Redeemable Preferred Shares Issued in a Tax Planning Arrangement

Amendment to Section 3856 regarding the current exemption of classifying redeemable preferred shares issued in a tax planning arrangement as equity. The AcSB reaffirmed its view that the basis for the exception should be on the condition of retention of control of the enterprise and decided that the control of the enterprise must be retained by the party receiving the redeemable preferred shares. The AcSB further decided on the additional conditions necessary to qualify for equity classification which determine that control of the future cash outflows of the enterprise has not changed.

The AcSB noted that at least some of the tax planning arrangements that meet the classification exception under the current guidance will not qualify for the exception under the proposed basis.

Currently in deliberations. The AcSB is expecting to issue a re-exposure draft in the 3^rd quarter of 2017.

Agriculture

As a result of a lack of specific authoritative guidance, there is diversity in accounting by private enterprises for biological assets and agricultural produce. Stakeholder input to this Discussion Paper will assist the AcSB in deciding whether to develop authoritative guidance, and if so, the issues to be addressed and how they could be addressed.

This Discussion Paper was published by the AcSB in December 2015. Currently in deliberations. The AcSB plans to issue an exposure draft by 1^st quarter of 2018. The AcSB Agriculture Advisory Group has been formed to assist the AcSB as it works to develop new accounting guidance on agriculture.

Section 3056, Interests in Joint Arrangements

Amendments clarify that the transitional provisions may not be applied when an enterprise changes its accounting policy choice to consolidate its subsidiaries at any time in the future and that this relief is only available when transitioning to this Section for the first time.

FYI Article – Accounting For Investments: Are You Ready For the Changes?

Annual financial statements relating to fiscal years beginning on or after January 1, 2017.

Section 1591, Subsidiaries

Amendments:

• clarify that the transitional provisions may not be applied when an enterprise changes its accounting policy choice to consolidate its subsidiaries at any time in the future and that this relief is only available when transitioning to this Section for the first time, and
• explicitly state that an enterprise preparing non-consolidated financial statements is not required to assess whether contractual arrangements give rise to control.

Amendment sets out the underlying principle that an interest in a subsidiary that is subsequently accounted for using the cost method is initially measured on a basis that is similar to other business combinations.

FYI Article – Accounting For Investments: Are You Ready For the Changes?

Annual financial statements relating to fiscal years beginning on or after January 1, 2017.

Annual financial statements relating to fiscal years beginning on or after January 1, 2018.

Section 3051, Investments

Amendments add guidance on how to apply the cost method and add two indicators of impairment relating to the acquisition of an additional interest, sale of a portion of an interest or dilution of an investor's interest in an investee.

FYI Article – Accounting For Investments: Are You Ready For the Changes?

Annual financial statements relating to fiscal years beginning on or after January 1, 2018.

2017 Annual Improvements

Amendments to Sections 1505, 1506, 1521, 1651, 3031 and 3065.

Annual financial statements for fiscal years beginning on or after January 1, 2018.

Accounting Standards Improvements for Not-for-Profit Organizations

This exposure draft, issued by the AcSB in February 2017, proposes to replace Sections on tangible capital assets, intangible assets and collections held by Not-for-Profit Organizations. Not-for-Profit Organizations would follow Part II of the Handbook for tangible capital assets and intangible assets, except for items such as contributed assets and write-down of assets. Tangible capital assets, intangible assets and collections will need to be assessed and, if impaired, written down to reflect the decline in their value. Collections would need to be recorded on the statement of financial position, at cost or at nominal value.

Comment period ended on May 31, 2017. Currently in deliberations.

IFRS 17 Insurance Contracts

IASB issued the final standard in May 2017. This new standard, IFRS 17 Insurance Contracts, replaces IFRS 4 Insurance Contracts, which was an interim standard allowing companies to carry on accounting for insurance contracts using national accounting standards resulting in different approaches. IFRS 17 requires all insurance contracts to be accounted for in a consistent manner. Insurance obligations will be accounted for using current values – instead of historical cost.

