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.
Governance
AcSB Guidance Framework
The AcSB discussed and approved the proposed guidance framework for domestic standards.
The framework begins with determining whether the issue raised meets the proposed criteria for further discussion. This includes questions related to prevalence and diversity of the issue, and the impact of the accounting outcome on users’ decisions . These criteria will be posted on the AcSB’s website for the public to understand the process and to provide transparency on how the Board considers issues.
If an issue meets the criteria, it will be discussed by the relevant advisory committee at a subsequent meeting. The Committee will seek to understand the judgments involved in coming to accounting conclusions on the issue. All this information will be given to the AcSB to determine the appropriate course of action.
The AcSB decided that, going forward, decision summaries will present application issues that meet the criteria, and that the Committee and the Board have discussed. These decision summaries will be the public’s key source of information about these issues.
Finally, the AcSB considered a formalized risk assessment that will be carried out before issuing a final standard to determine whether areas warrant additional implementation support.
AcSB’s Annual Plan
The AcSB continued discussing its 2024-2025 Annual Plan for the operating year beginning April 1, 2024, and considered feedback from the Accounting Standards Oversight Council (AcSOC) and AcSOC’s Performance Review Committee. The Board discussed its risk assessment and decided on its priorities for next year, including continued international influence and progress on domestic projects to enhance the relevance of accounting standards for each category of reporting entity in Canada. The Board also decided that the plan should be flexible, given the need to respond to emerging financial reporting matters, and address application issues through the guidance framework.
The AcSB approved its 2024-2025 Annual Plan and plans to issue it by March 31, 2024.
AcSB’s Performance Report
The AcSB discussed a draft of its performance report for the 2023-2024 operating year. The Board expects to approve its performance report in April 2024 for presentation to AcSOC’s Performance Review Committee. The Committee will receive this report in May 2024 to assess the Board’s performance for the 2023-2024 operating year.
The AcSB also discussed its draft 2023-2024 annual Report for the operating year and plans to issue the report in June 2024.
IFRS® Accounting Standards
Financial Instruments with Characteristics of Equity
The AcSB discussed key points to include in its response to the International Accounting Standards Board’s (IASB) Exposure Draft, “Financial Instruments with Characteristics of Equity.” The IASB issued its Exposure Draft in November 2023, with comments due to the IASB by March 29, 2024. In developing the key points to include in its response letter, the AcSB considered feedback from 124 interested and affected parties, including users, preparers, practitioners, and regulators. The AcSB discussed concerns surrounding the scope of the expanded measurement requirements included in the Exposure Draft and whether these proposals would result in decision-useful information for financial statement users.
The AcSB will submit its response letter to the IASB ahead of the March 29, 2024, deadline.
Standards for Private Enterprises
Climate-related Risks and Opportunities
The AcSB discussed a draft document titled, Sustainability for ASPE Users: Climate-related Risks and Opportunities. The document is proposed as an awareness tool to help engage Accounting Standards for Private Enterprises (ASPE) users and preparers with how climate-related risks and opportunities impact financial statements.
The draft document mirrors the IFRS for SMEs® Accounting Standard educational material on climate risks and opportunities for small and medium-sized entities (SMEs) that the IASB published in May 2023. While there is no specific climate standard in ASPE, the AcSB thinks the standards themselves are fit for purpose and can be used when considering climate-related risks and opportunities that have a material financial impact. The AcSB’s draft document highlights certain ASPE standards and climate-related examples.
The AcSB approved the document for publication. The document will be published in sections, starting in the spring 2024.
Insurance Contracts with Cash Surrender Value
The AcSB discussed feedback on the Exposure Draft, “Accounting for Life Insurance Contracts with Cash Surrender Value,” which closed for comment January 31, 2024. In response to this feedback the Board tentatively decided to:
- retain the proposal to require recognition of cash surrender value as an asset when an enterprise becomes the owner and beneficiary of the underlying insurance contract;
- retain the proposal to require measurement of cash surrender value at the amount that would be immediately realized upon termination of the policy;
- remove the requirement to disclose the amounts of acquisitions and terminations during the period;
- provide a consequential amendment to Section 1500, First-time Adoption, and Section 1501, First-time Adoption by Not-for-Profit Organizations, to allow the transition provisions in proposed Accounting Guideline (AcG)21, Accounting for Life Insurance Contracts with Cash Surrender Value, to be applied on a first-time adoption of ASPE or Accounting Standards for Not-for-Profit Organizations (ASNPO); and
- defer the effective date of proposed AcG-21 to year-ends beginning on or after January 1, 2026.
