Accounting Standards Board
Decision Summary
February 27, 2008

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). In particular, the AcSB noted the following:

• The issue by the IASB of amendments to IAS 32, Financial Instruments: Presentation, and IAS 1, Presentation of Financial Statements, effective for annual periods beginning on or after January 1, 2009, with early adoption permitted. The amendments require entities to classify financial instruments as equity, instead of as financial liabilities, if they have the following characteristics: the instruments are puttable financial instruments, or if they are instruments, or components of instruments, that impose an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation. These changes will not be adopted into Canadian GAAP for Publicly Accountable Enterprises until changeover to IFRSs on January 1, 2011.
• The acknowledgement by US Securities and Exchange Commission (SEC) Chair, Christopher Cox, that the SEC will be considering an updated “roadmap” to determine the best approach to continuing the progress in adopting IFRSs in the United States.
• The Canadian Securities Administrators (CSA) recently issued a Concepts Paper on adopting IFRSs in Canada. The AcSB requested staff to develop a draft response to the CSA highlighting additional factors regarding the proposal that the CSA’s regulations refer only to IFRSs as published by IASB.
• The Board of Trustees of the US Financial Accounting Foundation (FAF) has voted to approve major changes to the oversight, structure and operations of the FAF, and its two standard-setting Boards, the FASB and the Governmental Accounting Standards Board. The changes pertaining to the FASB include reducing its size from seven to five members effective July 1, 2008 and, following appropriate consultation, vesting in the Chair the authority to set the FASB project plans, agenda and priority of projects. The FAF further decided to retain the FASB simple majority voting requirement, and reaffirmed the need for investor participation on the FASB by broadening the current by-law requirement that FASB members possess investment experience.
• The US SEC Advisory Committee on Improvements to Financial Reporting has published a progress report and is soliciting public comment. The progress report contains the Committee’s developed proposals, conceptual approaches and matters for future consideration on improving the financial reporting system in the United States. Later in 2008, the Committee will identify and analyze some of the issues to be resolved in the move toward global convergence of accounting standards.

Publicly Accountable Enterprises Strategy

Omnibus Exposure Draft
The AcSB decided on a 120-day comment period for the omnibus exposure draft of IFRSs, which is expected to be issued in late March 2008.

Interim Financial Reporting
The AcSB has decided that IFRSs will replace current Canadian GAAP for publicly accountable enterprises effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The AcSB directed staff to consider the implications of this decision for the first interim period of an entity’s first fiscal year reported on an IFRS basis.

Pension Plans
The AcSB decided that on adoption of IFRSs for publicly accountable enterprises, GAAP financial statements for pension plans should continue to be prepared in accordance with Section 4100, Pension Plans, rather than IAS 26, Accounting and Reporting by Retirement Benefit Plans. To the extent that aspects of financial reporting by pension plans are not addressed by Section 4100, plans currently refer to other primary sources of Canadian GAAP. After the changeover to IFRSs, they will refer instead to IFRSs other than IAS 26 for such additional guidance. The AcSB will encourage the IASB to undertake a project to update and improve IAS 26, with a view to eventually replacing Section 4100 with an improved version of IAS 26.

The AcSB noted that the ability to use Section 4100 does not extend to an entity that holds or manages the assets of a pension fund, but is not itself a pension plan.

These decisions will be exposed for public comment in the forthcoming omnibus exposure draft of IFRSs.

Private Enterprises Strategy

The AcSB continued discussion of its Private Enterprises strategy in light of the responses to its Invitation to Comment and the CICA’s proposed reporting Framework for Owner-managed Enterprises. The AcSB decided not to pursue development of non-GAAP standards, but will discuss in future meetings a possible simplified form of GAAP intended to be available to all private enterprises.

Not-for-Profit Organizations Strategy

The AcSB continued discussions on the future direction for setting accounting standards applicable to not-for-profit organizations. No decisions were made.

Business Combinations

The AcSB agreed not to re-expose proposed new Section 1582, Business Combinations. It confirmed that it will issue the new Section, conformed to the recently issued revised version of IFRS 3, Business Combinations, and the corresponding US standard, after completing the development of the related standard on non-controlling interests. An exposure draft on that topic will be issued for comment in March 2008.

Insurance Contracts

The AcSB discussed the approach for dealing with its standards on insurance relative to IFRS 4, Insurance Contracts, assuming that the IASB’s current project on insurance contracts is not complete when Canada adopts IFRSs. The AcSB directed staff to consult further with its Insurance Accounting Task Force and the Office of the Superintendent of Financial Institutions. Discussion of this issue will continue at a future meeting.

Emerging Issues Committee (EIC)

The AcSB approved the addition of an item to the EIC's agenda on whether a reduction in the valuation allowance for a tax loss carryforward should be included in net income or in other comprehensive income when that reduction is the result of an unrealized gain on a financial asset classified as available for sale.