This summary of Accounting Standards Board (AcSB) decisions has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussion on projects, which may change after further deliberations by the AcSB. Decisions to publish Handbook material are final only after a formal ballot process.
For more detailed information on AcSB projects, including the decisions summarized below, please refer to the project summaries under Projects, which will be updated within the month following an AcSB meeting. |
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 following:
- The AcSB staff has submitted a comment letter to the IASB regarding the proposals in its Exposure Draft on “Derecognition (proposed amendments to IAS 39 and IFRS 7).” The letter does not support the proposals because they are not considered an improvement over the existing provisions in IAS 39. The letter does support the “alternative view” summarized in the accompanying Basis for Conclusions, with some concerns to be resolved.
- The AcSB staff has submitted a comment letter to the IASB regarding the proposals in its Exposure Draft on “Income Taxes.” The letter does not support the project proceeding in its current form. The letter suggests the project be re-scoped to consider a more fundamental review of accounting for income taxes, or defer the project to allow constituents and the IASB to focus on projects currently of higher priority.
- With the encouragement of some IASB Board members and staff, a group of Canadian constituents is developing a proposal to alleviate concerns about aspects of the proposals in the IASB’s Exposure Draft ED 10 “Consolidated Financial Statements.” These concerns relate to investment companies consolidating controlling interests in other entities, rather than reporting them at fair value. The AcSB noted that this issue is of considerable interest to some stakeholders, both in Canada and elsewhere, and warrants further consideration by the IASB.
The AcSB decided to issue exposure drafts reflecting the proposals in the IASB Exposure Draft, “Classification of Rights Issues (proposed amendment to IAS 32),” the IASB Exposure Draft, “Discount Rate for Employee Benefits (proposed amendments to IAS 19),” and the Draft International Financial Reporting Interpretations Committee (IFRIC) Interpretation D25, “Extinguishing Financial Liabilities with Equity Instruments.” The final amendments and interpretation will revise or supplement the IFRSs in Canadian GAAP that are to be adopted by publicly accountable enterprises or other entities that choose to adopt IFRSs. - The AcSB also decided that the Exposure Draft proposals should not be adopted into pre-changeover Canadian GAAP (i.e., by amending existing Handbook Sections) for the following reasons:
- Classification of Rights Issues — Unlike the definition of a financial liability in IFRSs, the definition in Canadian GAAP does not include “contracts that will or may be settled in the entity’s own equity instruments.” As the IASB’s Exposure Draft is proposing to amend further that part of its financial liability definition, an amendment to Canadian GAAP is not required.
- Discount Rate for Employee Benefits — When a deep market does not exist for high-quality corporate bonds, Canadian GAAP already requires an entity to use professional judgment to determine the appropriate discount rate. It suggests that an entity start with the yield on Government of Canada bonds and add an appropriate adjustment to reflect the risk characteristics of high-quality corporate bonds.
- Extinguishing Financial Liabilities with Equity Instruments — In practice, stakeholders are interpreting the corresponding requirements in Canadian GAAP in the same manner as that proposed in the Draft Interpretation. Following Section 1100, Generally Accepted Accounting Principles, stakeholders could consult the final version of the IFRIC Interpretation or US Statement of Financial Accounting Standards No.15, Accounting by Debtors and Creditors for Troubled Debt Restructurings, as other sources of GAAP and reach a consistent interpretation.
The AcSB discussed plans for responding to these three IASB and IFRIC proposals. Given the targeted nature of these proposals, the AcSB directed staff to develop comment letters to the IASB and the IFRIC. The AcSB encourages stakeholders to respond directly to these documents, which are available for comment at www.iasb.org. Private Enterprise Strategy The AcSB commenced its review of the comment letters received in response to its Exposure Draft, “Generally Accepted Accounting Principles for Private Enterprises.” The AcSB will continue to redeliberate its Exposure Draft proposals at its next meeting in light of the comment letters. IFRS Discussion Group The AcSB approved the membership of its newly created IFRS Discussion Group (IDG). The IDG will assist the AcSB in identifying issues arising from the application of IFRSs in Canada. The IDG will be a public forum in which issues arising relating to the application of IFRSs in Canada can be discussed. The IDG will make recommendations to the AcSB as to whether particular issues should be referred to the IASB or the IFRIC. The AcSB expects to announce, in September 2009, the membership of the IDG and arrangements for the first IDG meeting. |