Final standard is expected to be issued by the AcSB in the second half of 2017.

Reporting the Financial Effects of Rate Regulation

This DP considers the common features of rate regulation and explores which of them, if any, creates a combination of rights and obligations that is distinguishable from the rights and obligations arising from activities that are not rate-regulated.

Currently in discussions. Another DP or an exposure draft is expected in the first half of 2018.

Accounting for Dynamic Risk Management

The DP explores a possible approach (portfolio revaluation approach) to better reflect dynamic risk management activities in entities’ financial statements.

Discussion Paper issued by the IASB in April 2014. Currently in deliberations. Another DP is expected in the second half of 2018.

Classification of Liabilities

Proposed amendments to IAS 1 clarify the criteria for the classification of a liability as either current or non-current.

Currently in deliberations. IASB expects to issue amendments in the first half of 2018.

Conceptual Framework and Updating References to the Conceptual Framework

The proposal aims to provide a more complete, clear and updated set of concepts that can be used by the IASB when it develops IFRSs and others to help them understand and apply those standards and to provide transition to the revised Conceptual Framework.

EDs published by the IASB in May 2015.  Currently in deliberations. Conceptual Framework is expected to be issued in the 4^th quarter of 2017.

Remeasurement on a Plan Amendment, Curtailment or Settlement/Availability of a Refund from a Defined Benefit Plan

The proposed amendments to IAS 19 specify that the entity is required to use the updated assumptions about obligations and fair value of the plan to determine current service cost and net interest for the period followed by these changes. The proposed amendments to IFRIC 14 address how the powers of other parties, such as the trustees of the plan, affect an entity’s right to a refund of a surplus from the plan.

Currently in deliberations. IASB expects to issue amendments in the first half of 2018.

IFRIC 23 Uncertainty Over Income Tax Treatments

Issued in June 2017 by the IASB, this IFRIC Interpretation provides guidance on how uncertainty over income tax treatments should affect the accounting for income taxes.

Final standard is expected to be issued by the AcSB in the second half of 2017.

Application of Materiality to Financial Statements – Draft IFRS Practice Statement

The objective of this publication is to assist management in applying the concept of materiality to general purpose financial statements prepared in accordance with IFRS. This Practice Statement will be non-mandatory.

Draft guidance issued by the IASB in October 2015. IASB expects to issue a Practice Statement in the 3^rd quarter of 2017. It will come into effect immediately.

Definition of a Business and Accounting for Previously Held Interests

The proposed amendments to IFRS 3 will help distinguish between a business and a group of assets when applying the definition of a business. The proposed amendments to IFRS 3 and IFRS 11 are also intended to clarify the accounting for previously held interests in the assets and liabilities of a joint operation in two types of transactions: those in which an entity obtains control of a business that is a joint operation and those in which it obtains joint control of a business that is a joint operation.

Comment period ended on October 31, 2016. Currently in deliberations. IASB expects to issue amendments in the 4^th quarter of 2017.

Annual Improvements Cycle 2015-2017

The IASB issued this exposure draft in January 2017, proposing amendments to IAS 12, IAS 23 and IAS 28.

Comment period ended on April 12, 2017. Currently in deliberations. IASB expects to issue amendments in the 4^th quarter of 2017.

Improvements to IFRS 8 Operating Segments (Proposed amendments to IFRS 8 and IAS 34)

The proposed improvements to IFRS 8 include amendments to clarify and emphasize the criteria for aggregating operating segments; to disclose the title and role of those that perform the function of the chief operating decision maker; and to provide information if segments in the financial statements differ from segments reported elsewhere. Proposed amendments to IAS 34 will require companies that change their segments to provide restated segment information for prior interim periods earlier than they currently do.

Comment period ended on July 31, 2017.

