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AcSB Decision Summary – May 24, 2023

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® Accounting Standards

IFRS 9 and IFRS 15 Post-implementation Reviews

The AcSB discussed its plan to respond to the International Accounting Standards Board’s (IASB) Requests for Information on the Post-implementation Reviews of IFRS 9 Financial Instruments—Impairment (issued on May 30, 2023, with a 120-day comment period) and IFRS 15 Revenue from Contracts with Customers (planned to be issued in late June with a 120-day comment period). The Board approved outreach and communications plans, which include gathering feedback from Advisory Committees and Working Groups, public roundtables, and targeted outreach with representatives from industries heavily impacted by these standards. More information on public events will be shared on our website in the coming weeks.

Standards for Private Enterprises

Domestic Implications of the International Tax Reform Pillar Two Model Rules

The AcSB heard from its Private Enterprise Advisory Committee that some entities applying Part II of the CPA Canada Handbook – Accounting may be impacted by the Global Anti-Base Erosion rules (GloBE) released as part of the Pillar Two initiative by the Organisation for Economic Co-operation and Development (OECD). 

The OECD’s objective for Pillar Two is for large multinational groups to pay a minimum amount of tax on the adjusted net income arising in each jurisdiction in which they operate. This will be achieved by applying a system of top-up taxes that results in the total amount of taxes payable on excess profit for each jurisdiction representing at least the minimum rate of 15 percent. The GloBE rules provide a template that jurisdictions may use when developing and enacting their domestic tax laws. The rules are intended to be enacted via domestic tax law in the respective countries.

The AcSB discussed accounting for the GloBE minimum tax and the impact on Section 3465, Income Taxes. The Board thinks that the GloBE minimum tax would fall into the definition of income taxes in Section 3465. The Board acknowledged that the GloBE minimum tax could be an alternative minimum tax. Entities are encouraged to have discussions with tax professionals to understand the GloBE minimum tax rules and their own facts and circumstances. The Board will continue to monitor developments as the GloBE rules are substantively enacted in Canada.  

Related Party Combinations

The AcSB continued its discussion of stakeholder feedback from outreach activities on its Exposure Draft, “Improvements to Accounting for Common Control Combinations." The Board also discussed feedback from its Private Enterprise Advisory Committee on the Board’s tentative decisions at its March 2023 meeting. 

In response to this feedback, the AcSB tentatively decided to:

  • amend the definition of “business combination” in Section 1582, Business Combinations, to include transactions meeting criteria in Related Party Transactions, paragraph 3840.44(a) to clarify that all of Section 1582 applies to these transactions;
  • revise the amendments to clarify that the choice to retrospectively restate comparatives in paragraph 3840.44(b) is available on a transaction-by-transaction basis;
  • revise the amendments to retain the current text in paragraph 3840.44(b) when the restatement option is chosen, while providing an option to account for the transaction prospectively from the point of the transaction; and
  • not allow an option to apply the amendments retrospectively to transactions prior to the effective date.

The AcSB will continue its deliberations at its June 2023 meeting. The Board plans to issue the amendments in September 2023.

Standards for Pension Plans

Pension Plans

The AcSB discussed feedback from the Pension Plan Working Group and research related to improvements to the disclosure of investment management expenses. The Board tentatively decided that improvements should be made to the disclosures related to investment management expenses in pension plan financial statements to increase transparency and comparability. The Board will seek additional feedback from the Pension Plan Working Group in July to obtain input on the nature of any proposed disclosures. 

In addition, AcSB members discussed that pension plans commonly hold interests in investment funds and other structured entities. As such, the Board is considering whether it may be useful to introduce disclosure requirements to improve transparency in this area. The Board will seek more feedback on this matter, including potential solutions at its Pension Plan Working Group meeting in July 2023.

Relevance of Financial Reporting

Sustainability Reporting

The AcSB discussed its plan to respond to the International Sustainability Standard Board’s Request for Information, Consultation on Agenda Priorities, which was issued in May 2023. The Board approved its communication and outreach plans and decided to respond to aspects of this document that are relevant to its work as a financial reporting standard setter.

Due Process 

AcSB’s Advisory Committees and Working Groups 

Private Enterprise Advisory Committee

The AcSB received an update on the May 3, 2023, Private Enterprise Advisory Committee meeting. At this meeting, the Committee discussed revenue application issues, upfront non-refundable fees or payments, related party combinations, and international tax reform.

Not-for-Profit Advisory Committee

The AcSB received an update on the May 2, 2023, Not-for-Profit Advisory Committee meeting. At this meeting, the Committee discussed reporting controlled and related entities, upfront non-refundable fees or payments, and insurance contracts with a cash surrender value.

Small Practitioners Working Group

The AcSB received an update on the May 17, 2023, Small Practitioners Working Group meeting. At this meeting, the Group completed an orientation session and discussed scaling the standards.

AcSB’s Advisory Committees’ and Groups’ Terms of Reference and Statements of Operating Procedures

As part of the triennial review, the AcSB considered input from its Committees and Groups on their Terms of Reference and Statements of Operating Procedures. Subject to minor amendments, the Board approved revised versions of their Terms of Reference. The Board also ratified the Committees and Groups’ Statements of Operating Procedures with minor amendments, subject to the respective Committees and Groups adopting them at their next meetings.

The AcSB also discussed a revised mandate for its Agriculture Advisory Group and Insurance Transition Resource Group given the respective standards on which these Groups provided advice to the AcSB are now effective (i.e., Section 3041, Agriculture and IFRS 17 Insurance Contracts). The Board approved revised Terms of Reference for these Groups.  

French-only Editorial Corrections

The AcSB approved French-only editorial corrections to Parts I-IV of the CPA Canada Handbook – Accounting.

Due Process Compliance

The AcSB approved a report for the Accounting Standards Oversight Council (AcSOC) on its due process compliance.