Guidance Framework

Guidance Framework – Private Equity Funds

The AcSB continued discussing an application question regarding the measurement of investments in private equity investment funds under Section 3856, Financial Instruments. The question was whether units of a private equity fund would meet the criteria to be considered “quoted in an active market” under Section 3856.

The AcSB noted that, according to paragraph 3856.A9, a financial instrument is quoted in an active market when quoted prices are readily and regularly available from market sources and reflect actual and regularly occurring arm's length market transactions. The Board also noted that determining whether a financial instrument meets these criteria may require judgment based on the facts and circumstances of the investment, as noted in paragraph 73 of the Basis for Conclusions to Section 3856.

The AcSB will continue to monitor developments in this area, including work performed by standard setters in other jurisdictions. The Board will consider whether further guidance is needed to address the question in a future meeting.

Guidance Framework – Agriculture

The AcSB considered feedback from its Agriculture Advisory Group on staff’s non-authoritative resource regarding how to determine when there is a change in the carrying amount of productive biological assets that are managed on a collective basis. This resource was developed in response to a question that interested and affected parties raised and that met the Guidance Framework criteria, as the Board discussed at its February 18, 2026, meeting. The Board approved publishing the non-authoritative resource to support consistent application of Section 3041, Agriculture. The resource is expected to be published before the end of August 2026.

The AcSB also dissolved the Agriculture Advisory Group because it fulfilled its purpose of supporting the development and post-implementation review of Section 3041. The Group’s contributions informed recent narrow-scope amendments to Section 3041 and the development of the non-authoritative resource. The Board will continue to monitor questions raised regarding Section 3041 through its Guidance Framework.

Guidance Framework – Cloud Computing

The AcSB continued its discussion on an application question regarding the disclosure requirements in Accounting Guideline (AcG) 20, Customer’s Accounting for Cloud Computing Arrangements in Part II of the CPA Canada Handbook – Accounting Standards for Private Enterprises.

The submitter asked how paragraphs 35(b) and 36(b)(i) of AcG 20 should apply to disclosing cloud computing costs recognized as an expense in a period. Specifically, they asked whether these disclosures are intended to include all cloud computing costs expensed during the period or only implementation-related costs.

The AcSB agreed that paragraphs 35(b) and 36(b)(i) of AcG 20 require disclosure of all amounts expensed during the period when an entity applies the simplification approach in AcG 20, and all software service costs recognized as an expense during the period. The Board discussed that, consistent with Financial Statement Concepts, paragraphs 1000.14 and 1001.14, preparers should apply professional judgment in assessing the materiality of this information and whether omitting it would influence or change the decisions of financial statement users.

Guidance Framework – Private Equity Funds

The AcSB discussed and considered input from its Private Enterprise Advisory Committee on an application question raised regarding the measurement of investments in private equity investment funds under Section 3856, Financial Instruments in Part II of the Handbook.

The submitter asked whether units of a private equity fund would meet the criteria to be considered “quoted in an active market” under Section 3856. They also asked whether the quoted unit prices or the fund’s net asset value could be used as a measure of fair value of the investment if those criteria are met or if an entity elects to measure the units at fair value in accordance with paragraph 3856.13.

Based on the Committee’s feedback, the AcSB concluded that the Guidance Framework criteria have been met. The Board tentatively decided to explore issuing a non-authoritative resource on the topic and will continue discussions at a future meeting.

Guidance Framework – Assessing Control Under Section 1591 Subsidiaries

The AcSB received a question about how to apply the definition of control under Part II of the CPA Canada Handbook – Accounting Standards for Private Enterprise.

In the submitted scenario, an operating company issued nonparticipating voting shares to a family trust (Trust A) and participating nonvoting shares to a second family trust (Trust B).  No other voting shares exist. Both trusts have the same four adult siblings as trustees, and decisions require agreement of at least two siblings, so no individual has control. The beneficiaries of Trust B include the four siblings and their children, and the trustees have discretion over distributions. The broader family structure includes multiple holding and operating companies and neither Trust A nor Trust B prepare consolidated financial statements.

The question was “which family trust controls the operating company?” This determination is relevant to  determining whether Trust A or Trust B are subject to Pillar Two’s Global Minimum Tax rules.

The AcSB conducted targeted outreach and concluded that this issue does not meet the criteria in the Guidance Framework. As a result, no further work is required. The issue was not considered prevalent, and the accounting outcome is not expected to affect user decision making, particularly because the trusts in this scenario are unlikely to prepare financial statements.

