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AcSB Decision Summary – July 17, 2019

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.

IFRS® Standards

Insurance Contracts

The AcSB received an update on international developments relating to IFRS 17 Insurance Contracts. The Board discussed the proposed amendments to the standard in preparation for its outreach activities with IASB member, Darrel Scott. These activities included:

  • hosting a panel discussion on July 18, 2019, featuring Mr. Scott and other experts from the financial reporting community (video recording available);
  • consulting with the Board’s Insurance Transition Resource Group; and
  • undertaking targeted outreach with Canadian stakeholders.

The AcSB will also hold two virtual roundtables on September 5 and 11, 2019, for Canadian stakeholders across Canada to provide input on the proposed amendments to IFRS 17.

IFRS® Discussion Group

The AcSB received feedback from the IFRS Discussion Group’s meeting on June 20, 2019. It included the Group’s recommendation that the Board consider referring the following two issues to the IASB or the IFRS® Interpretations Committee: 

  • Issue 1: Considering rights of first refusal in assessing right to control under IFRS 16 Leases.
  • Issue 2: Recognition and measurement of uncertain tax positions acquired in a business combination. Specifically, whether the exception described in paragraph 24 of IFRS 3 Business Combinations should be revised to include both the current and deferred tax asset or liability.

The AcSB discussed the Group’s recommendations:

  • Issue 1: The Board directed staff to undertake further research to understand how pervasive the issue is across different industries in Canada. 
  • Issue 2: The Board directed the staff to undertake further research to evaluate whether the issue meets the submission criteria for the IFRS Interpretations Committee. 

Standards for Private Enterprises


The AcSB considered feedback on the fatal-flaw-review of Section 3041, Agriculture, and directed staff to make some minor clarifications.

The AcSB approved issuing the final standard, no later than the fourth quarter of 2019, subject to final drafting and a written ballot.

Implementing Accounting Standards for Private Enterprises (ASPE)

The AcSB discussed implementation questions stakeholders raised on the amendments to Section 3856, Financial Instruments, issued in December 2018 for retractable or mandatorily redeemable shares issued in a tax planning arrangement. The Board deliberated:

  • how “Condition 1 – Control” should be interpreted in tax planning arrangements where control of an enterprise is not directly held;
  • “Condition 2 – No consideration other than shares” and whether nominal consideration in a tax planning arrangement results in this condition not being met; and
  • “Condition 3– Redemption schedule” and whether a redemption schedule for some of the retractable or mandatorily redeemable shares issued in a tax planning arrangement results in all the remaining shares being classified as a financial liability. 

The AcSB decided that it will issue additional implementation materials to assist stakeholders with applying the amendments. These materials will outline factors that enterprises might consider when applying professional judgment in determining the appropriate classification of the shares in these arrangements.

Standards for Not-for-Profit Organizations


The AcSB continued discussing the initial measurement of a combination between organizations within the scope of Part III of the CPA Canada Handbook – Accounting. The Board tentatively agreed, subject to further deliberation, that:

  • unfavourable lease arrangements meet the definition of a liability and should be recognized for combinations that are accounted for as an acquisition;
  • transaction costs should be defined in the standard and that the definition should include severance costs; and
  • goodwill recognized from a previous not-for-profit acquisition should be expensed when a not-for-profit organization applies Part III for the first time.

The AcSB also discussed situations in which an acquiror used the size exemption for the recognition of capital assets and intangible assets prior to a combination accounted for as an acquisition. The Board decided that if the acquiror no longer met the exemption subsequent to the acquisition, the capital assets and intangible assets acquired would be recognized at fair value.

The AcSB also considered other drafting proposals to clarify the definition of a reporting entity and consequential amendments. The Board will continue its deliberations in September 2019 and plans to issue an exposure draft in January 2020.

Enhancing the Relevance of Financial Reporting

The AcSB discussed the progress in raising awareness and encouraging the use of the Framework for Reporting Performance Measures. The Board provided feedback on tailored communications and activities to connect with management, directors, and users on how the Framework’s guidance can help enhance the quality of the information reported about performance measures. The Board is making the Framework available in the CPA Canada Standards and Guidance Collection in August 2019. This will make the voluntary guidance easily accessible to stakeholders on the CPA Canada research platform. It is already accessible on the website.

Due Process

Board Advisory Committees

The AcSB received feedback on the discussions from the June 2019 meetings of its IFRS® Discussion Group and User Advisory Council.

IFRS Foundation Due Process Handbook

The AcSB discussed the draft response letter to the IFRS® Foundation’s Exposure Draft “Proposed amendments to the IFRS Foundation Due Process Handbook.The Board directed the staff to make amendments based on its comments. The Board’s final response letter will be sent to the IFRS Foundation by the July 29, 2019 deadline.

AcSB’s Advisory Committees’ Terms of Reference and Standard Operating Procedures

The AcSB discussed proposed changes to the Terms of Reference and the standard operating procedures for the Board’s advisory committees. For example, the Board proposes to expand the range of potential membership of the committees to make recruitment more flexible. The Board directed staff to update the Terms of Reference and the standard operating procedures based on its comments. The documents will be presented to the respective committees for their comments.

The AcSB will approve the Terms of Reference and will ratify the standard operating procedures at a future meeting.