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Accounting Standards for Private Enterprises

2021 Annual Improvements

Summary

The Accounting Standards Board (AcSB) has adopted an annual process to make minor improvements to accounting standards for private enterprises (ASPE) in Part II of the CPA Canada Handbook – Accounting as they are identified. The annual improvements process:

  • clarifies guidance or wording in the standards; or
  • corrects relatively minor unintended consequences, conflicts or oversights.

Major improvements to the standards, such as the issuance of a new standard, are not included in the annual improvements process. Annual improvements to Part II may also apply to not-for-profit organizations that use Part III.

Staff Contact(s)

Danielle MacLeod, CPA, CA Associate Director, Accounting Standards Board

Phone number  +1 416 204 3951
Email address  [email protected]

Project Status

  • Information gathering

    Completed during 2019 and early 2020

  • Approving project

    The AcSB approved the project on July 7, 2020

  • Engaging Communities

    The AcSB issued its exposure draft in October 2020

    Exposure Draft closed for comment on December 14, 2020

    Exposure Draft
  • Deliberating feedback

    The AcSB is deliberating feedback on its Exposure Draft

  • Final pronouncement

    The AcSB issued the final amendments in April 2021

News

March 26, 2021

News

Handbook Update – 2021 Annual Improvements

The AcSB has issued the 2021 annual improvements to accounting standards for private enterprises and accounting standards for not-for-profit organizations. These amendments are effective for fiscal years beginning on or after January 1, 2022 with earlier application permitted.

Meeting & event summaries

January 21, 2021

AcSB Decision Summary – January 20, 2021

The AcSB discussed stakeholders’ responses to the Exposure Draft, 2021 Annual Improvements to Accounting Standards for Private Enterprises and Accounting Standards for Not-for-Profit Organizations. The Board decided, subject to written ballot, to:

  • amend Illustrative Example 3 in Section 3856, Financial Instruments, to use an assigned value of $45,000 in the case facts of the example;
  • issue the amendments to Section 1510, Current Assets and Current Liabilities, as exposed, with the exception of a consequential amendment to Section 1521, Balance Sheet; and
  • issue the amendments to Section 1500, First-time adoption, Section 1501, First-time Adoption by Not-for-Profit Organizations, and Section 1540, Cash Flow Statement, and, as exposed.

The AcSB provided approval to begin the balloting process. The Board plans to issue the final amendments in April 2021.

September 9, 2020

AcSB Decision Summary – September 9, 2020

The AcSB discussed the Private Enterprise Advisory Committee’s feedback on the issues addressed in the 2021 annual improvements cycle and provided comments on the draft exposure draft.

The AcSB decided to remove one issue from the annual improvement cycle related to the measurement of investments in a related party transaction accounted for in accordance with Section 1591, Subsidiaries, Section 3051, Investments, or Section 3056, Interests in Joint Arrangements. The Board decided this issue is outside the scope of an annual improvement and will consider whether a separate project is warranted in the context of its Part II priorities. 

The AcSB also decided to propose that the amendments be effective for fiscal years beginning on or after January 1, 2022, with early application permitted. The Board plans to issue the Exposure Draft, “2021 Annual Improvements,” in Q4 2020.

July 22, 2020

Private Enterprise Advisory Committee Notes – July 22, 2020

The Private Enterprise Advisory Committee discussed the five issues the AcSB is considering for annual improvements. A summary of the issues and the Committee’s recommendations on staff’s draft of the proposals are as follows:

  • Presentation of Related Party Balances: The Board proposes to clarify that an enterprise may present amounts owing on loans from directors, officers and shareholders, and amounts owing to parent and other affiliated companies, either separately on the face of the balance sheet or in the notes to the financial statements. The Committee recommended clarifications to the staff’s draft proposals.
  • First-time adoption: The Board proposes to permit an enterprise re-adopting ASPE could re-apply the first-time adoption provisions in Section 1500, First-time Adoption. The Committee advised that the Board also require note disclosure about why an enterprise re-adopted ASPE.
  • Section 1540, Cash Flow Statement disclosures: The Board proposes to remove a requirement in Section 1540 to disclose the total assets and total liabilities acquired or disposed of in a business combination or in a disposal of assets. The Committee didn’t recommend any changes to staff proposals and noted similar disclosure requirements also exist in the underlying standards Section 1582, Business Combinations, and Section 3475, Disposal of Long-lived Assets and Discontinued Operations to meet users’ information needs.
  • Measurement of investments in a related party transaction: Illustrative Example 3 in Section 3840, Related Party Transactions, illustrates the accounting for newly issued shares in a related party transaction by the enterprise receiving the shares. Section 3856, Financial Instruments, specifically excludes from its scope the measurement of interests in subsidiaries, enterprises subject to significant influence and jointly controlled enterprises. Therefore, the Board proposes to clarify in the illustrative example which standard applies for the measurement of the investment by the enterprise receiving the shares. The Committee made recommendations on staff’s proposals for the Board to consider at a future meeting.
  • Measurement of newly issued common shares in a related party transaction: Illustrative Example 3 in Section 3840 also demonstrates the initial measurement of share capital from the issuers’ perspective. However, the measurement basis is different from illustrative Example 3 in Section 3856 for a similar fact pattern. The Board seeks to make the Illustrative Examples consistent. The Committee had no further recommendations on the staff’s proposal to remove references to assigned value as the basis for measuring the shares in Section 3856.
 

July 7, 2020

AcSB Decision Summary – July 7, 2020

The AcSB discussed which issues to include in its 2020-2021 Annual Improvements cycle considering stakeholders’ ability to provide feedback in the current environment. The Board decided to include all five issues it was considering for annual improvements as these will provide clarity to stakeholders in areas where they have asked for guidance. The Board will issue an exposure draft no later than the fall of 2020.

Disclaimer

This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal voting process.