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Standard-setting activities & insights
International Financial Reporting Standards
Sales or contributions of assets between an investor and its associate/joint
venture
On September 11, 2014, the IASB issued narrow-scope amendments to IFRS 10,
Consolidated Financial Statements, and IAS 28, Investments in Associates
and Joint Ventures (2011). The amendments address an acknowledged
inconsistency between the requirements in IFRS 10 and those in IAS 28 (2011), in
dealing with the sale or contribution of assets between an investor and its
associate or joint venture. The main consequence of the amendments is that a
full gain or loss is recognized when a transaction involves a business (whether
it is housed in a subsidiary or not). A partial gain or loss is recognized when
a transaction involves assets that do not constitute a business, even if these
assets are housed in a subsidiary. The amendments will be effective from annual
periods commencing on or after January 1, 2016.
Highlights from the IFRS Discussion Group's June
Meeting
At its June 12 meeting, the AcSB's IFRS Discussion Group
discussed issues arising from the application of certain
IFRS, including shared-risk pension plans, changes in
classification between joint ventures and joint
operations, and various issues related to the capitalization of borrowing costs..
Financial Effects of Rate Regulation
On September 17, 2014, the IASB issued for public
comment a Discussion Paper, Reporting the Financial Effects of Rate
Regulation. This is part of the IASB's project to develop a
comprehensive IFRS standard for entities that have rate-regulated activities.
The Paper seeks comments on whether or not the distinguishing features of
defined rate regulation, as identified by the IASB, sufficiently capture the
type(s) of rate regulation that have the most significant financial effects. The
Paper dœs not include any specific accounting proposals. Instead, it explores
what information about rate-regulated activities is most useful to users of
financial statements and outlines possible approaches (and the accompanying
advantages and disadvantages) that the IASB could consider in deciding how best
to report the financial effects of rate regulation. Comments on the Discussion
Paper are due by January 15, 2015.
Measurement of investments in subsidiaries, joint ventures and associates at
fair value
On September 16, 2014, the IASB issued for public
comment an ED, Measuring Quoted Investments in Subsidiaries, Joint Ventures
and Associates at Fair Value (Proposed amendments to IFRS 10, IFRS 12, IAS 27,
IAS 28, IAS 36, and illustrative examples for IFRS 13), which details proposals concerning the measurement of
investments in subsidiaries, joint ventures and associates at fair value when
those investments are quoted in an active market. The proposed amendments
clarify that an entity should measure the fair value of quoted investments and
quoted CGUs as the product of the quoted price for the individual financial
instruments that make up the investments held by the entity and the quantity of
financial instruments. Comments on the ED are due by January 16, 2015.
Adoption of IFRS
At its meeting on September 3-4, 2014, the AcSB
discussed the challenges faced by Canadian stakeholders being the first to
adopt new IFRS when other jurisdictions permit new IFRSs to be adopted at a
later date. Stakeholders have expressed concern with the cost and effort
incurred and the risks borne when being the first jurisdiction to adopt and
interpret new IFRSs, citing examples such as IFRS 10, Consolidated Financial
Statements, and IFRIC 21, Levies. The AcSB considered ways to help
address these challenges. The AcSB noted that Canadian stakeholders will
continue to be the first to adopt new IFRSs as they are required by Canadian
securities laws to issue interim financial statements on a quarterly basis. Most
other jurisdictions only require interim reporting on a semi-annual basis. No
decisions were made.
Discussions on IFRS Investment Entity Exceptions
At its meeting on September 3-4, 2014, the AcSB also discussed some concern among stakeholders regarding a potential lack of transparency if the proposed amendments are applied, meaning, certain subsidiaries would be measured at fair value rather than being consolidated. Specifically this was identified as an issue among stakeholders when an investment entity parents conducts all investing activities through these subsidiaries. The AcSB approved its response to the IASB regarding this amendment and highlighted these concerns in their response.
Editorial corrections
On September 19, 2014, the IASB published its second
batch of editorial corrections for 2014. Editorial
corrections consist of those amendments that are needed
as a result of an error made when writing or typesetting
the documents. They can consist of spelling errors,
grammatical mistakes or unmarked consequential
amendments.