In May 2024, the AcSB will seek advice from its Private Enterprise Advisory Committee and Not-for-Profit Advisory Committee on these tentative decisions and will continue deliberations. The Board intends to issue the new Accounting Guideline and accompanying Basis for Conclusion in Part II of the Handbook in September 2024.
ASPE Application Issues
The following issues were raised before the AcSB’s Guidance Framework was put in place. Therefore, these issues might not have met the initial criteria of prevalence and diversity of the issue and impact on the accounting outcome to users of the financial statements.
The AcSB discussed questions from practice regarding the application of ASPE and considered input from its Private Enterprise Advisory Committee on the following topics:
- consolidated financial statements;
- redemption of retractable or mandatorily redeemable preferred shares; and
- presentation of related party loans.
Consolidated financial statements
In the scenario discussed, a parent company has a year-end in March, while three of its material subsidiaries have year-ends in December. The question was how the guidance in Section 1601, Consolidated Financial Statements, applies when the subsidiaries’ year-ends are non-conterminous.
Private Enterprise Advisory Committee members had similar views on the application of the guidance, noting that the guidance in the standard is unclear and, as a result, there could be diversity in practice.
The AcSB decided to consider this as part of its annual improvement process and will discuss the timing for the next annual improvements project in a future meeting.
Redemption of retractable or mandatorily redeemable preferred shares
In the scenario discussed, an enterprise has Class B retractable preferred shares outstanding, with some classified as debt at their redemption amount and others classified as equity at their stated capital amount. The enterprise then redeems a portion of its Class B retractable preferred shares and the question raised is which ones are redeemed first.
Most Committee members had not seen the scenario in practice. Some thought they could understand how it could arise in practice and others questioned the fact pattern.
Given that the issue is not prevalent in practice, the AcSB decided that professional judgment should be applied and that no further guidance is needed. In May 2024, the Board will begin gathering information as part of its post-implementation review of the amendments to Section 3856, Financial Instruments, for retractable or mandatorily redeemable shares.
Presentation of related party loans
The AcSB discussed an application question regarding the classification of a shareholder loan as current or long-term. Committee members had consistent views on the question applying the guidance in Section 1510, Current Assets and Current Liabilities. Given that there is no diversity in practice, the AcSB decided that no further action was needed.
Revenue
The AcSB deliberated feedback on its Exposure Draft, “Revenue – Upfront Nonrefundable Fees or Payments.” The Board approved the issuance of the amendments, subject to a written ballot. The Board plans to issue the amendments in Part II of the Handbook in May 2024.
Standards for Not-for-Profit Organizations
Contributions
The AcSB continued deliberating the feedback on its Exposure Draft, “Contributions – Revenue Recognition and Related Matters.” The Board also discussed input from its Not-for-Profit Advisory Committee and from targeted outreach activities completed in January and February 2024 on potential options to address the feedback, and next steps for the project.
The potential options the AcSB considered to address the Exposure Draft feedback included:
- a revised recognition model that proposed new criteria for recognition of restricted contributions; and
- a recognition model consistent with the Exposure Draft proposals but with additional presentation or disclosure requirements.
Outreach participants agreed that presentation and disclosure alone do not adequately address the concerns raised in the Exposure Draft. Views were mixed on the revised recognition model ; some preferred it to what was proposed in the Exposure Draft, but others thought their current recognition model results in more decision-useful information.
Many Committee members and outreach participants saw merit in a single recognition model that could enhance comparability across the sector. However, most respondents indicated that comparability is more important within subsectors than across the entire not-for-profit sector. Participants also expressed concerns about the cost of moving to a single recognition model. Financial statement users indicated that a single recognition model would be helpful; however, they do not experience any significant challenges comparing financial statements prepared under the two existing recognition methods, provided there is adequate disclosure.
The AcSB considered the feedback on the Exposure Draft, as well as the input from additional outreach, and concluded that a single recognition model may not meet the diverse needs of the not-for-profit sector. Furthermore, considering the feedback from financial statement users, the benefits of moving to a single recognition model would likely not exceed the costs to develop, implement, and apply one model. Therefore, the Board decided to continue to allow an accounting policy choice for the recognition of contributions.
The AcSB will develop a new exposure draft that proposes improvements to the two existing methods for recognizing restricted contributions. This new exposure draft will incorporate the relevant proposals from the first Exposure Draft, and the feedback received, including topics such as definitions, recognition of restricted contributions using the deferral method, disclosure, and presentation. The project’s objective, moving forward, is to improve the quality and understandability of not-for-profit financial statements through improved consistency in application of the standards.
