- The Academic Advisory Council (AAC)
assists the AcSB in understanding academic perspectives on financial reporting issues and communicating its
activities to the academic community.
- The Differential Reporting Advisory Committee
(DRAC) assists the AcSB by providing input to the standard-setting process concerning differential reporting
options for non-publicly accountable enterprises.
- The IFRS Advisory Committee (IAC) assists the
AcSB in implementing its strategy for financial reporting by publicly accountable Canadian enterprises — that
is, to adopt IFRSs.
- The Not-for-Profit Organizations Advisory
Committee (AdCom) assists the AcSB in implementing its strategy for the not-for-profit sector. The AdCom
also considers the effect of specific standard-setting projects on not-for-profit organizations and provides
recommendations to the AcSB concerning standards for dealing with transactions and circumstances unique to
the not-for-profit sector.
- The User Advisory Council (UAC) assists the
AcSB in understanding how users, including investors and investment professionals, credit granters in
financial institutions, equity and credit analysts, and rating agencies, use financial information and how
GAAP could be improved to better meet their needs.
- The AcSB also creates ad hoc groups from time to time to assist it with specific projects.
- For certain projects, the IASB establishes a working group to provide input to IASB project staff and
Board members. When a Canadian is appointed to an IASB working group that provides input to the IASB, the
AcSB may, with the agreement of the IASB working group member, set up an advisory group to support that
individual. The advisory group consists of individuals with strong relevant experience and knowledge and from
a variety of backgrounds so as to provide different perspectives. The role of the advisory group is to assist
the IASB working group member in preparing for working group meetings. The advisory group provides the IASB
working group member with information about the Canadian business environment as it relates to the issues to
be considered in the IASB working group meetings (including the nature of transactions typically undertaken
in Canada, the effect of tax and regulatory regimes on transactions, circumstances commonly encountered that
affect financial statement elements and what is typically reported in practice, and Canadian views on best
practices). The advisory groups may also assist the AcSB in responding to IASB invitations to comment. To
date, the AcSB has established three such advisory groups:
-
- The Insurance Accounting Task Force provides
input to the IASB project on insurance contracts, with a view to assisting the AcSB in adopting the IASB
standard when it is completed. The IASB published a Discussion Paper in May 2007, but the project is not
expected to be completed for several years.
- The Employee Benefits Advisory Group provides
input to the IASB project on post-employment benefits, which involves a fundamental review of all aspects of
post-employment benefit accounting.
- The Leases Advisory Group provides input to the
joint IASB/FASB long-term leasing project, which is expected to result in a fundamental change in
accounting for leases by both lessors and lessees. The project will cover leases of real estate as well as
equipment and other assets.
Structure and Membership of the AcSB
The AcSB consists of nine voting members from a variety of backgrounds — current members are listed here. The Chair is a full-time position and the
remaining members are part-time volunteers. Members are chosen so that the AcSB has an appropriate
balance of competencies and experiences to meet its objectives. Members volunteer for a three-year term
(renewable for one term), with staggered expiry dates.
The Vice-President, Standards, the Director, Accounting Standards, and the individual designated by the
International Accounting Standards Board (IASB) to liaise with the AcSB are non-voting members of the
AcSB.
The AcSB is supported by a staff consisting of the Director, Accounting Standards, 11 Principals, a number
of consultants, and administrative support.
- How Do Topics Get on the AcSB's Agenda?
A topic can be added to the AcSB's agenda in a variety of ways:
-
- Projects activated by the IASB — work generally proceeds in parallel with the IASB.
- Staff members may become aware of a particular accounting issue and draw it to the
attention of the AcSB. Staff members are usually alerted to an issue through research, monitoring of
domestic and international developments and ongoing discussions with others such as other standard-setting
bodies, securities regulators, industry groups and representative organizations.
- Members of the AcSB, with their varied backgrounds, provide valuable insight in identifying accounting
issues, in particular, problems that arise in practice.
- AcSOC may also provide input by informing the AcSB of the concerns of the diverse groups represented on
AcSOC who have an interest in accounting standards.
- An issue may be raised by a member of the public, by contacting the Chair or a staff member.
The AcSB reviews its agenda regularly to assess the status of ongoing projects, potential projects and to
identify priority projects. Project proposals analyzing various project planning considerations such as
the scope and objectives of the project, resources available and the level of interest in the subject (i.e.
the extent to which there is an issue) are developed by staff for areas of potential interest.
Agenda setting is subject to the AcSB’s strategy of adopting IFRSs for publicly accountable enterprises.
Hence the AcSB monitors the work plan of the IASB and
generally activates its own projects to correspond with the IASB’s activities. The AcSB also monitors the
work plan of the US Financial Accounting Standards Board (FASB),
given its significance to some Canadian entities and the importance of the FASB globally. In addition, topics
relevant to private enterprises and not-for-profit organizations are also added to the agenda as
required.
AcSB Procedures (Due Process)
The AcSB follows a rigorous set of procedures, known as “due process”, in developing standards. The due
process procedures are critical in maintaining the objectivity of the standard-setting process and the
quality of the output. The basic ingredients in every case are research, discussion and consultation.
