Accounting Standards Board
Decision Summary
February 5, 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).

The AcSB noted the recent announcement by the International Accounting Standards Committee Foundation (IASCF) that it has succeeded in establishing a national funding regime in a number of countries to support the work of the IASB. The expanded funding regime now includes the participation of thousands of financial market participants.

The AcSB noted the issue by the IASB of the revised IFRS 3, Business Combinations, and the amended version of IAS 27, Consolidated and Separate Financial Statements. The IASB has issued a Project Summary and Feedback Statement that discusses the comments received during the exposure draft process on the business combinations project and summarizes the IASB’s discussions related to those comments. The IASB would like to receive comments or suggestions on the usefulness of this feedback statement.

The AcSB also noted the issue by the IASB of amendments to IFRS 2, Share-based Payments. The amendments clarify that vesting conditions are service and performance conditions only, and that cancellations, whether by the entity or by other parties, should receive the same accounting treatment.

The AcSB staff has submitted favourable responses to three IASB exposure drafts: Joint Arrangements, Annual Improvements, and Financial Instruments: Recognition and Measurement. The comment letters can be viewed from the links provided on the individual IASB project pages at www.iasb.org.uk.

Publicly Accountable Enterprises Strategy

Proposed amendments to IFRS 1
The AcSB confirmed that it would provide a letter to the IASB on suggested improvements to IFRS 1. The AcSB noted that the exemption in IFRS 1 relating to derecognition of financial assets and financial liabilities provides relief from retrospective application only prior to a specified date of January 1, 2004. The benefit of this relief is significantly reduced when the specified date is several years before the transition to IFRSs. The AcSB agreed to ask the IASB to modify IFRS 1 to replace the January 1, 2004 date with a reference to “the date of transition to IFRSs.”

The AcSB also noted that the adoption of IFRSs can result in a requirement to retrospectively determine fair values. This issue arises with, for example, the bifurcation of debt and equity, and share-based payments. The AcSB agreed to ask the IASB to modify IFRS 1 to specify a principle that, prior to the date of transition, retrospective determinations of fair value be prohibited, unless the necessary information was already available at the past reporting date.

The AcSB observed that IFRS 1 can require an entity to re-adopt an existing accounting practice, but as of a different date than under GAAP. The result may be that past accounting has to be restated even though the practice is the same. The AcSB agreed to ask the IASB to modify IFRS 1 so that entities do not have to change their previous accounting in such circumstances.

The AcSB acknowledged receipt of a letter from the Oil & Gas Industry IFRS Oversight Committee concerning a proposed amendment to IFRS 1. Subject to completing a review of the issue, the AcSB expects to issue a letter to the IASB expressing the view that relief is needed in the initial application of IFRSs by companies that have applied the full cost method to resource properties and related assets. In addition, the AcSB was informed that it would be receiving a letter from representatives of rate-regulated companies on proposed amendments to IFRS 1.

The AcSB considered several other suggestions from stakeholders of issues on which it might recommend amendments to IFRS 1, but decided not to adopt them because the suggested amendments would be unnecessary or inconsistent with previous IASB decisions. Some further issues are being investigated by the staff for further consideration by the AcSB.

Business Combinations

The AcSB agreed to issue an exposure draft proposing:

• new Section 1602, Non-controlling Interests, providing guidance on the treatment of non-controlling interests after acquisition in a business combination that is converged with newly amended IAS 27, Consolidated and Separate Financial Statements; and
• new Section 1601, Consolidated Financial Statements, carrying forward existing Canadian guidance on aspects of the preparation of consolidated financial statements subsequent to acquisition other than non-controlling interests.
     

These new Sections, to be issued concurrently with new Section 1582, Business Combinations, would replace Section 1600, Consolidated Financial Statements, effective for years beginning on or after January 1, 2011 with earlier adoption permitted.

Emerging Issues Committee (EIC)

The AcSB approved a recommendation by the EIC that a project on when a change to income tax regulations is substantively enacted should be added to the EIC agenda, but did not approve adding a project on the accounting for maintenance and inspection costs.