2017 Annual Improvements
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Second quarter of 2017 – Final Handbook material to be approved
The Accounting Standards Board (AcSB) has adopted an annual process to make minor improvements to accounting standards for private enterprises (ASPE) in Part II of the Handbook as they are identified.
The annual improvements process:
- clarifies guidance or wording in the standards; or
- corrects relatively minor unintended consequences, conflicts or oversights.
Major improvements to the standards, such as the issuance of a new standard, are not included in the annual improvements process. Annual improvements to Part II may also apply to not-for-profit organizations that use Part III.
PROJECT NEWS & DECISION SUMMARIES
FYI Article – 2017 Annual Improvements to Accounting Standards for Private Enterprises: Have Your Say
December 5, 2015. This article outlines the AcSB’s Exposure Draft and urges you to respond by December 15, 2016.
AcSB Exposure Draft – 2017 Annual Improvements to Accounting Standards for Private Enterprises
September 13, 2016. The AcSB has issued an Exposure Draft proposing amendments that will affect private enterprises and not-for-profit organizations. Stakeholders are encouraged to submit their comments by December 15, 2016.
AcSB Decision Summary – July 20, 2016
The AcSB considered the remaining issues for inclusion in the 2017 annual improvements process and decided that the proposals:
- in Section 1506, Accounting Changes, would require the disclosure of the amount of an adjustment related to a change in accounting policy for the prior period(s) presented, and remove the requirement to disclose the adjustment related to the current period; and
- in Section 1521, Balance Sheet, would clarify the presentation and disclosure requirements including that assets under capital lease should be presented separately.
The AcSB further decided not to include in the 2017 annual improvements clarification on how impairment losses should be allocated between long-lived assets and goodwill when an impairment loss is determined at the reporting unit level, as the issue is not within the scope of an annual improvement. The AcSB directed staff to conduct further analysis of the issue for consideration at a future meeting.
In addition, the AcSB decided to correct the duplication of the requirement to disclose the number of shares issued in Section 3240, Share Capital, as an editorial correction.
The AcSB discussed whether to remove Foreign Currency Translation, paragraph 1651.53, to permit the reversal of previously recorded write-downs of inventory consistent with the guidance in Section 3031, Inventories. The AcSB would like to better understand the concern before deciding on this issue and directed staff to conduct further analysis of the issue.
The AcSB expects to issue an exposure draft in the third quarter of 2016.
Private Enterprise Advisory Committee Notes – June 14, 2016
The Committee discussed various issues raised by stakeholders to consider which, if any, should be suggested to the AcSB for inclusion in the 2017 Annual Improvements.
The Committee agreed to suggest the following to the AcSB:
Item to Be Considered as Part of the 2017 Annual Improvements
Foreign Currency Translation – Reversal of Previously Recorded Write-downs of Inventory
Foreign Currency Translation, paragraph 1651.53, requires that previously recorded write-downs of inventory should not be reversed in the translated financial statements of an integrated foreign operation. However, this requirement contradicts the guidance in Section 3031, Inventories, that requires previous write-downs to inventory be reversed when the circumstances that previously caused inventories to be written down no longer exist or there is clear evidence of an increase in the net realizable value reflecting changes in economic circumstances.
The Committee agreed to suggest to the AcSB that this contradiction be addressed by deleting the requirement that prohibits the reversal of previously recorded write-downs of inventory in paragraph 1651.53.
Balance Sheet – Presentation of Assets Leased under Capital Lease
Section 1521, Balance Sheet, consolidates the presentation requirements in other Sections. Stakeholders noted that paragraph 1521.04, which lists the assets that should be separately presented on the balance sheet, omits assets leased under capital leases. However, Leases, paragraph 3065.21, requires that assets under capital lease should be presented separately. The Committee agreed to suggest to the AcSB that the relevant standards in either Section 1521 or Section 3065 should be aligned to address this issue.
Accounting Changes –Disclosure of Adjustments when Applying and Accounting Policy Change
The pre-changeover accounting standards in Part V, Section 1506, Accounting Changes, required an enterprise to disclose the amount of an adjustment related to an accounting policy change for both the current and each of the prior period(s) presented. When Part II standards were developed, the disclosure requirement regarding the adjustment for the current period was retained; however, the disclosure requirement relating to each of the prior period(s) presented was removed. Committee members noted that disclosing the adjustment related to the prior period(s), rather than the current period, meets the needs of users.
The Committee agreed to suggest to the AcSB that this issue be addressed by deleting the requirement to disclose the amount of an adjustment related to an accounting policy change for the “current period” and add a requirement for the “prior period(s) presented” in paragraphs 1506.34(e) and 1506.35(c).
