The Accounting Standards Board (AcSB) proposes, subject to comments received following exposure, to incorporate into Part I of the CPA Canada Handbook – Accounting, amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures.
This AcSB Exposure Draft reflects proposals made by the International Accounting Standards Board (IASB) that the AcSB intends to adopt, subject to deliberating comments received, as Canadian generally accepted accounting principles.
Comments are requested from individuals and organizations in Canada who agree with the Exposure Draft proposals, as well as from those who do not. Comments are most helpful if they relate to a specific paragraph or group of paragraphs. Any comments that express disagreement with the proposals should clearly explain the problem and include a suggested alternative, supported by specific reasoning.
Comments received on the AcSB Exposure Draft will be available on the website shortly after the comment deadline unless confidentially is requested. The request for confidentially must be stated explicitly within the response.
IASB® Exposure Draft
The IASB recently issued the Exposure Draft, “Contracts for Renewable Electricity,” which proposes amendments to IFRS 9 and IFRS 7, and is available on the IASB website at http://www.ifrs.org/.
The IASB’s Exposure Draft proposes a narrow-scope amendment aimed to provide clarity on the financial reporting for renewable electricity contracts, also known as power purchase agreements (PPAs). PPAs include contracts to buy and take delivery of electricity that are settled on a gross basis (physical PPAs), as well as contracts settled net based on the difference between the market and contract price of electricity (virtual PPAs).
The objective of the IASB’s Exposure Draft is to:
- provide clarity on own-use requirements;
- permit hedge accounting application for renewable electricity with specified characteristics as a hedging instrument; and
- enhance the disclosure requirements to enable users to better understand the impact of these contracts on an entity’s financial performance, as well as on the amount, timing, and uncertainty of future cash flows
for those electricity contracts for which the source of production is nature dependent and the purchaser is exposed to substantially all of the volume risk.
The IASB’s Exposure Draft includes a Basis for Conclusions, as well as proposed amendments to the forthcoming IFRS 19 Subsidiaries without Public Accountability: Disclosures. This material may provide useful information to interested and affected parties.
Comments Requested
The AcSB encourages interested and affected parties in Canada to respond to the IASB on its Exposure Draft. Specific questions for which the IASB would like input are provided in the Invitation to Comment section in its Exposure Draft. The AcSB requests that comment letters be sent directly to the IASB with a copy to the AcSB.
The AcSB would like input from Canadian respondents on the following additional question regarding the proposed amendment:
The IASB has developed the proposed amendments in accordance with its due process for application around the world. Assuming the Exposure Draft proposals are finalized and approved by the IASB in accordance with its due process, do you think that the proposals are appropriate for application in Canada? If not, please specify which aspects of the proposals, and what circumstances, make the accounting requirements proposed in the Exposure Draft inappropriate.
Send responses to this additional question directly to the AcSB.
When to Reply
We value your input and look forward to your feedback. Comments to the IASB are due by August 7, 2024. Responses to the AcSB on the additional questions set out above are due by July 31, 2024.
If you’d like the AcSB to consider your feedback before finalizing its comment letter to the IASB, please send your comments to the AcSB by July 31, 2024. Following the deadline, your feedback to the AcSB is considered as part of our IFRS® Accounting Standard endorsement process. We also share Canadian feedback with the IASB through our involvement in international activities.