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
IFRS® Discussion Group
The AcSB discussed three issues the IFRS Discussion Group (the Group) raised at its meeting on May 19, 2022.
The first issue relates to the recent IFRS Interpretations Committee’s (Committee’s) Tentative Agenda Decision, “Special Purpose Acquisition Companies (SPACs): Accounting for Warrants at Acquisition.” Given the potential impact of this Tentative Agenda Decision on Canadian entities, the Group recommended that the AcSB formally respond. The Board submitted a response letter on May 30, 2022, having followed the Committee’s discussion as it occurred.
The second issue relates to matters for non-insurance entities when adopting IFRS 17, Insurance Contracts. The Group recommended that the AcSB consider publishing a resource that links to existing publications to help non-insurance entities understand the requirements in IFRS 17. The Board directed staff to prepare the resource the Group recommended, which will be available in July.
The third issue relates to a fact pattern involving a share-based payment award with a variable vesting period based on a market condition where the market condition is met earlier than initially estimated. The question raised in the Group’s discussion is whether the expense recognition should be accelerated in these circumstances. The Group acknowledged that there is diversity in how entities interpret IFRS 2 Share-based Payment in these circumstances. The Group recommended that the AcSB discuss this issue and determine what, if any, further action is required. The Board directed staff to discuss this issue with International Accounting Standards Board staff.
Standards for Private Enterprises
Related Party Combinations
The AcSB received an update on its Private Enterprise Advisory Committee feedback on the issues to prioritize in the Related Party Combinations project. The Board also considered whether a phased approach should be used to advance the project.
The AcSB discussed the staff proposals to address the items identified as a high priority. This included revisiting the requirement in Related Party Transactions, paragraph 3840.44(b), to retroactively restate comparatives and removing the reference to the “exchange amount” in paragraph 3840.44(a) to clarify that business combinations under common control would only be subject to requirements in Section 1582, Business Combinations. The Board agreed to proceed to project proposal, which will be discussed at its September 2022 meeting.
Related Party Transactions
The AcSB discussed the accounting for financial instruments acquired or assumed when a business is transferred between two enterprises under common control. The Board considered whether the instruments transferred should be included in the scope of Section 3856, Financial Instruments, or Related Party Transactions, paragraph 3840.44. The Board will consult its Private Enterprise Advisory Committee to understand how entities are currently accounting for financial instruments acquired or assumed in these transactions.
Standards for Not-for-Profit Organizations
Contributions
The AcSB discussed exposure draft proposals relating to endowments; contributed materials and services; pledges; and bequests and reached the following preliminary views:
- Permanent endowment contributions should be recognized as direct increases in net assets in the period in which the organization is entitled to the contribution as they represent resources that the organization will never be able to access or use for their own benefit.
- Organizations should continue to have the option to recognize contributed materials and services when specific criteria are met.
- Pledges and bequests should not be recognized until the contributed assets are received since an organization cannot control access to the benefit of these contributions until that point.
These preliminary views are subject to discussion with the Not-for-Profit Advisory Committee and further consideration by the AcSB as other aspects of an exposure draft are developed.
The AcSB also discussed fund accounting, presentation of net assets, and disclosure of restricted cash. The Board considered how presentation and disclosure requirements can complement the proposed approach for accounting for contributions and improve the relevance of financial statements prepared in accordance with Part III of the CPA Canada Handbook – Accounting.
The Not-for-Profit Advisory Committee will discuss and provide input on these proposals at its July 2022 meeting. The AcSB will continue discussing exposure draft proposals at its July 2022 meeting. The Board plans to issue an exposure draft in the first quarter of 2023.
Standards for Private Enterprises and Not-for-Profit Organizations
Insurance
The AcSB continued discussing insurance accounting under domestic standards. Currently, no standards in Part II, Accounting Standards for Private Enterprises or Part III, Accounting Standards for Not-for-Profit Organizations explicitly deal with insurance contracts an entity issues. The only standard in the CPA Canada Handbook – Accounting that explicitly deals with insurance contracts is IFRS 4 Insurance Contracts in Part I, IFRS Standards. IFRS 4 will be replaced by IFRS 17 Insurance Contracts for annual periods beginning on or after January 1, 2023. The Board is aware some entities have insurance obligations but do not apply the IFRS Standards in Part I because they do not meet the definition of a publicly accountable enterprise in the Preface to the Handbook. For example, these entities could include certain member associations that provide insurance to their members and certain self-insured entities, depending on their facts and circumstances. These entities’ insurance activities are typically ancillary to their core operations.
