Accounting Standards Board
Decision Summary
March 7, 2007

International Activities

The AcSB received reports on recent meetings of the International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB) (see www.iasb.org.uk and www.fasb.org, respectively). The AcSB noted that the IASB has issued an exposure draft of the proposed IFRS for Small and Medium-sized Entities, for public comment by October 1, 2007, and an exposure draft proposing amendments to IAS 24, Related Party Disclosures, regarding state-controlled entities and the definition of a related party for public comment by May 25, 2007. The Trustees of the International Accounting Standards Committee Foundation issued an IFRIC “Due Process Handbook” on February 22, 2007.

Publicly Accountable Enterprises – Strategy

AcSB involvement with international activities
The AcSB agreed that it would continue to monitor all IASB activities and that it would continually evaluate which IASB projects are likely to be of greatest significance to Canadian entities. The AcSB will also identify the optimal time when it can add value by considering issues under development in those projects. The AcSB noted that it can often provide the most value in the early stages of a project by providing constructive input as preliminary views are being formulated by the IASB. The AcSB also continues to monitor FASB projects, especially those that are joint projects with the IASB.

Implications of IFRS 1, First-time Adoption of International Financial Reporting Standards
The AcSB discussed the implications of IFRS 1 for the Canadian changeover to IFRSs. The AcSB agreed that first-time adoption of IFRSs for Canadian enterprises should be achieved in a manner as close as possible to that which would be achieved by adopting IFRS 1. However, the AcSB suggested staff analyze whether there might be aspects of Canadian GAAP which would cause significant issues on changeover to IFRSs, to determine if there is a need for any additional transitional provisions. In addition, the AcSB asked staff to review the existing IFRS 1 and highlight any options available in accordance with IFRS 1 that would be considered inappropriate in the context of a transition from Canadian GAAP to IFRSs. For example, those options included in IFRS 1 to facilitate transition by entities from an accounting system far less well developed than the one existing in Canada. In such circumstances, the AcSB might consider limiting the options that could be applied on transition to IFRSs. The AcSB expects that transitional exceptions and exemptions similar to those in IFRS 1 will be available once only, on changeover to IFRSs.

Non-Publicly Accountable Enterprises – Strategy

The AcSB discussed a draft Invitation to Comment (ITC) on the non-publicly accountable enterprises strategy. Staff expects the ITC to be issued early in the second quarter of 2007. The AcSB also received a presentation on the IASB’s proposals for small and medium-sized entities.

Inventories

The AcSB approved, subject to written ballot, new Section 3031, Inventories, which will replace existing Section 3030 (same title). Section 3031 will apply to fiscal years beginning on or after January 1, 2008 with earlier application encouraged.

The AcSB’s conclusions are substantially the same as those set out in its June 2006 Exposure Draft, “Inventories”. The scope was modified to exclude:

• contracts accounted for using percentage of completion accounting in accordance with Section 3400, Revenue; and
• agricultural inventories, including biological assets and agricultural produce, (from the measurement provisions of the standard only).

Materiality

The AcSB discussed whether to add a project to its work plan on materiality, consistent with the US Securities and Exchange Commission’s Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. Staff was requested to develop a project proposal for consideration by the AcSB.

Canada/US GAAP Differences

The AcSB reviewed a summary of the staff survey of Canadian/US GAAP differences, as reported in a sample of Canadian company annual reports for years ending in 2005. The AcSB noted that the summary has been expanded to include some consideration of IFRSs. This summary will be placed on the AcSB’s website. The AcSB agreed that a similar survey should be carried out for annual reports with years ending in 2006, and that the consideration of IFRSs should be expanded further.