Evaluating the Preface

The AcSB discussed research related to its project to Evaluate the Preface to the Handbook. This research included outreach with its Private Enterprise Advisory Committee, Not-for-Profit Advisory Committee, Medium and Small Practitioners Advisory Committee, IFRS^® Interpretations Committee Member Support Group, and Pension Plan Advisory Committee. Those consulted 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/or the information needs of their financial statement users. However, most of those who were consulted thought changes to the Preface are not needed.

The AcSB considered this feedback and decided that no changes to the Preface are needed. As a result, the Board decided to conclude work on its Evaluating the Preface project. The Board plans to issue a document summarizing the results of its research and its rationale for concluding the project.

The Committee discussed the AcSB’s strategic initiative to evaluate the Preface to the Handbook and whether the Preface is directing small health and wellness funds to the most suitable framework to meet their reporting needs.

The Committee advised that for small health and wellness funds that are acting as intermediaries and not holding assets in a fiduciary capacity, further research may be needed to assess whether Part IV of the Handbook is meeting the financial reporting needs. The Committee advised that this may not be limited to small health and wellness funds and therefore any research should be broader to include other types of plans as well.

The AcSB will consider the Committee’s feedback at its meeting in February 2025.

The Not-for-Profit Advisory Committee received an overview of feedback from the AcSB’s advisory committees and working group regarding its strategic initiative to evaluate the Preface of the Handbook. The Committee provided additional feedback on the financial reporting requirements for certain types of entities, such as social enterprises and sports and social clubs. The Board will discuss the Committee’s feedback at its meeting in November 2024.

The Private Enterprise Advisory Committee received an overview of feedback from the AcSB’s advisory committees and working group regarding its strategic initiative to evaluate the Preface of the Handbook. The Committee provided additional feedback on the financial reporting requirements for certain types of entities, such as social enterprises, small health and wellness funds, and sports and social clubs. The Board will discuss the Committee’s feedback at its meeting in November 2024.

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.

The Private Enterprise Advisory Committee received an overview of the AcSB’s research project on the Preface to the Handbook and preliminary research findings. The Committee discussed the purpose of the Preface and whether the Preface directs entities to apply the most appropriate accounting framework based on entities’ reporting needs and objectives.

The Committee discussed some types of entities, such as co-operatives or sports and social clubs, that apply different accounting frameworks depending on their ownership structure or purpose (i.e., member-benefit organizations versus for-profit clubs). Some members indicated that there can be differences in how these entities operate, which is why a different framework is applied . None of the members indicated that there are issues with how entities use the Preface to determine the part of the Handbook to apply, nor did they indicate that any changes to the Preface are needed.

The Committee also discussed certain types of non-listed entities that apply Part I of the Handbook, and considered whether a different framework such as ASPE would better meet their reporting needs. For captive and mutual insurance entities, some Committee members noted that IFRS® Accounting Standards are relevant as they include a standard on insurance contracts whereas ASPE does not. For smaller, less complex government business organizations, some members noted that IFRS can be onerous to apply; however, a member also noted that scaling the requirement to apply a framework based on size and/or complexity could be challenging.

The AcSB will discuss the Committee’s feedback at its meeting on June 19-20, 2024, as part of its ongoing research project on Evaluating the Preface.