Issues Committee (EIC) Abstracts will no longer be applicable to publicly accountable enterprises at the changeover date to IFRSs. (This change does not affect private enterprises or not-for-profit organizations, pending determination by the AcSB of the strategies for those entities.)
A review of all EIC Abstracts resulted in recommendations to the AcSB concerning whether any issues addressed in the Abstracts should either be:
referred to the IASB or the International Financial Reporting Interpretations Committee (IFRIC); or
the subject of guidance issued by the AcSB because the issue is affected by specific Canadian legal, tax, regulatory or other circumstances that do not apply in other countries and, therefore, will not be addressed by the IASB. For example, the issue of when changes in tax legislation are considered substantively enacted in Canada may fall into this category.
A Task Force of accountants with expertise in both Canadian GAAP (including EIC Abstracts) and IFRSs was formed to assist AcSB staff in this review.
The review of the issues addressed by each EIC Abstract considered whether:
IFRSs provide adequate guidance on the issues. In some cases, IFRSs may explicitly address the issues. Alternatively, there may be sufficient guidance provided in IFRSs to permit financial statement preparers and auditors to deal with the issues even though they are not specifically addressed.
the issues would meet the criteria of the IFRIC to issue an interpretation, or of the IASB to amend a standard (for instance, through the annual improvements process). IFRIC has rejected issues proposed to it on the grounds that they represent implementation or application guidance rather than an interpretation of IFRSs.
the issues currently remain significant, given that some EIC Abstracts were issued as much as 19 years ago.
The review commenced in December 2007 and was completed in May 2008.
- The Task Force proposed that guidance should be provided on the issues addressed by EIC-111, “Determination of Substantively Enacted Tax Rates under CICA 3465,” EIC-146, “Flow-Through Shares,” and EIC-160, “Stripping Costs Incurred in the Production Phase of a Mining Operation.” The AcSB decided that:
- the issues addressed by EIC-111 should be considered by the AcSB’s planned forum for the discussion of financial reporting issues arising from the application of IFRSs;
- the issues addressed by EIC-146 should be included in staff’s review of the IASB’s exposure draft on income taxes, which is expected to be issued this summer; and
- the issues addressed in EIC-160 should be referred to the International Financial Reporting Interpretations Committee as there is a lack of guidance in IFRSs on accounting for stripping costs.
The AcSB previously decided that, on adoption of IFRSs, GAAP financial statements for pension plans should continue to be prepared in accordance with Section 4100, Pension Plans, rather than IAS 26, Accounting and Reporting by Retirement Benefit Plans. EIC-116, “Pension Plans — Disclosure Requirements for Income from Investments in Segregated Funds,” and EIC-168, “Accounting by Pension Plans for Transaction Costs,” will therefore be retained.
Issues in some EIC Abstracts might be helpful in the development of current IASB projects and, as a result, AcSB staff was requested to communicate these issues to the appropriate IASB staff, which have been identified as follows:
Common Control Transactions
Transfer of a Business Between Enterprises Under Common Control
Exchanges of Ownership Interests Between Enterprises Under Common Control – Wholly and Partially-Owned Subsidiaries
Basis of Accounting for Assets Acquired Upon the Formation of an Income Trust
Conversion of an Unincorporated Entity to an Incorporated Entity
Earnings per Share
The Effect of Contingently Convertible Instruments on the Computation of Diluted Earnings Per Share
Fair Value Measurement Guidance
Income Tax Considerations in Applying the Goodwill Impairment Test in CICA 3062
Accounting for Sales with Leasebacks
Liabilities and Equity
Accounting for Shares that Provide Investors with a Sale Right