Guidance Framework – Retractable of Mandatorily Redeemable Shares Issues in a Tax Planning Arrangement

The AcSB discussed and considered input from its Private Enterprise Advisory Committee and Medium and Small Practitioners Advisory Committee on an application question raised regarding the accounting for retractable or mandatorily redeemable shares issued in a tax planning arrangement (ROMRS) under Accounting Standards for Private Enterprises in Part II of the Handbook.

In the scenario discussed, the operating company, Alpha Co., issued ROMRS. Mr. X, who is the sole shareholder, owns 100 per cent of Alpha Co.’s shares, including ROMRS. Alpha Co. accounts for the ROMRS as equity because the criteria in paragraph 23 in Section 3856, Financial Instruments were met. In the scenario, Mr. X sells 100 per cent of their shares, including the ROMRS, to an unrelated party, Mr. Y. The question considered was whether Alpha Co. should continue to classify the ROMRS as equity following the sale, or whether the change in control of the enterprise requires reassessing and reclassifying the ROMRS as a financial liability.

The AcSB reaffirmed that ROMRS meet the definition of a financial liabilities and noted that paragraph 23 in Section 3856 Financial Instruments provides an exception to liability classification. The Board considered the committees’ feedback that, in practice, there is no diversity in applying the guidance in paragraph 23 in Section 3856 Financial Instruments in these scenarios. The committees also noted that the requirements clearly indicate that the ROMRS must be reassessed and reclassified as a financial liability following their sale to Mr. Y.

Based on the feedback from the committees, the AcSB assessed whether the criteria in its Guidance Framework were met to determine if additional guidance or standard setting is needed to address the issue. The Board concluded that the issue does not meet the criteria in the Guidance Framework.

Guidance Framework – Cloud Computing

The AcSB discussed and considered input from its Canadian Private Enterprise User Advisory Committee on an application question raised regarding the disclosure requirements associated with Accounting Guideline AcG 20, Customer’s Accounting for Cloud Computing Arrangements in Part II of the CPA Canada Handbook – Accounting Standards for Private Enterprise.

In the scenario discussed, a submitter raised questions about how paragraphs 35(b) and 36(b)(i) of AcG 20 should apply to disclosing cloud computing costs recognized as an expense in a period. Specifically, they asked whether the Board intended this disclosure to cover all costs or only those related to implementation.

The AcSB did not reach a decision and will discuss this issue further at a future meeting.

Guidance Framework – Agriculture

The AcSB discussed questions that interested and affected parties have raised when responding to the Exposure Draft, “Amendments to Section 3041, Agriculture.” The Board analyzed these questions to determine if they meet its Guidance Framework criteria (that is, prevalence of the question, diversity in practice, and impact on users’ decisions) and considered input from its Agriculture Advisory Group in determining next steps. The questions raised generally fall into two categories:

1. Broader application questions relating to productive biological assets:
   i. Determining when there is a change to the carrying amount of productive biological assets managed on a collective basis.
   ii. Introducing net realizable value as an option to measure productive biological assets.
   iii. Introducing additional disclosure requirements for productive biological assets such as a continuity schedule.
   
   
2. Other specific application questions:
   i. Clarifying the meaning of short productive lives.
   ii. Clarifying the scope exclusion for animals raised or purchased for competitive sport.
   iii. Clarifying the scope exclusion for forestry.
   iv. Accounting for costs incurred during the gestational period of an animal.
   v. Accounting for agricultural inventories consumed in agricultural production.
   vi. Allowing the use of fair market value to measure betterments to productive biological assets when such value approximates cost.

Broader application questions relating to productive biological assets

The AcSB directed staff to develop a non-authoritative resource to help explain the principle in Section 3041 regarding how to determine when there is a change to the carrying amount of productive biological assets managed on a collective basis. Agriculture Advisory Group members indicated that this question meets the Guidance Framework criteria and that developing non-authoritative guidance would support consistent application.

The AcSB also considered questions asking to introduce net realizable value as an option to measure productive biological assets and adding disclosure requirements. These questions do not raise issues that meet the Guidance Framework criteria. Considering feedback from the Agriculture Advisory Group, the Board decided no further action is needed at this time to address these questions raised.

Other specific application questions

Through their feedback, the Agriculture Advisory Group indicated that the application question about the meaning of “short productive lives” meets the Guidance Framework criteria. For example, some agricultural producers categorize laying hens as productive biological assets and others categorize them as agricultural inventories.

The AcSB noted that paragraphs 43-44 of Agriculture, Section 3041—Background Information and Basis for Conclusions explain certain production animals or plants (such as poultry and tomato vines) have short operating cycles. Therefore, biological assets held for use in a productive capacity but with short productive lives are included in the agricultural inventories category. An agricultural producer applying the definitions of productive biological assets and agricultural inventories would need to consider the use of its assets, including whether the assets are managed individually or on a collective basis.

