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AcSB Decision Summary – December 6-7, 2021

This summary of Accounting Standards Board (AcSB) decisions has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussion on projects, which may change after further deliberations by the Board. Decisions to publish Handbook material are final only after a formal ballot process.

The AcSB will respond to change and reprioritize when necessary, ensuring we can address implementation challenges and provide the information users may need in these unique circumstances.

The AcSB values input and feedback from stakeholders and can be reached anytime through our online form.

IFRS® Standards

Classification of Debt with Covenants as Current or Non-Current

The AcSB received an overview of the International Accounting Standard Board’s (IASB) Exposure Draft, “Non-current Liabilities with Covenants: Proposed amendments to IAS 1,” and discussed a plan to respond.

The AcSB encourages stakeholders to share their views on the Exposure Draft by submitting their response letters to the IASB by March 21, 2022, with a copy to the AcSB. If respondents would like the Board to consider their comments before finalizing its letter to the IASB, they should submit their response letters to the AcSB before March 4, 2021.

The AcSB will discuss a draft of its response letter at its meeting in February 2022.

Post-implementation Review – IFRS 9

The AcSB received an update of outreach activities and feedback heard from stakeholders on the IASB’s Request for Information, “Post-implementation Review: IFRS 9 Financial Instruments – Classification and Measurement.” The AcSB encourages stakeholders to share their views on the Request for Information by submitting comment letters to the IASB by January 28, 2022, with a copy to the AcSB. If respondents would like the Board to consider their comments when drafting its letter to the IASB, they should submit their response letters to the AcSB before January 5, 2022.

The AcSB will discuss a draft of its response letter at its meeting in January 2022.

Standards for Private Enterprises and Not-for-Profit Organizations

Cloud Computing Arrangements

The AcSB discussed the feedback from its Not-for-Profit Advisory Committee and its Private Enterprise Advisory Committee on proposals to address customer’s accounting for fees paid in a cloud computing arrangement including related implementation costs. The Board also reviewed a preliminary draft of the accounting guideline.

The AcSB tentatively decided to provide an optional simplification approach to permit an entity to expense as incurred all intangible elements in a cloud computing arrangement. If the simplification approach is not applied, the Board tentatively decided to also provide an accounting policy choice to account for certain directly attributable implementation costs when the arrangement is considered a software service. The accounting policy choice will allow entities either to expense as incurred or to capitalize these costs as prepaid expenses.

The AcSB then discussed the proposed guidance in the accounting guideline for analyzing a cloud computing arrangement for the various goods and services received. The Board directed staff to redraft the proposed guidance to include using judgment in determining the extent of analysis needed.

The AcSB also discussed the proposed disclosure and transition requirements. The Board tentatively decided not to allow prospective application of the accounting guideline to improve comparability between the financial statements of different preparers. The Board directed staff to explore a modified retrospective transition method.

The AcSB’s next step is to review a revised draft of the accounting guideline and other information to include in the exposure draft. The Board plans to issue the exposure draft in the first quarter of 2022, with a 90-day comment period.

Parts II and III Priorities and Changes in Other Frameworks

As part of its ongoing activities to maintain high-quality domestic standards, the AcSB considers whether amendments made to accounting frameworks in other jurisdictions, if incorporated into Canadian standards, would significantly improve Parts II and III of the CPA Canada Handbook – Accounting. The Board discussed recommendations from its Private Enterprise Advisory Committee and its Not-for-Profit Advisory Committee on recent amendments made to the following frameworks:

  • U.S. generally accepted accounting principles (GAAP) issued by the Financial Accounting Standards Board;
  • IFRS® Standards issued by the IASB; and
  • Not-for-profit specific amendments made to:
    • New Zealand GAAP issued by the New Zealand Accounting Standards Board;
    • Australian accounting standards issued by the Australian Accounting Standards Board; and
    • U.K. GAAP issued by the U.K.’s Financial Reporting Council.

The AcSB agreed with the Committees’ recommendation to include accounting for onerous contracts on the list of topics considered for the Board’s future projects. The Board also decided to consider the amendments made to IFRS 9 included in the 2018-2020 Annual Improvements to IFRS Standards in a future annual improvements project.

The AcSB also discussed the projects currently on the Board’s future project list. The Board decided to defer conducting post-implementation reviews on Section 1591, Subsidiaries, and Section 3056, Interest in Joint Arrangements, in consideration of existing feedback on these sections. The Board will continue to assess the priority of the projects as part of its ongoing discussion on its 2022-2023 Annual Plan.

Retractable or Mandatorily Redeemable Shares Issued in a Tax Planning Arrangement

The AcSB discussed questions raised by stakeholders with applying the retractable or mandatorily redeemable shares (ROMRS) amendments that are effective for fiscal years beginning on or after January 1, 2021. The Board considered various tax planning arrangements that its Private Enterprise Advisory Committee discussed on October 27, 2021.

After considering the Private Enterprise Advisory Committee’s advice, the AcSB decided not to pursue additional standard setting to clarify the amendments. The Board suggests that stakeholders consider the previously issued Basis for Conclusions, podcast series and webinar that provide guidance on applying judgment when implementing the amendments. The Board will continue to monitor the implementation of the amendments and take additional action as needed. The Board encourages stakeholders to raise any implementation concerns using its Contact Us form.

Relevance of Financial Reporting

Disclosure of Climate-related Matters

The AcSB received an overview of the Canadian Security Administrator’s (CSA) proposed National Instrument (NI) 51-107, Disclosure of Climate-related Matters. The Board discussed the interaction of the proposals with the financial statements of reporting issuers. The Board also discussed feedback from its User Advisory Committee on the proposals.

The Board decided on the key points to include in its response letter to the CSA. The Board will approve its response letter at its meeting in January 2022.

Due Process

AcSB’s Advisory Committees and Insurance Transition Resource Group

The AcSB received feedback on the discussions at recent meetings of its Insurance Transition Resource Group, Private Enterprise Advisory Committee, and User Advisory Committee.

Insurance Transition Resource Group

At its meeting on November 25, 2021, the Group discussed the IASB’s Post-implementation Review of IFRS 9.

Private Enterprise Advisory Committee

At its meeting on November 18, 2021, the Committee discussed cloud computing arrangements and a question raised on the related party amendments to Section 3856, Financial Instruments.

User Advisory Committee

At its meeting on November 16, 2021, the Committee discussed the IASB’s Post-implementation Review of IFRS 9, the CSA’s proposed NI 51-107, the classification of debt with covenants as current or non-current, and a study of the current practice of net-zero reporting in Canada.

Annual Plan

The AcSB discussed an initial draft of its annual operating plan for the year beginning on April 1, 2022.

The AcSB made preliminary decisions on the activities to undertake in 2022-2023, including considering the new activities to add to its work plan related to Accounting Standards for Private Enterprises and Accounting Standards for Not-for-Profit Organizations. The Board will continue to evaluate its activities in the coming months to consider the activities required to achieve the strategies outlined in its next Strategic Plan, which also takes effect on April 1, 2022.

The AcSB will continue discussions at its January 2022 meeting and plans to approve the 2022-2023 annual plan in March 2022.

Draft Strategic Plan

The AcSB discussed a revised draft of its 2022-2027 Strategic Plan, which was updated based on feedback from stakeholders. The Board will discuss the next draft at its meeting in January 2022. The Accounting Standards Oversight Council will also discuss the next draft at a special meeting in January 2022.

The AcSB expects to issue the final 2022-2027 Strategic Plan on March 31, 2022.