The Accounting Standards Board (AcSB) is participating in the International Accounting Standards Board’s (IASB) project to develop a single source of principle-based guidance to improve the accounting for leases.
Under current lease accounting, financial statements do not recognize lessee rights and obligations for operating leases, resulting in many leases structured to be operating leases. This off-balance sheet accounting does not provide the information that users need and, as a result, users adjust the financial statements to reflect an estimated lease liability and related asset.
The objective of the project is to develop an approach for lessee and lessor accounting that will provide a more faithful representation of leasing transactions and provide more complete information for users.
The IASB and the Financial Accounting Standards Board (FASB) are carrying out the project jointly.
The AcSB’s due process includes ensuring that Canadian entities’ financial reporting needs are considered by the IASB and issuing the AcSB’s own exposure draft on each IASB proposal. Subject to the responses to the AcSB’s exposure draft on whether the IASB’s proposals are appropriate for application in Canada, the AcSB expects that the amendments will be incorporated into Canadian GAAP in accordance with the AcSB’s strategy of adopting IFRSs for publicly accountable enterprises.