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.
IFRS® Accounting Standards
Business Combinations – Disclosure, Goodwill and Impairment
The AcSB discussed key points to include in its response to the International Accounting Standards Board’s (IASB) Exposure Draft, “Business Combinations – Disclosures, Goodwill and Impairment.” The IASB issued its Exposure Draft in March 2024, with comments due to the IASB by July 15, 2024. In developing the key points to include in its response letter, the AcSB considered feedback from 88 interested and affected parties, including users, preparers, practitioners, valuators, and regulators.
The AcSB discussed users’ concerns about the need for better information on business combinations. This included the need for additional information that is critical for evaluating whether the price an entity paid for a business combination is reasonable, assessing the subsequent performance of the acquired business, and holding management accountable for its investment decisions. The Board considered whether the general-purpose financial reports are the appropriate location within which to provide this information.
Additionally, the Board discussed the importance of carefully considering the feasibility of implementing processes and controls to ensure that the information provided is verifiable at a reasonable cost.
The AcSB will proceed to finalize its response letter to the IASB.
Climate-related and Other Uncertainties in the Financial Statements
The AcSB discussed its plan to respond to the IASB’s upcoming exposure draft on Climate-related and Other Uncertainties in the Financial Statements. The exposure draft is expected to be issued in July 2024, with a 120-day comment period. The AcSB approved outreach and communications plans, which include gathering feedback from advisory committees and working groups, and holding a public webinar. More information on the public webinar will be shared on our website following the issuance of the exposure draft.
Power Purchase Agreements (Contracts for Renewable Electricity)
The AcSB discussed its plan to respond to the IASB’s Exposure Draft, “Contracts for Renewable Electricity,” which proposes amendments to IFRS 9 and IFRS 7. The IASB issued its Exposure Draft in May 2024, with comments due to the IASB by August 7, 2024. Responses to the AcSB are due by July 31, 2024.
In developing key points to include in the response letter, the AcSB discussed three key points, including own-use exemption for certain physical power purchase agreements (PPAs), hedging, and disclosure for certain physical and virtual PPAs. The AcSB also discussed its approach to targeted outreach activities and obtaining input from its committees.
Regarding the own-use exemption proposed amendment, the AcSB considered its response to the IASB’s Exposure Draft; the AcSB thinks that different treatments for two distinct financial instruments, but that have the same economic outcome, might introduce complexity and inconsistent accounting treatment. The AcSB also thinks that for the hedge accounting specific amendments, this narrow-scope amendment is very focused and that there may be opportunities to expand application to other similar types of contracts. The AcSB recognized that these types of contracts might grow over time.
The AcSB agreed on its plan to respond to the IASB’s Exposure Draft and will discuss its draft response letter at its July 2024 meeting.
Standards for Private Enterprises
Detailed Review of Accounting Standards for Private Enterprises
The AcSB discussed the scope of its Detailed Review of Accounting Standards for Private Enterprises. The Board approved an approach to determine which issues will be addressed as part of this project. The approach aims to ensure the project focuses on issues that arise from unnecessarily complex, onerous, and/or costly requirements in Part II of the CPA Canada Handbook - Accounting, considering the needs of and benefits to financial statement users. The approach seeks to capture only the most significant and pervasive issues within the scope of this project. Additionally, the approved approach clarifies the types of issues that will be addressed through the Board’s guidance framework for domestic standards rather than through this project.
Application Question – Guidance Framework
The AcSB continued discussing an application question from practice regarding the amendments issued in September 2023 to Section 3840, Related Party Transactions, in Part II of the Handbook. These amendments added an option in paragraph 3840.44(b) to either retrospectively restate all prior periods when carrying values are used to account for a combination or prospectively account for these transactions from the date that the transfer occurred.
The question raised is, when the new option is applied to account for a combination prospectively from the date that the transfer occurred, what comparative figures, if any, are presented?
The AcSB discussed feedback from the Private Enterprise Advisory Committee (PEAC) that the following views have emerged:
- an enterprise must identify an acquirer and report comparative figures of the acquiring entity; or
- an enterprise should apply professional judgment to consider the needs of financial statement users, and, in some scenarios, there could be no comparative figures.
Given the diverse views, PEAC recommended that the AcSB issue guidance to clarify the application of the amendment.
The AcSB considered this feedback and noted that the current language in paragraph 3840.44(b) could infer that determining an acquirer is required when carrying values are used to account for the transaction prospectively from the date that the transfer occurred. The Board discussed that in some scenarios identifying an acquirer could be complex or onerous for private enterprises.
The AcSB tentatively decided to develop an exposure draft for a narrow-scope amendment to Section 3840. The Board will discuss the exposure draft proposals at its meeting in September 2024. The Board expects to issue an exposure draft in Q4 2024.
Standards for Private Enterprises and Standards for Not-for-Profit Organizations
Insurance Contracts with Cash Surrender Value
The AcSB completed its deliberations on feedback from interested and affected parties on the Exposure Draft, “Accounting for Life Insurance Contracts with Cash Surrender Value,” considering feedback from its Private Enterprise Advisory Committee and Not-for-Profit Advisory Committee.
The AcSB approved the issuance of Accounting Guideline (AcG) 21, Accounting for Life Insurance Contracts with Cash Surrender Value, in Part II of the Handbook, subject to minor drafting changes. The Board plans to issue the AcG in September 2024.
Financial Statement Concepts
The AcSB discussed and approved a project proposal for a project to update Financial Statement Concepts in Parts II and III of the Handbook.
The project will focus on:
- clarifying the purpose and intended use of Financial Statement Concepts; and
- ensuring Financial Statement Concepts are appropriate for private enterprises and not-for-profit organizations in Canada.