Disclosure Initiative –  Principles of Disclosure

This Discussion Paper describes and seeks stakeholders’ views on disclosure issues that the IASB has identified during its outreach before and during its Principles of Disclosure project.  IAS 1 contains general requirements for disclosures in the financial statements. Consequently, this Discussion Paper considers the existing requirements in IAS 1 as a starting point with a view to either making amendments to parts of IAS 1 or creating a new disclosure standard to replace parts of IAS 1.

Comment period ends on October 2, 2017.

Prepayment Features with Negative Compensation (Proposed amendments to IFRS 9)

The IASB issued this exposure draft proposing minor amendments to IFRS 9 to enable companies to measure at amortized cost certain prepayable financial assets with so-called negative compensation. This narrow exception to IFRS 9 would apply to particular financial assets that would otherwise have contractual cash flows that are solely payments of principal and interest but do not meet that condition only as a result of a prepayment feature. Applying the proposal, some such financial assets would be eligible to be measured at amortised cost or at fair value through other comprehensive income, subject to the assessment of the business model in which they are held, if particular conditions are met.

Comment period ended on May 24, 2017. IASB expects to issue amendments in the 4^th quarter of 2017.

IFRS 12 Disclosure of Interests in Other Entities

Amendments clarify the scope of the standard.

Annual periods beginning on or after January 1, 2017.

IAS 7 Statement of Cash Flows

Amendments will require entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.

Annual periods beginning on or after January 1, 2017.

IAS 12 Income Taxes

Amendments clarify how to account for deferred tax assets related to debt instruments measured at fair value.

Annual periods beginning on or after January 1, 2017.

IFRS 1 First-time Adoption of International Financial Reporting Standards

Amendments remove short-term exemptions for first-time adopters.

Annual periods beginning on or after January 1, 2018.

IFRS 2 Share-based Payment

Amendments clarify how to account for certain types of share-based payment transactions.

Annual periods beginning on or after January 1, 2018.

IFRS 4 Insurance Contracts

Amendments designed to address the concerns about the different effective dates of IFRS 9 and the forthcoming new Insurance Contracts standard.

Annual periods beginning on or after January 1, 2018.

IFRS 9 Financial Instruments

IFRS 9 is built on a logical, single classification and measurement approach for financial assets that reflects the business model in which they are managed and their cash flow characteristics. Certain changes were made to the fair value option for financial liabilities to address the issue of own credit risk. IFRS 9 includes a new hedge accounting model. In addition, a single, forward-looking expected loss impairment model is introduced, which will require more timely recognition of expected credit losses.

Annual periods beginning on or after January 1, 2018.

IFRS 15 Revenue from Contracts with Customers

The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard contains enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively and improves guidance for multiple-element arrangements. IFRS 15 supersedes IAS 11, IAS 18, IFRIC 13, IFRIC 15, IFRIC 18 and SIC-31.

Amendments to IFRS 15 have been issued by the IASB which clarify how to identify the performance obligations, determine whether a company is a principal or an agent and determine whether the revenue from granting a licence should be recognized at a point in time or over time. Two additional reliefs are included which reduce cost and complexity for a company when it first applies the new standard.

Annual periods beginning on or after January 1, 2018.

IAS 28 Investments in Associates and Joint Ventures

Amendments with respect to measuring an associate or joint venture at fair value clarify that an entity makes the election separately for each associate or joint venture.

Annual periods beginning on or after January 1, 2018.

IAS 40 Investment Property

Amendments clarify the requirements on transfers to, or from, investment property.

Annual periods beginning on or after January 1, 2018.

IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration

This Interpretation addresses the exchange rate to be used in transactions that involve advance consideration paid or received in a foreign currency.

Annual periods beginning on or after January 1, 2018.

