Responses to Other Documents for Comment
The Accounting Standards Board (AcSB) may respond to a document issued for comment by other bodies when it relates to matters effecting financial reporting by Canadian entities.
AcSB Response – The FASB Exposure Draft on Financial Services — Insurance
On December 15, 2016, the AcSB submitted a comment letter responding to the FASB's Exposure Draft issued in September 2016. The letter commends the FASB for moving to a current approach to the accounting for long-duration insurance contracts and agrees overall with the approach being proposed. The letter strongly supports the proposal for a discount rate that is a current market observable rate that is independent of the insurance entity’s expected return on its invested assets. The letter recommends that the discount rate be a principles-based rate that reflects the characteristics of the cash flows and the liquidity characteristics of the insurance obligation. The letter encourages common global adoption dates for these proposed targeted improvements and the IASB’s forthcoming new insurance standard to the extent this is reasonable. Read the AcSB’s response posted by the FASB.
AcSB Response – The FASB Invitation to Comment on Agenda Consultation
On October 17, 2016, the AcSB responded to the Financial Accounting Standard Board’s (FASB) Invitation to Comment, “Agenda Consultation”, issued in August 2016.
Overall, the letter commends the FASB for the nature and structure of the document and for the initial research the FASB conducted before issuing the Invitation to Comment.
The letter urges the FASB and the IASB to, whenever possible, seek high-quality solutions that will result in comparable financial reporting outcomes in the U.S and globally and encourages the FASB to obtain the views of other standard setters on projects of mutual interest. Furthermore, the letter provides the AcSB’s assessment of the priority for which the FASB should prioritize the topics raised in the Invitation to Comment, given Canada’s use of U.S. GAAP. The letter also recommends that the FASB monitor the standard-setting activities of the IASB and national standard setters with regard to provisions, contingent liabilities and contingent assets, and pollutant pricing mechanisms. Read the AcSB’s letter posted by the FASB.
AcSB Response – The Office of the Superintendent of Financial Institutions Canada Draft Guideline on IFRS 9 Financial Instruments and Disclosure
On May 5, 2016, the AcSB responded to the Office of the Superintendent of Financial Institutions’ Draft Guideline, which provides Canadian federally regulated entities guidance on the application of IFRS 9 Financial Instruments and the related disclosure requirements. The letter commends the Office of the Superintendent of Financial Institutions for:
- revisiting its previously existing Guidelines as the result of the issuance of IFRS 9; and
- its commitment to comprehensively review its disclosure guidelines for insurance enterprises once the International Accounting Standards Board finalizes IFRS 4 Insurance Contracts.
The letter strongly urges the Office of the Superintendent of Financial Institutions to eliminate any guidance that would restrict Canadian federally regulated entities from applying all aspects of IFRS 9 for financial reporting purposes. This includes the limitations on the use of fair value and practical expedients.
Overall, the letter strongly supports global comparability in financial reporting and urges the Office of the Superintendent of Financial Institutions to eliminate any restrictions on the application of IFRS 9 that would:
- reduce global comparability in financial reporting between Canadian federally regulated entities and their peers, both domestically and internationally; and
- place Canadian financial institutions at a competitive disadvantage when compared to their peers.
AcSB Response – OSFI Draft Advisory: Early Adoption of IFRS 9 Financial Instruments for Federally Regulated Entities with October Year-ends
The AcSB has responded to the Office of Superintendent of Financial Institutions’ Draft Advisory. The letter expresses concerns about OSFI’s proposal and notes that the AcSB concerns itself with the quality of Canadian entities’ implementation of new IFRSs given the interpretation risk and the associated implementation costs.
Read the AcSB’s letter submitted to OSFI.