The AcSB considered whether it would be a priority to create a domestic insurance accounting standard. Through the information gathered to date, the Board understands that only a few entities are likely to be impacted. The Board also acknowledges the existence of well-established industry practices, including using actuarial guidance, in accounting for such insurance obligations under Part II and Part III of the Handbook. Considering other domestic priorities on its current work plan, the Board decided not to undertake standard-setting action at this time.
The AcSB notes that Section 1100, Generally Accepted Accounting Principles, and Section 1101, Generally Accepted Accounting Principles for Not-for-Profit Organizations, provide guidance in situations when primary sources of GAAP do not deal with accounting and reporting in financial statements of transactions or events an entity encounters. Entities shall adopt accounting policies and disclosures that are:
- consistent with primary sources of GAAP; and
- developed through the exercise of professional judgment and the application of financial statement concepts.
The AcSB values input and feedback from stakeholders. Should stakeholders have any questions on this decision or additional information that they would like the Board to consider, we can be reached anytime through our online form.
Revenue – Upfront Non-refundable Fees or Payments
The AcSB continued its discussion on feedback received from its Private Enterprise Advisory Committee and Not-for-Profit Advisory Committee on recent amendments to Section 3400, Revenue, related to accounting for upfront non-refundable fees or payments. Stakeholders indicated that the amendments sometimes result in information that is not decision-useful, particularly for entities collecting non-refundable initiation or life membership fees. The Board decided to issue an exposure draft to defer the effective date of these amendments while the Board analyzes the issues raised by stakeholders and determines what, if any, action is required to address these concerns. The Board expects to issue an exposure draft on July 15, 2022, with a 30-day comment period.
Relevance of Financial Reporting
Sustainability Reporting
The AcSB received an update on the Draft Guideline B-15, Climate Risk Management (the Guideline) issued by the Office of the Superintendent of Financial Institutions (OSFI). The Board discussed OSFI’s proposals and decided to issue a response letter. The Board will finalize its response at its July 2022 meeting. The Board encourages stakeholders to share their views on the Guideline by submitting their response letters to OSFI by August 19, 2022.
The AcSB also discussed feedback from stakeholders on the International Sustainability Standards Board (ISSB)’s Exposure Drafts, “[Draft] IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information” and “[Draft] IFRS S2 Climate-related Disclosures.” The Board will finalize its response at its July 2022 meeting. The Board encourages stakeholders to share their view on the ISSB’s Exposure Drafts by submitting their response letters to the ISSB by July 29, 2022.
Research
Crypto-asset Activities
The AcSB received an update on the recent developments in crypto-asset activities. The Board discussed possible next steps to advance financial reporting research on this topic, which include issuing a staff-led publication providing an overview of the crypto-asset ecosystem. The publication would include:
- market data on adoption, trends and developments;
- an overview of the global regulatory landscape; and
- educational material on the types and characteristics of crypto assets.
The publication would seek to incite dialogue, educate, and influence standard setting on the topic.
The AcSB decided to move ahead with the publication of the resource and to assess its impact before moving ahead with future publications on this topic.
Due Process
AcSB’s Advisory Committees
IFRS® Discussion Group
At its meeting on May 19, 2022, the IFRS Discussion Group discussed accounting for warrants on acquiring special purpose acquisition companies, hybrid work arrangements, matters for non-insurance entities when adopting IFRS 17 Insurance Contracts and share-based payment awards with variable vesting periods.
AcSB’s Annual Plan
The AcSB received a quarterly update on the activities relating to its 2022-23 Annual Plan, including identifying potential project-related risks and mitigating factors. The Board decided to continue with activities as planned and will continue to monitor whether updates to the Annual Plan are required. The Board will consider another quarterly update at its October 2022 meeting, or as required.
Strategic Research
The AcSB discussed the research completed to date regarding its proposed strategies related to the preface and scalability, as set out in the 2022-2027 Strategic Plan. The Board directed staff on more information needed to advance work on these strategies and to discuss next steps on this project. The Board will continue discussing next steps, including the nature and type of stakeholder consultation to undertake, at its meeting in September 2022.
Translation
The AcSB discussed the process for translating non-authoritative materials and the types of documents that are helpful and/or required for stakeholders to implement accounting standards. The Board has decided to begin translation on more non-authoritative materials and directed staff to prepare a roadmap on the nature and type of documents that will be translated.