Accounting Standards Board Update

Chartered Professional Accountants British Columbia Professional Development Course Accounting Standards Board Update COPYRIGHT Institute of Chartered Accountants of BC All rights reserved. No part of this publication/course material may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means (photocopying, electronic, mechanical, recording or otherwise) without the prior written permission of the copyright holder and publisher, applications for which shall be made to the Institute of Chartered Accountants of British Columbia, Box 22, 500-505 Burrard Street, Vancouver, BC V7X 1M4 DISCLAIMER This course material deals with complex matters and may not apply to particular facts and circumstances. As well, the course material and references contained therein reflect laws and practices which are subject to change. For these reasons, the course material should not be relied upon as a substitute for specialized professional advice in connection with any particular matter. Although the course material has been carefully prepared, neither the Institute of Chartered Accountants of British Columbia, the course author and/or firm, nor any persons involved in the preparation and/or instruction of the material accepts legal responsibility for its contents or for any consequence arising from its use. June 2014

Professional Development Seminar CPA British Columbia June 23, 2014 Canadian Accounting Standards: Update Linda Mezon, FCPA, FCA Chair, Accounting Standards Board The views expressed in this presentation are those of the presenter, not necessarily those of the AcSB.

Agenda How stakeholders shape accounting developments Update on developments in Canadian GAAP For Private Enterprises For Not-for Profit Organizations For publicly-accountable entities

AcSB Focus Hearing from Canadians 3

Part II - Private enterprises How we maintain standards Annual improvements Major projects 4

Accounting Standards for Private Enterprises Key principles in managing ASPE: Focus on needs of private enterprise sector Changes should significantly improve standards Cost/benefit No objective to adopt/converge with IFRSs 5

Developments in Other Jurisdictions IFRSs and IFRSs for SMEs US GAAP + differential reporting options US Financial Reporting Framework for SMEs Non-GAAP Based on Part II Consider if meet AcSB criteria for change e.g. Assessing need for project on goodwill 6

Private Enterprise Advisory Committee Advises the AcSB on managing and improving ASPE 14 members, including 4 users Provide private enterprise expertise Recommends changes to ASPE to AcSB Annual improvements Major improvements 7

Part II Annual Improvements Intended to Clarify an existing standard Resolve conflicts between standards Address oversights or unintended consequences Issued in October Effective following year Early adoption available 8

Part II 2013 Annual Improvements Business Combinations Contingent consideration Disclosures Subsidiaries Non-controlling interests Financial Instruments Economic compulsion Hedge accounting 9

Part II 2014 Annual Improvements Employee Future Benefits Financial Instruments Hedge accounting Receivable disclosures Status ED comments being considered Submit issues through www.frascanada.ca 10

Part II New Standards Employee Future Benefits Eliminate defer and amortize Measure obligations, assets as of balance sheet date Discontinued Operations Revised definition of a discontinued operation Both effective in 2014 11

Part II Major Projects AcSB balloting 2 new standards Consolidations Joint Arrangements Issue standards in Q3 2014 Effective for 2016 reporting 12

Part II Consolidations Consolidation of subsidiaries is optional If consolidate, must consolidate VIEs AcG-15 difficult to apply New standard Carries forward guidance on subsidiaries where control is through voting interests Provides new, easier to apply, guidance on other subsidiaries 13

Part II Joint Arrangements Jointly Controlled Asset Jointly Controlled Operation Jointly Controlled Enterprise Account for Assets/Liabilities Cost or Equity Method Option Re Interest in Assets/Liabilities 14

Part II Redeemable Preferred Shares Issued in a Tax Planning Arrangement Section 3856 present as equity Meet definition of liability AcSB proposing Classify as liability Measure at fair value Resulting debit recorded as a separate component of equity ED later this year 15

Part II Other Projects Agriculture Discussion Paper being developed Subsidiaries using the cost or equity method How apply cost and equity methods? Should business combination accounting be applied? 16

Part II Post-implementation Review Check if standard working as expected, unintended consequences AcSB developing process for Section 3856, Financial Instruments Issue request for written response to specific questions Face to face discussions with stakeholders May or may not lead to changes to standard 17

Part III Not-for-profit Organizations Standard effective in 2014 Joint NFPO Review 18

Part III - Employee Future Benefits Proposed same accounting as for Part II Concern about remeasurements Issued new Section 3463 Include remeasurements directly in net assets Effective in 2014 19

Part III Joint NFPO Review Statement of Principles Topics included Contributions Controlled entities Capital assets Expense disclosures 20

Part III Joint NFPO Review Feedback on Statement of Principles 200 people from across Canada 290 comment letters AcSB and PSAB pleased by extensive feedback 21

Part III Joint NFPO Review Next steps Analyze feedback Joint AcSB/PSAB meeting to develop a way forward Inform stakeholders of progress 22

Part I IFRSs How Canadians participate Major projects 23

AcSB Focus Canadians Provide Input to IASB 24

AcSB Focus Importance of US GAAP 25

Current IFRS Activities IASB completing 4 major projects Revenue Issued final converged IFRSs Leases Opportunity for converged elements Insurance Will not achieve convergence Financial Instruments Will not achieve convergence 26

IFRS 15: Revenue Status: AcSB balloting Global approach to revenue recognition Provides more guidance Affect sales with multiple deliverables Effective January 1, 2017 27

IFRS Project Leases Status: IASB and FASB deliberating comments Tentative decisions: IASB supports single vs. FASB dual approach to leases classification IASB exempt small assets leases Agreed to expand short-term lease exemption 28

IFRS Project Insurance Status: IASB deliberating comments FASB decided to amend US GAAP Key concerns of Canadians: Discount rate requirements Effective date 29

IFRS Project Financial Instruments IFRS 9 Issued chapters on: Classification, recognition and measurement Hedging IASB to issue in Q2 2014 Classification and measurement amendment Impairment chapter Effective date of January 1, 2018 30

IFRS Project other topics Research initiatives Rate-regulated Activities Clarifying IFRSs Narrow-scoped amendments Annual improvements Post-implementation reviews 31

IFRS Discussion Group Purpose Raise awareness of Canadian application issues Identify issues the AcSB should submit to IFRIC Public meetings 16 members meet June 12, Sept 11 and Dec 9 Submit issues through www.frascanada.ca Database of topics discussed Does not issue authoritative guidance 32

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AcSB activities Strategic initiative Communications 34

AcSB Strategic Initiative Review effects of applying new frameworks Monitoring activities since 2010 Affirming one size does not fit all Develop next strategic plan Identify how to better implement its strategies 2014 Seek input 2015 Issue draft plan for comment 35

Stay Up-to-Date Email updates www.frascanada.ca/subscribe Tailor your subscription 36

Stay Up-to-Date Website www.frascanada.ca 37

Standards Update Questions? 38