The AcSB plans to issue a feedback statement in May 2024, summarizing the views on the Exposure Draft proposals and additional outreach activities and providing an overview of the proposed direction and next steps. The Board will continue discussing the project at its May 2024 meeting.
Reporting Controlled and Related Entities
The AcSB discussed feedback from its Not-for-Profit Advisory Committee on improvements to the current disclosures and proposed additional disclosures in Section 4450, Reporting Controlled and Related Entities by Not-for-Profit Organizations in Part III of the Handbook. The Board also discussed proposed next steps to develop illustrative examples to support the application of definitions in Section 4450. These steps include forming a small focus group of experts who will help to provide a better understanding of the diverse scenarios encountered in practice.
The AcSB then approved a project proposal to:
- amend Section 4450 to improve the disclosures related to controlled and related entities;
- introduce illustrative examples to assist in the application of the definitions of control, significant influence, and economic interests in not-for-profit organizations in Section 4450; and
- revisit the current definitions of control, significant influence, and economic interests held in not-for-profit organizations, if necessary, based on any relevant learnings gained from the development of illustrative examples.
Standards for Private Enterprises and Not-for-Profit Organizations
Subsequent Measurement of Goodwill and Acquired Intangible Assets
The AcSB discussed and approved a project proposal for a standard-setting project allowing private enterprises and, to the degree impacted, not-for-profit organizations to amortize goodwill and to provide relief from recognizing certain or all intangible assets acquired in a business combination. To streamline the process, the Board opted for extensive preliminary outreach, including public engagement, rather than issuing a consultation paper. This approach aims to expedite financial reporting relief and ensure well-informed proposals for inclusion in an exposure draft.
The AcSB plans to complete preliminary outreach activities with interested and affected parties in May and June 2024. Opportunities to participate in outreach activities will posted on the Subsequent Measurement of Goodwill and Acquired Intangible Assets project page. Feedback from preliminary outreach will be discussed at the Board’s July 2024 meeting, leading to decisions on proposals for inclusion in an exposure draft.
Standards for Pension Plans
Improvements to Presentation and Disclosure of Investments for Pension Plans
The AcSB reviewed a proposed exposure draft that would amend Section 4600, Pension Plans, to improve the presentation and disclosure requirements related to investments held by pension plans. The proposals seek to make improvements in three areas:
- fair value disclosures;
- disclosures on interests in investment vehicles; and
- presentation and disclosure of investment expenses.
The AcSB discussed feedback from its Pension Plan Working Group on the proposals. Considering this feedback, the Board approved the proposed exposure draft (subject to drafting changes) and gave permission to begin the balloting process.
Further, the AcSB approved a communications and outreach plan to inform interested and affected parties of an exposure draft and to seek their feedback. The Board plans to issue an exposure draft in spring 2024, with a comment period of at least 90 days.
Due Process
AcSB’s Advisory Committees and Working Groups
User Advisory Committee
The AcSB received an update on the February 29, 2024, User Advisory Committee meeting. At this meeting, the Committee members shared their views on the proposals in the IASB’s Exposure Draft, “Financial Instruments with Characteristics of Equity.” The Committee also received updates on the Board’s ongoing research on cash flow reporting and carbon credits and Committee members shared their views on staff’s preliminary findings. The Committee continued to note the importance of the statement of cash flows to users. The Committee also acknowledged that carbon credits is an emerging area whose relevance to users will increase as they become more material to an entity’s financial statements. Other updates the Committee received included the IASB’s project on Power Purchase Arrangements .
Pension Plan Working Group
The AcSB received an update on the February 14, 2024, Pension Plan Working Group meeting. At this meeting, the Group discussed changes to its Terms of Reference and Statement of Operating Procedures as it transitions to become an advisory committee in April 2024. Advisory committees have indefinite lifespans and regular standing meeting(s) every year, whereas working groups meet as needed based on projects underway. The Board approved these changes at its March 2024 meeting.
At its meeting, the Group also discussed a proposed exposure draft to improve the presentation and disclosure requirements in Section 4600, Pension Plans, related to investments held by a pension plan. The AcSB considered the Group’s feedback in making its tentative decisions on the proposed exposure draft.
AcSB’s Advisory Committees – Chairs
The AcSB appointed new chairs for its Not-for-Profit Advisory Committee, User Advisory Committee, Agriculture Advisory Group, and Insurance Transition Resource Group.