IFRS 16 Leases

This new standard replaces IAS 17 Leases and brings leases onto companies’ balance sheets, increasing the visibility of their assets and liabilities. IFRS 16 removes the classification of leases as either operating leases or finance leases (for the lessee – the lease customer), treating all leases as finance leases. Short-term leases (less than 12 months) and leases of low-value assets (such as personal computers) are exempt from the requirements.

Annual periods beginning on or after January 1, 2019.

IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures

These standards were amended to eliminate an inconsistency between IFRS 10 and IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. Subsequent to the amendments, a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not), and 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.

Effective date to be determined. These amendments are available for application.

Financial Instruments: Transition

Proposed amendments clarify aspects of the Section’s scope of application, specifically, the receivables and payables that the Section does not apply to, and add transitional provisions and new guidance relating to certain specialized forms of agreements.

Consideration of amendments proposed in this ED is currently deferred until a later date.

Conceptual Framework Fundamentals and the Reporting Model

Consultation paper proposes a new reporting model and draft principles on public sector characteristics, financial statement objectives, qualitative characteristics, elements, recognition, measurement and presentation.

Consultation Paper 3 was issued by the PSAB in March 2015. Currently in deliberations. Statement of Principles is being developed.

Employment Benefits: Deferral Provisions in Sections PS 3250 and PS 3255

The objectives of this Invitation to Comment are to explain why PSAB is considering whether the deferral provisions in the standards remain appropriate; identify potential alternatives and related considerations; and seek stakeholder input prior to PSAB establishing its preliminary views on this issue. The ultimate objective of this project is to issue a new employment benefits Section, replacing Sections PS 3250 and PS 3255.

Invitation to Comment related to the Employment Benefits Project was issued by the PSAB in November 2016. Comment period ended on March 3, 2017. Second Invitation to Comment is expected in the 4^th quarter of 2017.  

Asset Retirement Obligations, Proposed Section PS 3280

This exposure draft proposes to issue a new section on asset retirement obligations and withdraw Solid Waste Landfill Closure and Post-Closure Liability, Section PS 3270. This new Section would enhance comparability of financial statements among public sector entities by establishing uniform criteria for recognition and measurement of asset retirement obligations, including obligations that may not have previously been reported. This Section also would enhance the decision usefulness of the information provided to financial statement users by requiring disclosures related to asset retirement obligations. The new Section would apply to fiscal years beginning on or after April 1, 2021.

Comment period ended June 15, 2017.

Related Party Disclosures, Section PS 2200

This new Section defines a related party and establishes disclosures required for related party transactions. Section PS 4260, Disclosure of Related Party Transactions by Not-for-Profit Organizations, has been withdrawn.

Fiscal years beginning on or after April 1, 2017.

Inter-entity Transactions, Section PS 3420

This new Section establishes standards on how to account for and report transactions between public sector entities that comprise a government's reporting entity from both a provider and recipient perspective.

Fiscal years beginning on or after April 1, 2017.

Assets, Section PS 3210

This new Section provides guidance for applying the definition of assets set out in Section PS 1000 and establishes general disclosure standards for assets.

Fiscal years beginning on or after April 1, 2017.

Contingent Assets, Section PS 3320

This new Section defines and establishes disclosure standards on contingent assets. 

Fiscal years beginning on or after April 1, 2017.

Contractual Rights, Section PS 3380

This new Section defines and establishes disclosure standards on contractual rights. 

Fiscal years beginning on or after April 1, 2017.

Restructuring Transactions, Section PS 3430

This new Section defines a restructuring transaction and establishes standards for recognizing and measuring assets and liabilities transferred in a restructuring transaction.

Fiscal years beginning on or after April 1, 2018.

Financial Statement Presentation, Section PS 1201

This Section revises and replaces Financial Statement Presentation, Section PS 1200. The new standard introduces a new statement for reporting of remeasurement gains and losses.

Fiscal years beginning on or after April 1, 2019.