Considering feedback from the Agriculture Advisory Group, the Board concluded that the explanation in the Basis for Conclusions continues to provide appropriate non-authoritative guidance to help an agricultural producer apply judgment.

For the remaining application questions, the AcSB noted that these questions do not raise issues that meet the Guidance Framework criteria. Considering feedback from the Agriculture Advisory Group, and the importance of preserving judgment in applying Section 3041 given diverse situations could be found across agricultural industries, the Board decided no further action is needed at this time to address these questions raised.

Next steps

At a future meeting, the AcSB will consider the Agriculture Advisory Group’s feedback on the non-authoritative resource regarding how to determine when there is a change to the carrying amount of productive biological assets that are managed on a collective basis.

Guidance Framework: Equity Method

The AcSB discussed and considered input from its Medium and Small Practitioners Advisory Committee and Private Enterprise Advisory Committee on a question raised regarding the application of the equity method to account for an interest in a jointly controlled enterprise in two different scenarios in accordance with Part II of the Handbook.

In the scenarios discussed, the parent, which is the reporting entity, uses the equity method to account for its interest in the jointly controlled enterprise. The jointly controlled enterprise is structured as a holding company with a fully owned subsidiary that holds the operations. In one scenario, the parent also has other subsidiaries that are consolidated, and in the second scenario, the parent has no other subsidiaries.

The question was whether the parent's application of the equity method to account for its interest in the jointly controlled enterprise requires the jointly controlled enterprise to consolidate its subsidiary. The Board considered the Committees’ feedback that they are not observing diversity in practice in these scenarios when applying the guidance in Section 3051, Investments.

Based on the Committees’ feedback, the AcSB concluded that the issue did not meet the criteria in the Guidance Framework; therefore, no further guidance is needed at this time to address the application question raised.

Guidance Framework: Going Concern

The AcSB discussed and considered input from its Private Enterprise Advisory Committee, Not-for-Profit Advisory Committee, and Medium and Small Practitioners Advisory Committee regarding the implications of the revised Canadian Auditing Standard (CAS) 570, Going Concern, issued by the Auditing and Assurance Standards Board (AASB) in June 2025, to Parts II and III of the Handbook. The revised auditing standard requires auditors to request that management extend its going concern assessment period to at least 12 months from the date of approval of the financial statements.

To support consistent understanding, staff of the AcSB, AASB, and Public Sector Accounting Standards Board (PSAB) jointly issued a publication in June 2025 to alert management and auditors to the changes to the auditor’s expectation for management’s going concern assessment timeline.

Based on the Committees’ feedback, the AcSB assessed whether the criteria in its Guidance Framework were met to determine if additional guidance or standard setting is needed. The Board concluded that the issue did not meet the criteria and therefore no further action is needed at this time. However, it will continue to monitor developments following the effective date of the revised CAS 570 (periods beginning on or after December 15, 2026) and may revisit the need for additional guidance if circumstances change.

Guidance Framework: Disclosure Requirement in Section 3400, Revenue

The AcSB discussed an application question regarding a disclosure requirement in Section 3400, Revenue in Part II of the CPA Canada Handbook – Accounting. The disclosure requirement in paragraph 3400.32A(b) requires an enterprise to disclose “the aggregate amount of costs incurred and recognized profits (less recognized losses) to date” for contracts in progress at the end of the reporting period that have been accounted for using the percentage of completion method.

The question is whether paragraph 3400.32A(b) should be disclosed as a single aggregate number, or as two amounts: the aggregate amount of costs incurred and separately, the aggregate amount of recognized profits (less recognized losses) to date.

The AcSB considered input from its Private Enterprise Advisory Committee and Medium and Small Practitioners Advisory Committee on whether guidance was needed to clarify the disclosure requirement. Committee members advised that there is diversity in practice regarding the application of this paragraph and that guidance would be helpful to clarify the requirement and the objective of the disclosure.

The AcSB discussed various options to address the question. The Board tentatively decided not to undertake standard-setting action at this time, as application challenges related to Section 3400 are currently being explored in other open projects. The Board will assess whether amendments to the disclosure requirements in Section 3400 could be incorporated into a broader standard-setting project in the future that would scope in other identified revenue application issues.

Guidance Framework: Derecognition of Financial Liabilities

The AcSB continued discussing how recent amendments to IFRS 9 Financial Instruments affect Section 3856 Financial Instruments in Part II of the Handbook, regarding the derecognition of financial liabilities.

Although the IASB issued an amendment, there have been no changes to ASPE in this area. Therefore, the AcSB does not expect changes in how these transactions are being accounted for in Canada by entities applying Section 3856.

