Accounting Standards Board
Decision Summary
May 29, 2007

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 was informed that the IASB has issued a Discussion Paper on “Preliminary Views on Insurance Contracts,” for public comment by November 16, 2007.

Publicly Accountable Enterprises Strategy

The AcSB continued discussions related to the implementation of its strategy to adopt International Financial Reporting Standards (IFRSs) for publicly accountable enterprises. Several of the topics discussed at this meeting took into account advice received from the AcSB’s IFRS Advisory Committee at its meeting on May 3, 2007. Discussions will continue at future AcSB meetings.

Progress Review
The AcSB’s IFRS Implementation Plan indicates that a progress review will be undertaken before confirming the changeover date to IFRSs. The AcSB has been monitoring and assessing evidence that might affect the timing of the changeover date since the strategy was adopted and will continue to do so with a view to confirming the changeover date no later than March 31, 2008. The AcSB noted that information to date confirms the appropriateness of its strategy to adopt IFRSs for publicly accountable enterprises. The AcSB confirmed that the focus of the progress review will be to assess the readiness for planned implementation of the strategy in fiscal years beginning on or after January 1, 2011 (the expected changeover date). The AcSB will review its plan for the progress review with the Accounting Standards Oversight Council (AcSOC) at AcSOC’s May 31-June 1 meeting.

Early Adoption
The AcSB discussed whether early adoption of IFRSs could be an option for Canadian enterprises. In particular, the AcSB noted the circumstances of a number of Canadian enterprises with foreign parents or subsidiaries that currently report under IFRSs. These enterprises might wish to eliminate the need to prepare financial information in accordance with both IFRSs and Canadian GAAP as soon as possible. The AcSB tentatively concluded that once IFRSs have been approved as Canadian GAAP (i.e., following exposure), it could see no reason to preclude early adoption. While IFRSs would not be mandatory for Canadian publicly accountable enterprises until the changeover date, early adoption might be possible as soon as 2009. Such an approach might also accommodate the circumstances of Canadian enterprises registered with the US Securities and Exchange Commission, which is considering removing its requirement for foreign registrants to provide reconciliations to US GAAP in the case of companies reporting in accordance with IFRSs.

IASB Work in Progress at Changeover Date
The AcSB agreed that, based on current projections of the IASB work programme, it does not expect to make any modifications to IFRSs to accommodate work in process by the IASB at the changeover date. The AcSB noted that it would be inappropriate to preclude any enterprise from adopting IFRSs in their entirety at that date, and thus potentially limiting an enterprise’s ability to use the transitional provisions of IFRSs or to access US markets without reconciliation. Based on current projections, there do not appear to be standards that:

• are likely to be changed by the IASB shortly after the Canadian changeover date; and
• would require significant transitional effort followed by a possible additional change shortly thereafter.

Consistent with the above, the AcSB tentatively concluded that after adoption of IFRSs in Canada, oil and gas enterprises should account in accordance with IFRSs and should not continue to apply existing GAAP that is inconsistent with IFRSs. The AcSB recognized that this could represent a significant change for oil and gas companies that use the full cost method. In accordance with the AcSB's due process, this tentative decision will be exposed for comment as part of the proposed "omnibus" exposure draft (see below).

Canadian Standards with No IFRS Equivalent that Will Not Be Maintained on Changeover
The AcSB discussed several of its current standards that have no equivalent in IFRSs. Consistent with its objective of adopting IFRSs in full and without modification, the AcSB tentatively concluded that the following standards would not be retained at the changeover to IFRSs:

• Section 1625, Comprehensive Revaluation of Assets and Liabilities;
• Section 3610, Capital Transactions;
• Section 3841, Economic Dependence;
• AcG-7, The Management Report; and
• AcG-16, Oil and Gas Accounting — Full Cost.

These tentative conclusions will be reflected in the proposed “omnibus” exposure draft that will seek comment on those standards expected to be in effect on changeover to IFRSs and those standards that will no longer be in effect after that date.

Definition of Publicly Accountable Enterprise — Co-operative Enterprises
The AcSB tentatively concluded that co-operative enterprises have public accountability as they have open membership and, generally, members rely on the financial statements for financial reporting information. Hence, they should be considered publicly accountable enterprises and will be expected to adopt IFRSs at the same time as other publicly accountable enterprises. This decision and others affecting the definition of a “publicly accountable enterprise” will be exposed for public comment.

IFRS 1, First-time Adoption of IFRSs
The AcSB tentatively concluded that no modifications are necessary to IFRS 1, First-time Adoption of International Financial Reporting Standards, for purposes of the transition of Canadian GAAP to IFRSs.

Role of Canadian Standard-setting Activities
The AcSB commenced discussions on the role of Canadian standard-setting activities in the international environment following the adoption of IFRSs into Canadian GAAP. No decisions were made.

Private Enterprises Strategy

The AcSB confirmed that Section 1530, Comprehensive Income, Section 1535, Capital Disclosures, Section 3855, Financial Instruments — Recognition and Measurement, Section 3862, Financial Instruments — Disclosures, Section 3865, Hedges, and related consequential amendments, will become effective for non-publicly accountable enterprises for interim and annual financial statements relating to fiscal years beginning on or after October 1, 2007. The AcSB will request advice from its Differential Reporting Advisory Committee as to the need for any additional differential reporting options in Sections 1535 and 3862. The AcSB noted that, whatever strategy it adopts for non-publicly accountable enterprises, it is unlikely to result in standards based on principles that differ significantly from the basic principles underlying these standards (see paragraphs 3855.02 and 3865.05). These same principles underlie both IFRSs dealing with financial instruments and the proposed standards in the IASB’s Exposure Draft of its IFRS for Small and Medium-sized Entities. The AcSB asked its staff to consider developing implementation guidance suggesting how non-publicly accountable enterprises might adopt these standards in the most straightforward manner possible, while minimizing the risk of further change on adoption of a new approach to financial reporting by private enterprises.

AcSB Performance

The AcSB approved its report to AcSOC on its performance for 2006-07 and its plan for 2007-08. These documents will be discussed by AcSOC in its meeting on May 31-June 1, 2007.