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Accounting Standards Board
Decision Summary
August 22, 2007
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. |
Rate-Regulated Operations
- The AcSB considered the comments received on its March 2007 Exposure Draft,
“Rate-Regulated Operations,” and decided to:
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- remove the temporary exemption in Section 1100, Generally Accepted Accounting
Principles, pertaining to the application of that Section to the recognition and measurement of assets
and liabilities arising from rate regulation;
- amend Section 3465, Income Taxes, to require the recognition of future
income tax liabilities and assets as well as a separate regulatory asset or liability for the amount of
future income taxes expected to be included in future rates and recovered from or paid to future customers;
and
- make these changes applicable prospectively to fiscal years beginning on or after January 1, 2009.
- The AcSB also decided not to withdraw:
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- the existing guidance relating specifically to rate-regulated operations in Section 1600, Consolidated Financial Statements, Section 3061, Property, Plant and Equipment, and
Section 3475, Disposal of Long-Lived Assets and Discontinued Operations;
and
- AcG-19, Disclosures by Entities Subject to Rate Regulation, but to make
consequential amendments to the Guideline as a result of the above changes.
The changes to Sections 1100 and 3465 will result in consistency between all Handbook Sections providing
guidance relating specifically to rate-regulated operations, and the corresponding guidance under US
GAAP.
The AcSB believed there was benefit to removing all Handbook recognition and measurement guidance relating
specifically to rate-regulated operations prior to the adoption of IFRSs for publicly accountable
enterprises, as was proposed in the Exposure Draft, and noted that the decisions summarized above may not
have a much different effect on practice than the Exposure Draft proposals. At the same time, it acknowledged
the concerns expressed by respondents about the ability of Canadian entities to rely on US GAAP in this area,
and to influence the development of any future IFRS guidance on rate-regulated operations, once the Handbook
guidance had been removed. The AcSB noted the high degree of support expressed by respondents for retaining
AcG-19 during the transition period.
- The AcSB also noted that:
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- respondents appeared focused on the current uncertainty about whether the accounting prescribed by FASB
Statement of Financial Accounting Standards No. 71, Accounting for the Effects of
Certain Types of Regulation (FAS 71), and Handbook Sections with recognition and measurement guidance
relating specifically to rate-regulated operations, is compatible with IFRSs, and therefore, what will
transpire upon changeover to IFRSs; and
- it has brought this issue to the attention of other national standard setters and the IASB, and continues
to follow up on it.
The AcSB decided that the final Background Information and Basis for Conclusions for this project would
not express any views of the AcSB regarding this issue or the status of FAS 71 as an “other source of GAAP”
within the Canadian GAAP hierarchy.
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