Accounting Standards Board
Decision Summary
December 10, 2009

Financial Instruments

The AcSB reviewed comment letters received in response to its July 2009 Exposure Draft, “Financial Instruments: Classification and Measurement,” as well as responses submitted by Canadians to the IASB on its Exposure Draft of the same name. The AcSB approved the addition of IFRS 9 Financial Instruments to Part I of the CICA Handbook – Accounting (Handbook). IFRS 9 applies to the classification and measurement of financial assets and is mandatory for years beginning on or after January 1, 2013.  Earlier application is permitted. IFRS 9 will be included in the first update to Part I, at the end of the first quarter of 2010.

The AcSB decided to issue an exposure draft seeking comment on Canadian implications of adopting the proposals in the IASB Exposure Draft, “Financial Instruments: Amortised Cost and Impairment.”  The AcSB staff plan to conduct public roundtables in 2010 to discuss the possible effect on Canadian businesses of implementing the proposals. Comments on the Canadian exposure draft will be due by June 15, 2010. Comments to the IASB are due by June 30, 2010.

The AcSB also decided to issue an exposure draft reflecting the proposal in the IASB Exposure Draft, “Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters, Proposed amendment to IFRS 1.” The proposed amendment is to provide the same transition relief to first-time IFRS adopters that is provided to existing IFRS preparers in adopting the amendments to IFRS 7 Financial Instruments: Disclosures, issued in March 2009. The comment deadline for the AcSB’s exposure draft will be January 10, 2010. Comments to the IASB are due by December 29, 2009. The final amendment will revise the IFRSs in Part I of the Handbook.

Pension Plans

The AcSB began its redeliberations on pension plan financial reporting as a result of comments received on its Exposure Draft, “Pension Plans.”  The AcSB decided on the following substantive changes to the proposals in the Exposure Draft:

• A pension plan refers to the guidance on fair value in IAS 39 Financial Instruments: Recognition and Measurement in measuring investment assets and investment liabilities. The AcSB intends to incorporate the forthcoming IFRS on fair value measurement after that standard is issued.
• Investment assets are presented on a non-consolidated basis even when the pension plan controls an investee.
• A pension plan’s surplus or deficit is shown in the statement of financial position. The surplus or deficit is the difference between the net assets available for benefits and the pension obligation. A pension plan may also disclose the actuarial value of the net assets available for benefits. The difference between that actuarial value and the pension plan’s net assets available for benefits (sometimes referred to as an “actuarial asset value adjustment”) does not meet the definition of an asset or a liability and, therefore, is not included in computing the pension plan’s surplus or deficit.
• All financial assets and financial liabilities are recognized and derecognized in accordance with the recognition and derecognition requirements in IAS 39. The standards will include the definitions in IFRSs for financial instruments, financial assets, financial liabilities and derivatives.
• In selecting or changing accounting policies that do not relate to investments and pension obligations, a pension plan consistently refers to either Part I of the Handbook (IFRSs), or Part II of the Handbook (accounting standards for private enterprises).
• The standards will include general standards of financial statement presentation such as fair presentation, comparative information, and materiality.
• A pension plan with an interest in a master trust recognizes at fair value, either the security issued by the master trust or its undivided interest in the various assets and liabilities of the master trust, depending on the nature of the interest that it holds in the trust.  It will no longer be permitted to report its interest in a master trust using either proportionate consolidation or the equity method of accounting.
• The standards will apply to benefit plans with characteristics similar to pension plans, with necessary adaptations.
• Other changes include: deleting the requirement to include transaction costs as part of administration expenses; permitting the disclosure of investment assets and liabilities by type in the notes to the financial statements; clarifying that changes in the fair value of investment assets and liabilities on the statement of financial position include both realized and unrealized gains and losses; and not requiring disclosure of particular related party transactions such as additional investments by the plan in existing investees.

AcSB staff was directed to consult further with stakeholders regarding the scope of the proposals. The AcSB confirmed that the final standards will be effective for annual financial statements for fiscal years beginning on or after January 1, 2011, with earlier application permitted. The AcSB expects to issue the final standards by March 31, 2010.

Private Enterprise Financial Reporting

The AcSB approved the establishment of a Private Enterprises Advisory Committee. A request for expressions of interest in becoming a member of the committee will be posted on the AcSB's website in early 2010.

Public Company Strategy

The AcSB considered comments received on its third and final omnibus Exposure Draft, “Adopting IFRSs in Canada, III,” issued in October 2009. The AcSB decided that no action is necessary in response to those comments. Consequently, the AcSB decided that all IFRSs exposed in the three Exposure Drafts should be incorporated into Part I of the Handbook.

The AcSB approved the following as part of the initial contents of Part I of the Handbook:

• Framework for the Presentation and Preparation of Financial Statements (the Conceptual Framework);
• IFRSs exposed in the AcSB’s three omnibus Exposure Drafts of IFRSs; and
• the following changes to IFRSs issued after “Adopting IFRSs in Canada, III”:
    -   amendments to IAS 24 Related Party Disclosures;
    -   amendments to IFRIC 14 Prepayments of a Minimum Funding Requirement; and
    -   new IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments.

Each of these changes is discussed separately below.

The AcSB noted that the initial contents of Part I will also include an introduction to that Part of the Handbook.  Part I is expected to be published in late January 2010.

IAS 24 Related Party Disclosures
The AcSB discussed the IASB’s amendments to IAS 24 Related Party Disclosures that relate to entities controlled, jointly controlled or significantly influenced by a government. The amended standard is effective for annual periods beginning on or after January 1, 2011. Earlier application is permitted. The AcSB approved the incorporation of the amendments to IAS 24 into Part I of the Handbook.

Amendments to IFRIC 14: Prepayments of a Minimum Funding Requirement
The AcSB discussed the IASB’s recent amendments to IFRIC 14 IAS 19 — The Limit on a Defined Benefit Asset in respect of prepayments of a minimum funding requirement. The amendments are effective for annual periods beginning on or after January 1, 2011. Earlier application is permitted. The AcSB approved the incorporation of these amendments into Part I of the Handbook.

Extinguishing Financial Liabilities with Equity Instruments
The AcSB discussed the responses the International Financial Reporting Interpretations Committee (IFRIC) received to its Draft Interpretation D25, “Extinguishing Financial Liabilities with Equity Instruments,” and changes made in finalizing the Interpretation. IFRIC 19 is effective retrospectively for annual periods beginning on or after July 1, 2010. Earlier application is permitted. The AcSB approved the incorporation of IFRIC 19 into Part I of the Handbook.