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 IAS 32 Financial Instruments: Presentation, IFRS 7 Financial Instruments: Disclosures, and IAS 1 Presentation of Financial Statements.
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 confidentiality is requested. The request for confidentiality must be stated explicitly within the response.
IASB® Exposure Draft
The IASB recently issued the Exposure Draft, “Financial Instruments with Characteristics of Equity,” which is available on the IASB website at www.ifrs.org.
The IASB’s Exposure Draft proposes to address challenges in applying IAS 32 for the classification of certain financial instruments with both financial liability and equity characteristics. These challenges have resulted in diverse accounting practices that make it more difficult for investors to assess and compare companies’ financial position and performance. In addition, investors have been calling for better information, particularly about equity instruments.
The IASB’s Exposure Draft proposes to address the diversity in practice and respond to investor feedback by:
- clarifying the underlying classification principles of IAS 32 to help companies distinguish between financial liabilities and equity;
- requiring companies to disclose information to further explain the complexities of instruments that have both debt and equity features; and
- introducing new presentation requirements for amounts—including profit and total comprehensive income—attributable to ordinary shareholders separately from amounts attributable to other holders of equity instruments.
The IASB’s Exposure Draft includes illustrative examples, implementation guidance, and a Basis for Conclusions. 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 on which the IASB would like input are provided in the Invitation to Comment 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 March 29, 2024. Responses to the AcSB on the additional question set out above are due on the same date.
If you would like the AcSB to consider your feedback prior to finalizing its comment letter to the IASB, please send your comments to the AcSB by March 1, 2024. Following the deadline, your feedback to the AcSB is considered as part of our IFRS Accounting Standards endorsement process. We also share Canadian feedback with the IASB through our involvement in international activities.