The discussion that follows starts from an (increasingly rare) assumption that the AcSB is developing a
standard on its own initiative, rather than engaging in global convergence activities. The IASB, and the AcSB
each follow fundamentally the same due process, which makes it easier for the AcSB to rely on the work of the
IASB, as well as facilitating joint activity. The variations on the AcSB’s basic due process that flow from
global convergence activities are discussed below.
Throughout the process of developing new or revised standards, the AcSB may solicit AcSOC’s advice or its
assistance in carrying out the public consultation process. The Advisory Councils and Committees also play a
role.
The first step in an AcSB project to develop a new or revised standard is an agenda-setting process to
decide whether or not a project should be initiated. The AcSB discusses the draft proposal, amends it where
necessary, and then takes a formal vote. A project can only proceed on the affirmative vote of at least six
of the nine AcSB members. Members are required to vote according to their own beliefs rather than the views
of their firm or organization.
A decision to take on a global convergence project is somewhat abbreviated, relies on the work of the
IASB, and focuses on whether global convergence on a particular topic is an appropriate step. For projects on
the IASB’s work plan, the question is whether there is any reason for the AcSB not to adopt the new standards
the IASB is producing at the same time as the IASB. On selected topics for which improvements in current
Canadian GAAP are considered important, the AcSB considers whether to import a better IASB standard on the
topic in the short term rather than waiting for its adoption in 2011.
Having approved a project proposal, the AcSB then commences a process of research, normally undertaken by
the staff. The knowledge gained by research must be analyzed and processed so that decisions can be made. The
touchstone against which all potential decisions are tested is the conceptual framework.
The increased extent to which the AcSB has been emphasizing global convergence since the mid-1990s,
initially through harmonization with US GAAP and latterly through the AcSB’s strategy to adopt IFRSs for
publicly accountable enterprises, has meant that the AcSB is increasingly adopting the technical decisions of
the IASB. This does not mean blind copying. All key decisions are reviewed by the AcSB in light of Canadian
circumstances which, on rare occasions, may lead to modifications necessary to deal with unique Canadian
circumstances or to avoid creating inconsistencies within Canadian GAAP.
The process of discussion and decision-making is intended to be as transparent as possible. The AcSB posts
its meeting agendas on its website in advance. It posts a Decision Summary shortly after each meeting to
advise the public of decisions taken. Whereas the full-time members of the IASB and the FASB meet and vote in
public, AcSB discussions and voting are held in private. The AcSB’s longstanding practice in this regard is
associated with its volunteer membership. Confidentiality is intended to protect members from undue outside
influence by allowing them to debate freely as individuals and vote without concern for the personal
consequences in their relationships with clients, employers or business associates. However, the AcSB makes
public the rationale for its collective decisions in essentially the same manner as the IASB and the
FASB.
Standard-setting decisions of the AcSB are almost always tentative until it has undertaken public
consultations based on published proposals. The AcSB is empowered to act without public consultation when it
is convinced of the need to do so in the public interest. Such occurrences are relatively infrequent and
usually involve deferring the effective date of a standard to address circumstances arising since the
standard was adopted. On those rare occasions when the AcSB undertakes a major project that does not involve
global convergence, it will generally undertake more than one round of public consultation. This process is
the norm for the IASB on its projects. In such cases, the first round of consultation focuses on the key
issues, the relevant principles and the general direction for the project.
The final round of public consultation (Exposure Draft) seeks input on a complete draft of the proposed
Handbook material, as the AcSB expects to issue it. On global convergence projects, reliance on the work of
the IASB allows the AcSB to proceed directly to an Exposure Draft. In that case, Canadian stakeholders are
encouraged to participate in the preceding global processes for developing the principles. An Exposure Draft
is issued only with the affirmative vote of six of the nine AcSB members. Certain global convergence projects
are assigned by the AcSB to a Panel comprising six of its members, after the full membership has provided a
specific mandate for the Panel to follow. In that case, decisions to issue an Exposure Draft and to finalize
new Handbook material require the affirmative vote of five out of six Panel members.
The AcSB is very aware of the need to develop and issue standards in a timely fashion, while at the same time
giving all who wish to do so an adequate opportunity to respond; (for global convergence projects, the timing
of AcSB activity is constrained by the time line of the IASB). A record of documents issued for comment
is included in the Standards Digest (PDF), and documents
for comment are posted on the AcSB website (see Documents for
Comment). Those interested in notification of the issue of all exposure drafts are urged to
subscribe (free of charge) to the automatic notification of new postings on the
AcSB website click here. Subscribers will automatically
receive an electronic message informing them of the posting of an exposure draft and other accounting
standards related activities.
The exposure process allows the AcSB to obtain input from all interested parties, and also gives
stakeholders advance notice of impending changes to GAAP. The AcSB’s Exposure Drafts are published on its
website with a highlights summary, explanatory material and a general invitation to comment that also poses
specific questions on matters of particular interest to the AcSB. Exposure Drafts are typically open for
comment for a period of 90 days, but the length of the period depends on the nature of the material and when
it is published.