Accounting Standards for Private Enterprises
Post implementation review Section 3856, Financial
Instruments
At its meeting on September 3-4, 2014, the AcSB approved
a Request for Information for the post-implementation
review of Section 3856, Financial Instruments.
The purpose of the post-implementation review is to
assess the effect of the new Section on financial
statement users, preparers and auditors to help the AcSB
identify areas in which unexpected costs or
implementation issues are encountered. The AcSB expects
to publish this document for public comment in October
2014 with a 120-day comment period.
Accounting Standards for Not-for-Profit Organizations
Improvements to Not-for-Profit Standards
At its meeting on September 3-4, 2014, the AcSB
continued its consideration of written responses to the
April 2013 Joint AcSB/PSAB Statement of Principles,
Improvements to Not-for-Profit Standards. The Board
discussed (i) overarching principles and questions to be
considered and additional information to be gathered as
the project progresses; and (ii) next steps to be
undertaken, including collaboration with the PSAB on
this topic. No decisions were made.
Public Sector Accounting Standards
Conceptual Framework for General Purpose Financial
Reporting by Public Sector Entities
On September 18, 2014, the IPSASB announced that it has
approved its Conceptual Framework for General Purpose
Financial Reporting by Public Sector Entities (the
Conceptual Framework). The Conceptual Framework
establishes the concepts that will guide the IPSASB's
approach to standard-setting and guidance. It addresses
concepts applicable to both public sector financial
statements and a wider set of public sector financial
reporting needs. The completed Conceptual Framework is
expected to be issued by the end of October 2014. The
final four chapters were approved by the IPSASB during
its September 2014 meeting. Those four chapters, which
address the definition, recognition, and measurement of
the "elements" (or building
blocks) of financial statements and presentation in
General Purpose Financial Reports, join the original
four chapters, which were issued early in 2013, bringing
the entire Conceptual Framework to eight chapters. The
Conceptual Framework project has been the key strategic
priority for the IPSASB in recent years.
US GAAP
Revenue
On September 11, 2014, the Financial Accounting
Standards Advisory Council's meeting, the SEC staff
clarified its views on how registrants would reflect
their implementation of ASC 606 (the “new revenue
standard”) in the five-year table required under SEC
Regulation S-K, Item 301.
Proposed Accounting Standards Update Technical Corrections and
Improvements
The amendments in this proposed Update represent changes to clarify the
Codification, correct unintended application of guidance, or make minor
improvements to the Codification that are not expected to have a significant
effect on current accounting practice or create a significant administrative
cost to most entities. Additionally, some of the proposed amendments would make
the Codification easier to understand and easier to apply by eliminating
inconsistencies, providing needed clarifications, and improving the presentation
of guidance in the Codification.
Securities regulatory matters
AMF Continuous Disclosure Activity Report
On September 12, 2014, the AMF issued a Continuous Disclosure Activity Report,
which covers the period from April 1, 2013 to March 31, 2014. In addition to the
results of these reviews and the most common deficiencies identified in
continuous disclosure documents, it provides a brief overview of recent
amendments to continuous disclosure obligations as well as a glimpse at the
reviews contemplated by the AMF for the period from April 1, 2014 to March 31,
2015.
Non-GAAP financial measures
On September 9, 2014, the International Organization of Securities Commissions
(IOSCO) issued proposed guidance setting out its expectations for issuers with
respect to the presentation of financial measures other than those prescribed by
Generally Accepted Accounting Principles (GAAP), so called “non-GAAP financial
measures”.
Assurance
Auditing Revenue
On September 9, 2014, the Public Company Accounting Oversight Board released a
new alert highlighting the requirements for auditing revenue under PCAOB
standards, in light of significant audit deficiencies in this area that have
been frequently observed during its inspections. PCAOB inspection reports have
consistently identified revenue as one of the most common areas for audit
deficiencies.
Canadian standard – setting governance activities
Highlights from the AASOC's July Meeting
At its July 10-11 meeting, the Auditing and Assurance
Standards Oversight Council reviewed the activities AASB
and other related standard setters, including the AASB
Auditor Reporting project, the CPAB 2014 Inspections and
the expanded auditor's role resulting from the
Re-exposure Draft of proposed changes to CAS 720,
Responsibilities Related to Other Information.
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Chantal Rassart, CPA, CA, CPA (IIIinois)