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Accounting Standards for Private Enterprises

AcSB Exposure Draft – Financial Instruments

Summary

The Accounting Standards Board (AcSB) proposes, subject to comments received following exposure, to amend FINANCIAL INSTRUMENTS, Section 3856 in Part II of the CPA Canada Handbook – Accounting. This amendment would provide an optional expedient for applying debt modification accounting and an exception to certain hedge accounting requirements in Section 3856. The amendment aims to ease the financial reporting burdens related to the market-wide interest rate benchmark transition from interbank offered rates (IBORs) to alternative benchmark rates (IBOR reform). This amendment applies to private enterprises and not-for-profit organizations using Parts II and III of the Handbook.

Staff Contact(s)

Katharine Christopoulos, CPA, CA Director, Accounting Standards Board

Phone number  +1 416 204 3270
Email address  [email protected]

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Response Booklet – AcSB Exposure Draft, Financial Instruments

Support Materials

Effects of IBOR Reform on Financial Reporting

Background

In April 2021, the AcSB added a project to its agenda to consider the financial implications of IBOR reform. The Board’s objective for the project is to provide relief to minimize any operational burden and interruptions IBOR reform causes for Canadian private enterprises. Specifically, the proposed amendments to Section 3856, Financial Instruments would: 

  1. simplify the current accounting analysis for debt modifications solely due to IBOR reform; and 
  2. allow hedging relationships to continue upon a change in certain critical terms related to IBOR reform.