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.
Employee Future Benefits
The Committee received an update on the AcSB’s discussions regarding changes to pension legislation in Ontario and Quebec, including the effects on the measurement of the defined benefit obligation. Committee members provided feedback on their experience in practice relating to using funding valuation for defined benefit plans with and without a funding valuation requirement.
The Board will consider the Committee’s feedback at its next meeting in June 2019.
Amendments in Other Frameworks
The Committee considered recent amendments issued in other jurisdictions to assess whether some or all of the new accounting in those standards would provide significant benefit to Canadian private enterprises reporting under ASPE. Committee members discussed:
- new or amended standards under U.S. generally accepted accounting principles issued by the U.S. Financial Accounting Standards Board (FASB) since December 2017; and
- IFRS® Standards issued or amended by the International Accounting Standards Board since December 2017.
The Committee advised the AcSB that the FASB amendments related to accounting for cloud computing arrangements have merit for the Board’s consideration in its Part II priorities.
The Committee also discussed practice issues and advised the AcSB to consider the following:
- Committee members had differing views about whether the liquidation basis of accounting is considered ASPE or not when financial statements are not prepared on a going concern basis. The Committee referred the issue to the Board to consider clarifying in Section 1400, General Standards of Financial Statement Presentation, whether the liquidation basis is ASPE.
- Committee members raised a concern about whether the option to classify retractable or mandatorily redeemable shares issued in a tax planning arrangement as a financial liability is to be applied on a per transaction basis, per share basis, per class of share basis, or as a policy choice. The Committee advised the Board to consider this issue and provide clarity on how the choice is to be applied.
- Committee members discussed whether the condition that no consideration other than shares is included in a tax planning arrangement for retractable or mandatorily redeemable shares is intended to mean zero consideration or if nominal consideration still meets the condition for equity classification on a materiality basis. Committee members had mixed views and referred the issue to the Board for clarification.
The Committee also discussed the results of its member-feedback survey for the 2018-2019 fiscal year.