Members of the public are encouraged to submit issues for possible consideration by the Accounting Standards Board (AcSB) as part of its annual improvements process.
Annual Improvements Criteria
To be addressed as an annual improvement, an issue must be:
- a correction of an error; or
- clarification of existing guidance.
Corrections of errors consist of:
- resolving conflicts between existing requirements in the standards;
- addressing oversights in creation of the standards; or
- addressing unintended consequences of the existing requirements.
Clarifications of existing guidance generally address:
- unclear wording in the standards; or
- an absence of guidance in the standards.
Issues that are not corrections of errors or clarifications of existing guidance generally will not be addressed in the annual improvements process. Issues determined not to meet the criteria for inclusion in the annual improvements may be addressed outside that process.
Guidelines for Clarifications
The following guidelines are used to determine whether a clarification should be addressed as part of the annual improvements. These guidelines are not intended to act as definitive rules; accordingly, there may be cases in which issues that do not meet all of these guidelines are addressed. Other factors may also be considered in evaluating a particular issue.
- Clarifications should be narrow in scope. Major changes are not included in the annual improvements process. For example, a suggestion to change a fundamental or pervasive part of a standard would generally be a major improvement and, accordingly, not an annual improvement.
- Professional judgment is encouraged under accounting standards for private enterprises. A standard should provide sufficiently clear guidance that it results in the appropriate accounting with the proper exercise of professional judgment. By its nature, professional judgment may result in some divergence in practice in the accounting for a particular type of transaction, asset or liability within the bounds set by the standards. However, if the application of professional judgment results in a very wide range of outcomes, then the standard needs to be clarified.
- An issue should be widespread in practice. Unique, or very rare, situations are generally not addressed. While issues that are relevant to one particular industry may be appropriate topics, those that affect very few entities across the overall private enterprise sector or a small portion of a particular industry, will generally not result in an annual improvement.
- When an issue relates to a standard that is expected to be modified as part of a current major improvements project, there must be a need to make the improvement sooner than the completion of the major project in order for it to be addressed. Such circumstances are expected to be rare.
Annual Improvements Process
The AcSB uses the criteria above to assess whether a specific issue should be addressed as part of the annual improvements process with input from the Committee. Ensuring that an issue meets these criteria promotes efficient discussion of the issue, and also helps stakeholders in framing issues submitted for consideration.
Issues are considered during the year and then bundled together for purposes of exposure and issuance as amendments to Part II of the Handbook. This “bundling” reduces the number of times changes to the standards are proposed and issued and makes it easier for stakeholders to keep current with changes to the standards. The typical timeline will result in an exposure draft being issued late in the third quarter of the year and the changes being finalized late in the second quarter of the following year. This timing will result in the annual improvements being available for use in the year after they are issued.
- Issues should meet the Annual Improvements Criteria.
- Requests for clarification should identify why the existing guidance is unclear and the alternative accounting that might result from that lack of clarity.
- Issues will be presented without identifying the submitter.
Submit issues in writing to:
Mohamed Hassanali CPA, CA
Principal, Accounting Standards Board
277 Wellington Street West
Toronto ON M5V 3H2
Telephone: +1 (416) 204-2967
Fax: +1 (416) 204-3412
Email: [email protected]