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 Board. Decisions to publish Handbook material are final only after a formal ballot process.
The AcSB will respond to change and reprioritize when necessary, ensuring we can address implementation challenges and provide the information users may need in these unique circumstances.
The AcSB values input and feedback from stakeholders and can be reached anytime through our online form.
Standards for Not-for-Profit Organizations
Contributions
The AcSB continued discussing the exposure draft proposals related to the recognition of revenue for restricted contributions and capital asset contributions.
The AcSB discussed the proposed guidance for determining whether a contribution is externally restricted. The Board reached a preliminary decision that for a contribution to be externally restricted, the restriction must be:
- explicitly communicated by the contributor;
- sufficiently specific in directing the organization how the resources must be used, beyond being used for the organization’s general mandate; and
- substantive.
The AcSB discussed factors that would indicate a restriction is substantive, including scenarios where a significant constructive obligation would indicate a restriction in substantive.
With respect to the recognition of revenue from restricted contributions, the AcSB reached a preliminary decision that an externally restricted contribution should be deferred and subsequently recognized in revenue when the substantive external restrictions are met.
The AcSB reaffirmed its tentative decision from its May 2022 meeting that capital asset contributions should be accounted for consistently with other types of restricted contributions. Therefore, a capital asset contribution should be deferred when there is a substantive external restriction on the use of the asset. For example, a contributed capital asset with an external requirement to use that asset in line with the general mandate of the organization would not be deferred because the requirement is not sufficiently specific and, therefore, is not considered externally restricted.
The AcSB will continue discussing the exposure draft proposals at its September 2022 meeting. The Board plans to issue an exposure draft in the first quarter of 2023.
Standards for Private Enterprises and Not-for-Profit Organizations
Cloud Computing
The AcSB assessed the sufficiency of stakeholders’ feedback from its outreach activities and comment letters received on its Exposure Draft, “Customer’s Accounting for Cloud Computing Arrangements.” The Board concluded that it has received sufficient feedback from a wide range of stakeholders, including practitioners, preparers, users, and academics.
The AcSB then deliberated stakeholders’ feedback on its Exposure Draft. The Board tentatively decided to:
- create a new balance sheet caption to present capitalized expenditures on implementation activities when the cloud computing arrangement is a software service;
- provide additional transition relief to address stakeholders’ concerns;
- defer the effective date of the proposed Accounting Guideline 20, Customer’s Accounting for Cloud Computing Arrangements, from January 1, 2023, to January 1, 2024, with early application permitted; and
- include an example to illustrate implementing an additional module to the software after commencement of accessing the software.
The AcSB tentatively decided to finalize the following proposals in the Exposure Draft, subject to certain minor edits:
- scope;
- determining a method for allocating arrangement consideration on a rational and consistent basis;
- optional simplification approach;
- accounting policy choice to capitalize expenditures on implementation activities that are directly attributable to preparing the software service for intended use or expense as incurred;
- applying the accounting policy chosen by the enterprise consistently to expenditures in cloud computing arrangements;
- factors to consider when determining whether a cloud computing arrangement includes a software intangible asset;
- factors to consider in determining the expected period over which the capitalized expenditures on implementation activities should be expensed when a cloud computing arrangement is a software service; and
- disclosure requirements.
The AcSB will seek the advice of its Not-for-Profit Advisory Committee at its July 2022 meeting and continue deliberations in September 2022.
Standards for Pension Plans
Pension Plans
The AcSB considered the sufficiency of feedback from its outreach activities and comment letters received on the Exposure Draft, “Pension Plans.” The Board concluded that it received sufficient feedback from stakeholders including practitioners, preparers, users, provincial accounting bodies, regulators, academics, actuaries, and other individuals.
The AcSB then deliberated stakeholder feedback on its Exposure Draft. The Board tentatively decided to:
- include a requirement to disclose the applicability and status of a regulatory discharge for arrangements in which an entity purchases an annuity from a third party that assumes some or all of the obligations of the pension plan (commonly referred to as “buy-out” annuity contracts);
- reiterate that plans do not need to remeasure the amount of pension obligations transferred to a third party subsequent to the year of transfer in a buy-out annuity contract;
- add disclosure requirements for investments in a master trust to provide for cases where the plan’s position is not proportionate to the plan’s total position in the master trust; and
- defer the effective date to annual periods beginning on or after January 1, 2024, with earlier application permitted.
The AcSB tentatively decided to finalize the following proposals in the Exposure Draft, subject to certain minor edits:
- clarifying that a statement of changes in pension obligations is not required for defined contribution pension plans;
- guidance on determining the split or amalgamation date for pension plans;
- recognition, measurement, and disclosure guidance on the accounting for guaranteed annuity contracts (commonly referred to as “buy-in” annuity contracts);
- most of the derecognition guidance for pension obligations transferred to a third party in a buy-out annuity contract;
- additional risk disclosures for investments in master trusts; and
- presentation requirements for combination plans.
The AcSB plans to review a draft of the final amendments to Section 4600, Pension Plans, at its September 2022 meeting.
Relevance of Financial Reporting
Sustainability Reporting
The AcSB discussed its response letter to the International Sustainability Standards Board’s (ISSB) Exposure Drafts “[Draft] IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information” and “[Draft] IFRS S2 Climate-related Disclosures.” The AcSB’s letter focuses on areas of overlap with financial reporting and provides the ISSB with comments to consider in developing high-quality sustainability disclosure standards.
Due Process
AcSB’s Advisory Committee and Working Group
Private Enterprise Advisory Committee
The AcSB received an update on the July 6, 2022 Private Enterprise Advisory Committee (PEAC). PEAC discussed the stakeholder feedback on the AcSB’s Exposure Draft, “Customer’s Accounting for Cloud Computing Arrangements.”
Pension Plan Working Group
The AcSB received an update on the July 7, 2022 Pension Plan Working Group (PPWG) meeting. The PPWG discussed the results of its self-assessment survey, stakeholder feedback on the AcSB’s Exposure Draft “Pension Plans,” and other issues in Part IV of the Handbook, including investment disclosures and presentation of investment fees.