DEVELOPMENTS IN ASPE: 2015 FALL UPDATE

Transcription

1 DEVELOPMENTS IN ASPE: 2015 FALL UPDATE Accounting Standards for Private Enterprises November 18, 2015 Armand Capisciolto, CPA, CA, CPA (Michigan) Accounting Standards Board member

2 Agenda AcSB strategy for private enterprises Update on major projects Financial Instruments Post-implementation Review Feedback Statement Redeemable Preferred Shares Issued in a Tax Planning Arrangement Subsidiaries and Investments Exposure Draft Agriculture Discussion paper 2015 Annual Improvements 2

3 Polling question # 1 What is your current role? a) Public practitioner or professional advisor b) Financial statement preparer (e.g. management, CFO, controller, business owner) c) Financial statement user (e.g. banker, private equity) d) Academic e) Other (e.g. director) 3

4 AcSB Strategy for Private Enterprises AcSB serves the public interest by issuing high-quality accounting standards: Meet needs of Canadian stakeholders One size does not fit all Cost/benefit 4

5 AcSB Strategy for Private Enterprises For private enterprises Maintain the standards established in 2011 Key principles in managing ASPE: Focus on cost/benefit for preparers and users in the private enterprise sector Changes should significantly improve standards Monitor events in other jurisdictions Support exercise of professional judgment 5

6 Standard-setting Process Initial Research Discussion Paper Adding a standards-level project to the work plan Develop standard: Exposure Draft Final Standard Postimplementation Review 6

7 Standard-setting Process Major improvements Result in significant changes to ASPE, such as a new standard or major amendments to existing standards Narrow-scope improvements For purposes of implementation and maintenance Annual improvements are one type 7

8 Private Enterprise Advisory Committee Standing advisory committee of the AcSB 14 members (preparers, users, accounting firms) from across Canada Experience that assists in monitoring and improving ASPE Advises the AcSB on all changes to ASPE 8

9 Additional sources of input to AcSB on ASPE Regular meetings with CPA Canada committees Accounting firms Financial Executives International Canada Private Enterprise Advisory Committee (PEAC) associates Responses on proposals Roundtables on significant projects 9

10 How to get involved Let us know what you think Submit issues through Respond to proposals Attend public roundtables / conference calls Volunteer for PEAC or Associates Group Seek new PEAC members annually watch our website for postings Volunteer as an Associate contact nlahner@cpacanada.ca 10

11 Major Projects Financial Instruments Post-Implementation Review Feedback Statement Redeemable Preferred Shares Issued in a Tax Planning Arrangement Subsidiaries and Investments Exposure Draft Agriculture Discussion Paper 11

12 Financial Instruments Post-implementation Review (PIR) Purpose Assess effect of Section 3856 on financial statement users, preparers and auditors/practitioners Obtain feedback as to whether standard is operating as intended Feedback Statement released September 2015 Areas where comments were raised include: Initial measurement of certain financial instruments Scope and initial and subsequent measurement of financial instruments between related parties Certain disclosure requirements 12

13 Redeemable Preferred Shares Issued in a Tax Planning Arrangement Section 3856 currently classifies these shares as equity Problems in practice scope Equity treatment being applied to other transactions Some intended transactions excluded Exposure Draft (ED) proposed removing This exception Require all redeemable preferred shares to be treated as liabilities 13

14 Redeemable Preferred Shares Issued in a Tax Planning Arrangement Update on project status and outreach to date Webinar September 18, 2015 Significant concerns raised proceeding at a measured pace to ensure all input is fully considered Several possible approaches going forward Retain exception Develop alternative (replacement) Remove exception (ED proposal) 14

15 Cost method Subsidiaries and Investments Limited guidance currently Should some or all of business combinations accounting be followed? Key features proposed Underlying principle - Interest in a subsidiary initially measured on a basis similar to other business combinations Cost is initially measured at the acquisition-date fair value of the consideration transferred Acquisition costs are expensed and bargain purchase gains are not recognized Previously held investment is not remeasured when acquiring an additional interest 15

16 Subsidiaries and Investments ED issued in September 2015 Proposed amendments will be: Applied prospectively Effective January, with early adoption permitted Provide your input Comments due January 6,

17 Polling question # 2 How often is the cost method used to account for interests in subsidiaries or investments subject to significant influence? a) Most of the time b) Often, in many cases c) Rarely 17

18 Polling question # 3 Do you think the proposals will have a significant impact on the accounting for an interest in a subsidiary or an investment subject to significant influence? a) Yes b) No 18

19 Agriculture Important industry currently diversity in practice Key issue initial and subsequent measurement Cost or current value Extensive consultations Users, preparers, practitioners From across country Different types of agricultural activity 19

20 Agriculture Discussion paper Purpose obtain broad input on: Completeness of issues and alternative approaches Input on alternatives pros and cons Input on AcSB preliminary views (before ED is developed) Issue Q day comment period Extensive consultations including roundtables across country 20

21 2015 Annual Improvements Final amendments issued October 1, 2015 Disclosures Amounts recognized when business combination is achieved through acquisition of an asset or group of assets Impairment loss/reversal of a previously recognized impairment loss Applies to subsidiaries, investments and interests in joint arrangements accounted for using cost/equity method, and lease assets Separate disclosures not required for each item of PP&E 21

22 2015 Annual Improvements Employee Future Benefits Use of a Funding Valuation Clarifies what a funding valuation is and when a funding valuation can be used: At least one defined benefit plan for which funding valuation required to be prepared; and That defined benefit plan measured using a funding valuation Decision tree added 22

23 Polling question # 4 Before this webinar, were you: a) Unaware that you could submit issues for consideration to the AcSB? b) Aware that you could submit issues for consideration to the AcSB? 23

24 Stay Informed updates Tailor your subscription 24

25 Stay Informed (cont.) Website 25

26 Questions? Developments in ASPE: 2015 Fall Update November 18,

27 Thank you Kelly Khalilieh, CPA, CA Principal, Accounting Standards Phone: +1 (416) Contact Nicky Lahner, CPA, CA Principal, Accounting Standards Phone: +1 (416)