After considering input from its Private Enterprise Advisory Committee and Medium and Small Practitioners Advisory Committee, the AcSB concluded that further guidance would be helpful to clarify the requirements in ASPE.

The AcSB tentatively decided to provide guidance by issuing a narrow-scope amendment to Section 3856 through an annual improvement. The topic will be added to the list of potential projects to be addressed in the future and may be bundled with other unrelated minor amendments that meet the criteria for annual improvement.

Guidance Framework: Related Party Combinations

The AcSB continued discussing an application question from practice regarding the amendments issued in September 2023 to Section 3840, Related Party Transactions, in Part II of the Handbook. These amendments added an option in paragraph 3840.44(b) to either retrospectively restate all prior periods when carrying values are used to account for a combination or prospectively account for these transactions from the date that the transfer occurred.

The question raised is, when the new option is applied to account for a combination prospectively from the date that the transfer occurred, what comparative figures, if any, are presented?

The AcSB discussed feedback from the Private Enterprise Advisory Committee (PEAC) that the following views have emerged:

• an enterprise must identify an acquirer and report comparative figures of the acquiring entity; or

• an enterprise should apply professional judgment to consider the needs of financial statement users, and, in some scenarios, there could be no comparative figures.

Given the diverse views, PEAC recommended that the AcSB issue guidance to clarify the application of the amendment.

The AcSB considered this feedback and noted that the current language in paragraph 3840.44(b) could infer that determining an acquirer is required when carrying values are used to account for the transaction prospectively from the date that the transfer occurred. The Board discussed that in some scenarios identifying an acquirer could be complex or onerous for private enterprises.

The AcSB tentatively decided to develop an exposure draft for a narrow-scope amendment to Section 3840. The Board will discuss the exposure draft proposals at its meeting in September 2024. The Board expects to issue an exposure draft in Q4 2024.

The AcSB discussed application questions from practice and considered input from its Private Enterprise Advisory Committee on the following topics:

• related party business combinations; and
• disclosure of accounting policies.

Guidance Framework: Related Party Combinations

The AcSB discussed and considered input from its Private Enterprise Advisory Committee on an application issue raised regarding the amendments to Section 3840 , Related Party Transactions, in Part II of the Handbook issued in September 2023. These amendments added an option in paragraph 3840.44(b) to either retrospectively restate all prior periods when carrying values are used to account for a combination or prospectively account for these transactions. The question discussed is, when the new option is applied to account for a combination prospectively from the date that the transfer occurred, what comparative figures, if any, are presented?

Committee members advised that this is a common scenario arising in practice.

The AcSB considered various options to address the issue through authoritative or non-authoritative guidance. The Board directed staff to gather further information and decided to continue discussing the question at its June 2024 meeting.

Guidance Framework: Disclosure of Accounting Policies

The AcSB discussed a question raised regarding the application of Accounting Standards for Pension Plans in Part IV of the Handbook. Currently, Section 4600, Pension Plans, requires a pension plan to select accounting policies consistent with IFRS® Accounting Standards or ASPE for items that do not relate to its investment portfolio or pension obligation. Section 4600 also requires disclosure of significant accounting policies in paragraph 4600.29(b). The question raised is, when a pension plan selects IFRS Accounting Standards as the underlying framework, should plans use “significant” accounting policies as mentioned in Section 4600 or “material” accounting policies as required in IFRS Accounting Standards?

A potential option to address this question was to explore whether an amendment in Parts II-IV of the Handbook to require disclosure of material accounting policies instead of significant accounting policies would be helpful to entities in determining which policies to disclose. The AcSB considered input from its Private Enterprise Advisory Committee and decided that further input was needed from its Pension Plan Advisory Committee before concluding on the issue. The Board will continue discussing the application question and consider their views at a future meeting.

Guidance Framework

The AcSB discussed and approved the proposed guidance framework for domestic standards.

The framework begins with determining whether the issue raised meets the proposed criteria for further discussion. This includes questions related to prevalence and diversity of the issue, and the impact of the accounting outcome on users’ decisions . These criteria will be posted on the AcSB’s website for the public to understand the process and to provide transparency on how the Board considers issues.

If an issue meets the criteria, it will be discussed by the relevant advisory committee at a subsequent meeting. The Committee will seek to understand the judgments involved in coming to accounting conclusions on the issue. All this information will be given to the AcSB to determine the appropriate course of action.

The AcSB decided that, going forward, decision summaries will present application issues that meet the criteria, and that the Committee and the Board have discussed. These decision summaries will be the public’s key source of information about these issues.

Finally, the AcSB considered a formalized risk assessment that will be carried out before issuing a final standard to determine whether areas warrant additional implementation support.