Published consultation documents are generally accompanied by additional processes designed to encourage
maximum public input. Such processes include web presentations and project updates, presentations in courses
and conferences, and notices in various publications to make readers aware of proposals and solicit comment.
While the AcSB’s published proposals ask for written input, some stakeholders find it easier to comment
orally. To obtain this input, the AcSB may organize public roundtable meetings and hold meetings with
representatives of major stakeholder groups on projects of widespread interest.
After the deadline for comment on published proposals has passed, the AcSB considers all of the comments
received with the aid of a staff-prepared summary and analysis. All of the tentative decisions are reviewed
in light of the input gathered so that the AcSB can test its preliminary conclusions against the input
provided by stakeholders. New information and fresh lines of reasoning may be persuasive in changing
preliminary conclusions, regardless of who provided the input or how many commentators raised a particular
point. In the case of global convergence projects, important new information is passed on to the IASB. The
exposure process is not a popularity contest, but negative reactions to proposals can help the AcSB in
identifying stakeholder concerns that it (or the IASB) needs to address in subsequent communication
activities when it is not persuaded to change its position.
Most published proposals undergo at least some modification in light of comments received. After making
all of the changes considered appropriate (and in the case of global convergence projects, depending on the
actions of the IASB), the AcSB then determines whether there has been a significant change from the published
proposals. If there has been a significant change, the AcSB will expose the revised material for public
comment unless at least six of its nine members agree to forgo re-exposure for a stated reason. If there has
not been a significant change, the AcSB proceeds to publication. The publication process includes a thorough
review of the Handbook to ensure that all necessary amendments consequential to the adoption of the new or
revised standard are made to other standards to maintain internal consistency. Final approval and issuance of
new Handbook material requires the affirmative votes of at least six of the nine AcSB members, in writing
(or, in the case of a Panel project, five of the six Panel members).
The development of Accounting Guidelines generally follows the same procedures.
The AcSB normally includes one other component in its due process — the preparation and publication of a
Background Information and Basis for Conclusions (“Basis”) document. A draft Basis document is generally
provided with Exposure Drafts to assist readers in understanding the proposals and improving the comment
process (sometimes the material is provided within the Exposure Draft document and sometimes separately). The
Basis explains the objective of a new or revised standard, the reasons for changing GAAP and the rationale
for the significant decisions underlying the standard. It highlights the relevant accounting concepts,
explains alternative treatments considered and those rejected. The final version published with a new
standard also summarizes the results of the public exposure process including the disposition of significant
comments received. A Basis document is not part of a standard; accordingly, it does not include explanations
of requirements or application guidance that properly belong in the Handbook. AcSB members must approve a
Basis document by the same majority as a standard.
In addition to the published Basis, a public file of materials relating to completed projects is kept by
AcSB staff so that any member of the public can achieve a fuller understanding of the development of a new
standard.
The entire process takes some time to complete. The AcSB does not have a set target for completing
projects in general, but does start each project with a proposed timeline and monitors progress as milestones
occur. The AcSB does not have full control of project timing since many external events may affect its plans.
This is increasingly the case with global convergence projects that are dependent on current projects of the
IASB.
International Activities
As noted above, the AcSB has adopted a strategy to adopt International Financial Reporting Standards for
publicly accountable enterprises effective for fiscal years beginning on or after January 1, 2011.
Accordingly, international activities have become increasingly important to the AcSB's mission. Details of
the strategy can be found in the AcSB’s description of its strategies.
Enquiries
Financial statement preparers, auditors and others frequently have questions concerning specific projects
undertaken by the AcSB. The website section on Projects
contains summaries of the status of the AcSB's current projects and may provide links to relevant background
documents such as the exposure drafts. Other sources of useful information include Decision Summaries, which are published shortly after each AcSB meeting
to highlight the decisions of the AcSB, and "FYI"
Newsletters, which provide an overview of the work of the AcSB and additional information about current
projects.
AcSB staff do not have a mandate to answer technical enquiries that pertain to specific
situations. Staff members will provide assistance of a general nature, including facts or perspectives
that users of the CICA Handbook – Accounting may wish to take into consideration, or literature they may wish
to review, before drawing conclusions. However, such information is only provided orally, and does
not represent the official views of the AcSB. Those with enquiries about specific situations are
encouraged to contact their accounting firm or other technical advisors (for example, at the Provincial
Institutes of Chartered Accountants).
AcSB staff resources do not permit responses to requests from students for help with their studies.
General enquiries about the contents of this description of the AcSB or current AcSB activities may be
directed to:
Paul Cherry, FCA
or
Chair, Accounting Standards Board
Telephone: + 1(416) 204-3456
Fax: +1 (416) 204-3412
|
Peter Martin, CA
Director, Accounting Standards
Telephone: +1 (416) 204-3276
Fax: +1 (416) 204-3412 |
