Accounting Standards Board
Decision Summary
January 3, 2008

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). In particular, the AcSB noted the following:

• The IASB has issued an Exposure Draft proposing amendments to IFRS 2, Share-based Payments, and IFRIC 11, IFRS 2 – Group and Treasury Share Transactions. The Exposure Draft provides guidance on how a group entity that receives goods and services from a supplier records the cash payment the supplier will receive when it is linked to the price of the equity instruments of the entity or the price of the equity instrument of the entity’s parent. Comments are due by March 17, 2008.
• The IASB has issued an Exposure Draft proposing amendments to IFRS 1, First-time Adoption of International Financial Reporting Standards, and IAS 27, Consolidated and Separate Financial Statements, which addresses concerns about the cost of retrospectively applying IAS 27 on first-time adoption of International Financial Reporting Standards (IFRSs), and about the measurement of cost in the separate financial statements of a new parent. Comments are due by March 26, 2008.
• The US Securities and Exchange Commission (SEC) recently issued a rule on the acceptance of financial statements from foreign private issuers prepared in accordance with IFRSs, as issued by the IASB, without reconciliation to US GAAP. Included in the ruling is the indefinite extension of the accommodation to first-time adopters of IFRSs, allowing a foreign private issuer in its first year of reporting under IFRSs, as published by the IASB, to file with the SEC two years, rather than three years, of statements of income, changes in shareholders’ equity and cash flows.
• The FASB has issued for comment, by May 30, 2008, a Preliminary Views document on financial instruments with characteristics of equity. This is part of the IASB/FASB modified joint project on liabilities and equity, which is intended to result in a common final Statement. The IASB plans to publish the FASB’s Preliminary Views in early 2008 for comment by its constituents. The timing of AcSB activities on this topic is expected to correspond with that of the IASB.
• The Trustees of the US Financial Accounting Foundation have published for comment proposals for significant changes to the structure of the Foundation, as well as that of the FASB and the Governmental Accounting Standards Board. The proposed changes include a reduction in the size of the FASB to five members, from seven currently. The announcement of the proposed changes speaks to the future role and influence of the FASB on the global standard-setting process.
       

Publicly Accountable Enterprises Strategy

Changeover Date to IFRSs
The AcSB considered reports on roundtables held in Calgary, Halifax, Montreal, Toronto and Vancouver to discuss the timing of the AcSB’s proposed adoption of IFRSs for publicly-accountable enterprises. The AcSB noted that the overwhelming view of roundtable participants was that the AcSB should remove uncertainty as soon as possible by confirming that the changeover is for years beginning on or after January 1, 2011. The AcSB expects to consult with the Accounting Standards Oversight Council (AcSOC) on February 7-8, 2008, after which it will confirm the changeover date. In that regard, the AcSB considered a preliminary draft report to AcSOC on the findings of its progress review, including its conclusion nothing has been identified that would indicate that a delay in the changeover date is necessary. The review will continue until the changeover date is announced.

Report of IFRS Advisory Committee
The AcSB discussed a report of the meeting of its IFRS Advisory Committee held on December 7, 2007. In particular, the AcSB noted that some stakeholders have suggested one of the greatest challenges in adopting IFRSs in Canada will be identifying components of property, plant and equipment, as required by IAS 16, Property, Plant and Equipment. AcSB members observed that Section 3061, Property, Plant and Equipment, has a similar requirement. A priority implementation task for entities in some industries with capital assets that have been held for a long period of time should be collecting historical data for significant components.

Omnibus Exposure Draft of IFRSs
The AcSB continued to discuss the draft preamble to its “omnibus” exposure draft of IFRSs. The AcSB confirmed that the general presumption should be that IFRSs will apply in full to all Canadian entities, with the exception of not-for-profit organizations and non-publicly accountable enterprises, (i.e., enterprises that (a) have not issued, and are not in the process of issuing, debt or equity securities in a public market, and (b) do not hold assets in a fiduciary capacity for a broad group of outsiders). The AcSB expects to issue the omnibus exposure draft in March 2008.

First-time Adoption of IFRSs
Staff updated the AcSB concerning consultations on issues associated with the adoption of IFRSs that might need to be dealt with by the IASB in IFRS 1, First-time Adoption of International Financial Reporting Standards. A request for input has been issued on the AcSB website, for response by January 9, 2008. Staff are also consulting with the major accounting firms in Canada and internationally, with a view to making a submission to the IASB in mid-February 2008.

Review of EIC Abstracts
The AcSB received a status report on the review of EIC Abstracts by a task force to determine if any issues addressed in the Abstracts should either be referred to the International Financial Reporting Interpretations Committee or continue to be addressed in Canadian GAAP following the IFRS changeover. The issues most likely to continue to be addressed in Canadian GAAP would be those that are relevant to not-for-profit organizations or non-publicly accountable enterprises, or issues affected by specific Canadian legal, tax, regulatory or other circumstances that do not apply in other countries and, therefore, will not be addressed by the IASB. The AcSB decided that the recommendations of the task force regarding those Abstracts to be retained should be published on the AcSB website on an ongoing basis, noting that these recommendations will be subject to review before adoption by the AcSB.

Not-for-Profit Organizations

The Not-for-Profit Organizations Advisory Committee (AdCom) reported to the AcSB with respect to the development of an Invitation to Comment (ITC) on the future direction for setting accounting standards applicable to not-for-profit organizations (NFPOs). The report also provided the AcSB with an initial briefing on comments received on the 2007 NFPO Exposure Draft and on the AdCom’s activities planned for the 2008-2009 year.

The AcSB discussed the proposed content of the ITC and will continue those discussions to ensure that the ITC will generate significant dialogue on the future of financial reporting by NFPOs. The AcSB wants to ensure that there is broad-based participation in discussion of the needs of users of NFPOs’ financial reporting.

The AcSB noted that until the strategy for NFPOs has been developed and resulting changes implemented, the existing Handbook will be retained for continued application by NFPOs. The ITC is expected to be issued in mid-2008.

Asset-Backed Commercial Paper

The AcSB considered further the financial reporting implications of the disruption in the Canadian market for non-bank-sponsored asset-backed commercial paper. The AcSB agreed that the Chair should discuss potential year-end reporting issues with interested parties.

Canada/US GAAP Reconciliations

The AcSB considered the results of the ninth annual survey of Canada/US GAAP reconciliations in annual reports of Canadian companies for years ending in 2006. A summary of the results will be posted to the AcSB’s website shortly.

Planning

The AcSB continued discussion of an annual plan for its operating year commencing April 1, 2008. The AcSB agreed on a draft plan for review by the Accounting Standards Oversight Council.