Accounting Standards Board
Decision Summary
November 1, 2006

International Activities

The AcSB received reports on recent meetings of the International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB), including their joint meeting (see www.iasb.org.uk and www.fasb.org, respectively). The AcSB noted that a staff response to the IASB’s Exposure Draft, “Financial Instruments Puttable at Fair Value and Obligations Arising on Liquidations,” had been submitted.

Income Trusts

The AcSB considered Cash Flow Statements, paragraph 1540.55, and decided to proceed with an Exposure Draft proposing amendments to that paragraph.

The proposed amendments would require that when an enterprise makes a cash distribution on financial instruments classified as equity, and the distribution is determined in accordance with a contractual agreement, the following be disclosed:

Staff expects the Exposure Draft to be published shortly. The proposed amendments would be effective for annual and interim periods ending on or after March 31, 2007.

Public Company Strategy

The AcSB held a preliminary discussion on the definition of publicly accountable enterprises for purposes of determining the application of the AcSB’s Strategic Plan to such enterprises. The Board considered definitions of other standard setters, including the IASB’s proposed definition of a publicly accountable entity in its draft Exposure Draft, “Financial Reporting for Small- and Medium-sized Entities.” It seems likely that most enterprises, other than those qualifying as non-publicly accountable enterprises in accordance with Section 1300, Differential Reporting, would be included in the future requirement to prepare financial statements in accordance with IFRSs. Exclusions will depend, in part, upon conclusions that the AcSB reaches about its strategy for non-publicly accountable enterprises.

The AcSB also discussed circumstances in which modifications to IFRSs might be necessary when they are adopted in Canada. The general view was that modifications would be rare. When IFRSs direct entities to continue to follow national practices, as is the case presently with IFRS 4, Insurance Contracts, and IFRS 6, Exploration for and Evaluation of Mineral Resources, it seems likely that current Canadian standards dealing with those matters will be maintained. In addition, the AcSB noted that application guidance for specific Canadian circumstances might be appropriate, although every effort would be made to have such matters dealt with by the IASB or International Financial Reporting Interpretations Committee.

These topics were also discussed with the IFRS Advisory Committee on November 3, 2006.

Private Company Strategy

The AcSB considered possible courses of action in light of the staff research findings regarding user needs. The AcSB made no decisions and will continue to discuss this topic at future meetings.

Amendment to AcG-15, Consolidation of Variable Interest Entities

The AcSB's intention in issuing the Guideline in 2003 was to adopt the US standard on variable interest entities. It has come to the AcSB's attention that several words were inadvertently omitted from the penultimate sentence of paragraph 19 of the Guideline. The AcSB has agreed to correct the text of the Guideline so that the sentence will now read:

“A loan restructuring or other troubled debt restructuring is not an event that requires the reconsideration of whether an enterprise is the primary beneficiary of the variable interest entity.”