Items to Be Addressed but Considered to Be Outside the Scope of the Annual Improvements
Impairment – Allocation of an Impairment Loss
Section 3063, Impairment of Long-lived Assets, and Section 3064, Goodwill and Intangible Assets, respectively, provide limited guidance on how impairment losses should be allocated between long-lived assets and goodwill (or an asset group) when they are assessed for impairment at the same time, at the reporting unit level. The Committee noted that in practice this issue is raised frequently and that there is a lack of guidance in Part II of the Handbook, leading to diversity in practice. Accordingly, the Committee agreed to suggest to the AcSB that this issue warrants further consideration before any change can be considered.
Private Enterprise Advisory Committee Notes – February 17, 2016
The Committee discussed various issues raised by stakeholders to consider which, of any, should be recommended to the AcSB for inclusion in the 2017 Annual Improvements.
The Committee agreed to recommend the following to the AcSB:
Item to Be Considered as Part of the 2017 Annual Improvements
Share Capital – Disclosure of Number of Shares Issued
The pre-changeover accounting standards in Part V, Section 3240, Share Capital, required certain disclosures in respect of authorized andissued share capital in paragraphs 3240.02 and 3240.03, respectively. When Part II was developed, many of the disclosure requirements regarding authorized share capital were no longer required. In the process of removing the disclosure requirements relating to authorized share capital and merging some of those requirements with disclosures relating to issued share capital, the requirement to disclose the number of shares issued was duplicated in paragraphs 3240.20(a) and 3240.20(e).
The Committee agreed to recommend to the AcSB that this duplication be addressed by deleting the requirement to disclose the number of shares issued in paragraph 3240.20(e).
Items to Be Addressed as Narrow-scope Amendments
Subsidiaries – Transitional Provisions
The transitional provisions in Section 1591, Subsidiaries, were developed to provide relief only on transition to the new Standards. However, Committee members noted that some stakeholders hold the view that the transition provisions may be applied when an enterprise changes its accounting policy choice from cost to consolidation at any time in the future.
The Committee agreed to recommend to the AcSB that the applicability of the transitional provisions be clarified. The Committee noted that Section 1591 is effective for fiscal years beginning on or after January 1, 2016 and that the final annual improvements from the next cycle will not be issued until July 1, 2017. In that regard, the Committee further agreed to recommend that this issue be addressed outside the annual improvements cycle as a narrow-scope amendment.
Subsidiaries – Accounting for a Subsidiary Controlled through a Combination of Contractual Arrangements and Voting Interest
Stakeholders have noted that it is unclear as to how the voting interest, if any, that an investor holds in a subsidiary controlled through a combination of voting rights and contractual arrangements should be accounted for upon reading paragraph 1591.24(b)(ii). The Committee also noted that it is not clear in the guidance that an enterprise is not required to assess whether contractual arrangements give rise to control when consolidatedfinancialstatements are not being prepared. The Committee agreed to recommend to the AcSB that the standard be clarified in respect of both issues raised and that the issues should be addressed as part of the narrow-scope amendment discussed above.
FYI Article – Annual Improvements: Revised Timing
January 26, 2016. Are you aware that the AcSB revised the timing of the annual improvements process for accounting standards for private enterprises? Here’s an overview of the new process.
AcSB Decision Summary – November 24, 2015
In response to stakeholder feedback, the AcSB agreed to revise the timing of the annual improvements process, such that the exposure draft will be issued in September rather than February and final amendments will be released in the Handbook the following July as opposed to October. As a result, the next cycle of annual improvements will be issued in 2017. Stakeholders are encouraged to submit issues.
The AcSB considered recommendations of its Private Enterprise Advisory Committee and decided to include proposals in the 2017 annual improvements to remove the requirements for an enterprise to disclose:
- its accounting policies “as the first note to the financial statements” as described in Section 1505, Disclosure of Accounting Policies; and
- the carrying amount of impaired operating lease receivables set out in Section 3065, Leases.
The AcSB also decided not to include several other issues raised by stakeholders during the 2015 annual improvements process and the Post-implementation Review of Section 3856, Financial Instruments. The AcSB determined that the issues identified in the Post-implementation Review either were not within the scope of an annual improvement or thought the issues should be addressed as part of broader projects.
The AcSB expects to issue an exposure draft of the proposed 2017 annual improvements in September 2016.
Private Enterprise Advisory Committee Notes – October 6, 2015
These meeting notes include a summary of the Committee’s discussion of various issues raised by stakeholders to date.
Disclaimer: This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal ballot process.