The AcSB does not expect these updates to significantly impact current practice or the application of existing authoritative accounting standards. However, updating Financial Statement Concepts will provide greater clarity on topics that will assist the AcSB in standard setting and help preparers and practitioners interpret and apply the standards.
Standards for Not-for-Profit Organizations
Contributions
The AcSB continued discussing proposals to be included in its new exposure draft on recognition of restricted contributions and related matters. The Board deliberated the feedback on proposals in its 2023 Exposure Draft, “Contributions – Revenue Recognition and Related Matters,” regarding the definitions of “restricted contributions” and “endowments”. As part of this discussion, the Board considered input from its Not-for-Profit Advisory Committee.
Definition of “restricted contribution”
In response to the feedback that it is unclear when a contribution would meet the criteria of being explicitly communicated, the AcSB tentatively decided to provide additional guidance on the application of professional judgment to determine when a restriction has been explicitly communicated.
The AcSB discussed whether restrictions imposed by related parties or as the result of laws and regulations would be considered external restrictions. The Board tentatively decided that restrictions imposed by a related party would be considered to be an external restriction. The Board also tentatively decided that restrictions imposed as a result of laws and regulations would be considered external restrictions.
The AcSB discussed whether contributions that contain restrictions specifying that the contribution be used within a specific period of time should be included in the definition of “restricted contribution”. The Board tentatively decided that period-of-time restrictions would not result in the contribution being restricted, but that these restrictions would impact the timing of revenue recognition.
The AcSB also tentatively decided that contributions restricted to a specific aspect of an organization’s mandate would meet the definition of “restricted”.
The AcSB will consider these tentative decisions as it continues developing its new exposure draft. This will include interaction of the tentative decisions with other proposed requirements and the nature and extent of illustrative examples and other guidance to accompany the proposed requirements.
Definition of “endowment contribution”
The AcSB also discussed whether the definition of “endowment” should include only contributions that must be maintained permanently. The Board directed staff to conduct additional research to determine the prevalence and existing accounting treatment of contributions that are required to be maintained permanently and those that are not permanent but may be similar, such as those with long-term restrictions.
The AcSB will seek feedback through targeted outreach with interested and affected parties and through consultation with its Not-for-Profit Advisory Committee. The Board will continue its discussion on this topic at a later meeting.
Relevance of Financial Reporting
Sustainability Awareness Education Session
The AcSB received an education session on sustainability topics including, but not limited to, the following: climate change; biodiversity; diversity, equity, and inclusion; as well as a regulatory update. The Board will continue to monitor sustainability issues facing Canadian entities.
Research
Intangibles and crypto-asset activities
The AcSB considered the findings from the research on crypto-asset activities and the results from the domestic survey on intangible assets. The AcSB also discussed its next steps based on the research findings and the potential need for further research on broader intangibles that could contribute to the IASB’s project on Intangible Assets. The AcSB made the following decisions during the meeting:
- Monitor developments in the Canadian landscape for the prevalence of emerging intangible assets, including crypto-asset activities.
- Commence initial activities aimed at informing the development of a research proposal to influence the IASB’s Intangible Assets project.
The AcSB will discuss a detailed research proposal in an upcoming meeting later this year.
Evaluating the Preface
The AcSB discussed research related to its strategic initiative to evaluate the Preface to the Handbook. This research included outreach with its Private Enterprise Advisory Committee, Not-for-Profit Advisory Committee, and Small Practitioners Working Group. While most members thought that changes to the Preface are not needed, some highlighted potential changes that the Board might consider. They thought that certain entities, such as social enterprises, small health and wellness funds, and sports and social clubs are using frameworks that may not be suitable given their size, complexity, and the information needs of their financial statement users.
The AcSB will conduct additional research on the financial reporting needs of these entities. This will include further discussions with its advisory committees and outreach with staff of the Public Sector Accounting Board and the Auditing and Assurance Standards Board. The AcSB will discuss next steps at its November 2024 meeting.
Due Process
Annual Improvement and Post-implementation Review Process
The AcSB discussed its annual improvement and the post-implementation review process and whether any changes should be made to improve the processes. No decisions were made.
AcSB’s Advisory Committees and Working Groups
Academic Advisory Committee
The AcSB received an update on the June 7, 2024, Academic Advisory Committee meeting. At this meeting, the Committee shared its views on the IASB’s upcoming research project on IAS 7 Statement of Cash Flows; the International Auditing and Assurance Standards Board’s proposed integrated project to revise International Standards on Auditing (ISA) 330, The Auditor’s Responses to Assessed Risks, and ISA 520, Analytical Procedures; and the IASB’s upcoming exposure draft on Climate-related and Other Uncertainties in the Financial Statements. The Committee also discussed the results of the survey of volunteers on the performance of the Committee in 2023-2024. The Committee was satisfied with the results and will look to implement suggestions for improvement.
Small Practitioners Working Group
The AcSB received an update on the May 23, 2024, Small Practitioners Working Group meeting. At this meeting, the Group shared its views on Relief from Recognition of Intangible Assets and Amortization of Goodwill, as well as Evaluating the Preface.
User Advisory Committee
The AcSB received an update on the June 6, 2024, User Advisory Committee meeting. At this meeting, the Committee shared its views on the following IFRS® Accounting Standards projects: PPAs; Business Combinations – Disclosures, Goodwill and Impairment; Climate-related Risks and Other Uncertainties in the Financial Statements; and the Intangible Assets research project. The Committee also discussed key elements from the Exposure Drafts, Canadian Sustainability Disclosure Standard (CSDS) 1, “General Requirements for Disclosure of Sustainability-related Financial Information” and CSDS 2, “Climate-related Disclosures,” both issued by the Canadian Sustainability Standards Board. Finally, the Committee discussed the process and associated challenges faced with shareholder proposals raised during proxy season.