The Private Enterprise Advisory Committee assists the Accounting Standards Board (AcSB) with maintaining and improving accounting standards for private enterprises (ASPE) in Part II of the CPA Canada Handbook – Accounting and with identifying the need for non-authoritative guidance about the standards. The Committee makes recommendations to the AcSB but is not authorized to interpret or provide authoritative guidance on ASPE.
The AcSB staff has prepared this document based on discussions held during the Committee’s meeting. The meeting notes do not necessarily represent the AcSB’s views, and nothing in them constitutes authoritative guidance on acceptable or unacceptable application of ASPE. Only the AcSB can make such a determination.
Cloud Computing Arrangements
The Private Enterprise Advisory Committee discussed stakeholder feedback on the Exposure Draft, “Customer’s Accounting for Cloud Computing Arrangements.”
The Committee advised the AcSB of the following:
- The accounting policy choices in the Guideline should be applied consistently to all cloud computing arrangements.
- In a software service situation, the nature of expenditures on implementation activities is like an operating expense because the entity does not control the software. However, given stakeholders’ feedback, the Committee thought presenting such capitalized expenditures as long-term prepaid expenses would be more appropriate than allocating between a current and non-current portion.
- Adding an example to illustrate the accounting for a software module implemented after access to the software has commenced would be helpful.
The Committee also considered stakeholders’ feedback on the challenges entities may encounter in obtaining information to allocate arrangement consideration. The Committee thought some entities may need more time to review their cloud computing arrangements and assess whether they need additional information from their vendors to develop a supportable method for allocating arrangement consideration. Therefore, the Committee advised deferring the Guideline’s effective date by one year to apply to annual financial statements relating to fiscal years beginning on or after January 1, 2024. The Committee discussed options to provide additional transition relief.
The AcSB will consider the Committee’s comments at its meeting on July 20-21, 2022.