Accounting Standards Board
Decision Summary
October 14, 2009

International Activities

Classification of Rights Issues
The AcSB discussed the responses the IASB received to the Exposure Draft (ED), “Classification of Rights Issues, Amendment to IAS 32.” In considering the responses, the IASB revised the amendment to clarify that qualifying options and warrants, as well as rights, to acquire a fixed amount of the entity’s own equity instruments for a fixed price of any currency are classified as equity. The AcSB approved the adoption of the IASB’s final amendment to IAS 32 into Canadian GAAP as part of the standards that entities will adopt upon changeover to IFRSs. The amendment is effective retrospectively for annual periods beginning on or after February 1, 2010. Earlier application is permitted.

Derecognition
The AcSB reviewed comment letters received in response to its May 2009 ED, “Derecognition: Proposed Amendments to IAS 39, Financial Instruments: Recognition and Measurement and IFRS 7, Financial Instruments: Disclosures,” as well as responses submitted by Canadians to the IASB on its Derecognition ED.  The AcSB noted that the IASB continues to consider the appropriate model for derecognition of financial assets and financial liabilities. The AcSB decided not to undertake any further work at this time.

Income Tax
The AcSB considered comment letters received in response to its April 2009 ED, “Income Tax,” as well as responses submitted by Canadian constituents to the IASB on its Income Tax ED.  The AcSB welcomed the instances provided of areas in which the proposed standard would benefit from Canadian-specific application or interpretive guidance and noted that most concerns raised by Canadian constituents were communicated to the IASB in the AcSB response letter submitted in July.  Members emphasized the need for a globally converged solution on accounting for income tax. The AcSB decided not to undertake any further work at this time.

Financial Instruments
The AcSB received an update on the IASB project to replace IAS 39 Financial Instruments: Recognition and Measurement.

Not-for-Profit Organizations

The AcSB approved the development of an ED on the future direction for setting standards for the not-for-profit sector and the timing of the changeover from existing standards. For not-for-profit organizations that are not subject to public sector accounting standards, the AcSB tentatively decided that the ED will propose a free choice of (a) the accounting standards for private enterprises plus the 4400 series of Handbook Sections, appropriately modified to fit with those standards, (b) IFRSs or (c) public sector accounting standards. The AcSB understands that the Public Sector Accounting Board (PSAB) intends to propose that it adopt a version of the 4400 series of Handbook Sections, appropriately modified to fit with public sector standards. The AcSB also decided that it should work jointly with PSAB in developing ED proposals on this topic, and noted that it expects to reconsider the current requirements of the 4400 series of Handbook Sections, in collaboration with PSAB, after finalizing the strategic direction for this sector.

The AcSB also reaffirmed that Part V of the CICA Handbook – Accounting (see below) will be maintained for use by not-for-profit organizations at least until the new direction for setting standards for this sector has been approved.

Structure of the CICA Handbook – Accounting

The AcSB decided that, following implementation of the AcSB’s strategic plan for publicly accountable enterprises, private enterprises and not-for-profit-organizations, the CICA Handbook – Accounting will contain the following four parts:

For a time, the Handbook will also contain a fifth part. Part V will contain the primary sources of Canadian GAAP, as they exist today, for use by entities until the mandatory effective date of each of the other parts.