The Private Enterprise Advisory Committee assists the Accounting Standards Board (AcSB) with maintaining and improving accounting standards for private enterprises (ASPE) in Part II of the CPA Canada Handbook – Accounting and with identifying the need for non-authoritative guidance about the standards. The Committee makes recommendations to the AcSB but is not authorized to interpret or provide authoritative guidance on ASPE.
The AcSB staff has prepared this document based on discussions held during the Committee’s meeting. The meeting notes do not necessarily represent the AcSB’s views and nothing in them constitutes authoritative guidance on acceptable or unacceptable application of ASPE. Only the AcSB can make such a determination.
Employee Future Benefits
The Committee considered stakeholder feedback on the AcSB’s Exposure Draft, “Employee Future Benefits – Use of a Funding Valuation.” Committee members:
- provided input on staff’s proposed example to clarify the requirement to include all components of a funding valuation for legislative, regulatory or contractual purposes in the measurement of the defined benefit obligation;
- advised the Board to retain the word “solvency” in Employee Future Benefits, paragraph 3462.029D; and
- recommended changes to the Basis for Conclusions document and the transition provisions.
The AcSB will deliberate the Committee’s feedback at its March 2020 meeting.
Other Topics
The Committee also discussed the following:
- Section 1540, Cash Flow Statement: The Committee considered whether disclosing the total assets and total liabilities acquired or disposed of in a business combination or in a disposal of assets provides decision-useful information. The Committee noted that disclosure requirements also exist in the underlying standards Section 1582, Business Combinations, and Section 3475, Disposal of Long-Lived Assets and Discontinued Operations. The Committee advised the AcSB to remove the disclosure requirement in Section 1540 through an annual improvement, as the disclosures in the underlying Sections were sufficient.
- Section 3840, Related Party Transactions, and Section 3856, Financial Instruments: The Committee discussed Illustrative Example 3 in Section 3840, which shows how the “Investment in Company B” is measured. As paragraph 3856.03(a) specifically excludes from its scope interests in subsidiaries, enterprises subject to significant influence, and jointly controlled enterprises, the Committee thought that it was unclear whether the example illustrates measuring the investment using Sections 1591, 3051 and 3056, as required in the standard. The Committee advised the AcSB to clarify which standard to use in the example.
The Committee also considered the initial measurement of share capital in conjunction with Illustrative Example 3 in Section 3856, and noted that there is no guidance in Part II for the initial measurement of share capital. The Committee advised the AcSB to clarify the measurement of share capital in the illustrative examples and to consider a project on the initial measurement of share capital.
- Section 3065, Leases: The Committee discussed the accounting for sale-leaseback transactions and the guidance for these transactions in Part II. The Committee noted that sale-leaseback transactions are not common for private enterprises. However, Committee members thought that when they do occur, the guidance in Section 3065 allows stakeholders to effectively reflect the economics of the transaction in the financial statements. The Committee recommended that the AcSB not undertake any standard-setting activity on this topic.