Foreign Currency Translation, Section PS 2601

This Section revises and replaces Foreign Currency Translations, Section PS 2600. Definition of currency risk is aligned with the new Financial Instruments Section, PS 3450. The new standard also removes certain previously available exceptions to measurement of items on initial recognition. The deferral and amortization of foreign exchange gains and losses relating to long-term foreign currency denominated monetary items, hedge accounting and presentation of items as synthetic instruments are removed. In addition, the new statement of remeasurement gains and losses introduced in Section PS 1201 is used to reflect exchange gains and losses until the period of settlement, rather than reflecting them in the statement of operations.

Fiscal years beginning on or after April 1, 2019.

Portfolio Investments, Section PS 3041

This Section replaces Section PS 3040, Portfolio Investments. In addition, Section PS 3030 is withdrawn as the distinction between temporary and portfolio investments is removed with the issue of Section PS 3041. The scope in the new standard is expanded to include interests in pooled investment funds, and requirement for application of cost method is removed. The new standard is also aligned with the new Financial Instrument Section, PS 3450.

Fiscal years beginning on or after April 1, 2019.

Financial Instruments, Section PS 3450

This new Section establishes standards for recognizing and measuring financial assets, financial liabilities and non-financial derivatives. The standard introduces two measurement categories: fair value and cost or amortized cost. The statement of remeasurement gains and losses will reflect gains and losses arising on fair value remeasurement until an item is derecognized. The standard also introduces new disclosure requirements of items reported and the nature and extent of risks arising from financial instruments.

Fiscal years beginning on or after April 1, 2019.

Enhancing Audit Quality in the Public Interest: A Focus on Professional Skepticism, Quality Control and Group Audits

This ITC highlights the IAASB’s discussions on the topics of professional skepticism, quality control and group audits, and flags potential standard-setting activities the IAASB could take to enhance audit quality.

Invitation to Comment (ITC) issued by the IAASB in December 2015 (AASB in February 2016). Comment period closed.  Currently in deliberations.

Auditing Accounting Estimates and Related Disclosures

The IAASB is proposing to revise the standard on Auditing Accounting Estimates and Related Disclosures (ISA 540). The objective of the revised standard is for the auditor to obtain sufficient appropriate audit evidence to evaluate whether accounting estimates and related disclosures are reasonable in the context of the applicable financial reporting framework, or are misstated. The revised standard will include enhanced requirements for risk assessment and response procedures, consideration of complexity, use of judgement and estimation uncertainty, consideration of complex models, forward-looking information and internal controls in auditing accounting estimates and includes provisions to enhance application of professional skepticism and consideration of the potential for management bias, including enhanced risk assessment requirements, more granular requirements with respect to obtaining audit evidence, and requirements to “stand back” and evaluate the audit evidence obtained.

The IAASB issued this exposure draft in April 2017. The AASB’s related exposure draft proposes no Canadian amendments.  Comment period ended on August 1, 2017.

Exploring the Demand for Agreed-Upon Procedures Engagements and Other Services, and the Implications for the IAASB’s International Standards

This Discussion Paper, issued by the IAASB, resulted from a higher demand for agreed-upon procedures engagements either as stand-alone engagements or in combination with other engagements. The IAASB has established a working group to explore such engagements and inform the IAASB’s decisions in this regard. 

The objective of the AASB’s project is to update Section 9100, Reports on the Results of Applying Specified Auditing Procedures to Financial Information Other than Financial Statements. 

The AASB issued this Invitation to Comment in December 2016 to encourage Canadian stakeholders to provide feedback to the IAASB’s Discussion Paper of the same name.  AASB’s comments period ended on February 10, 2017. Currently in deliberations.

Reporting on Compliance

The AASB is proposing to issue CSAE 3530, Special Considerations – Attestation Engagements to Report on Compliance and CSAE 3531, Special Considerations – Direct Engagements to Report on Compliance. These standards would replace Sections 5800, 5815 and 8600. In addition, the standards would also replace certain paragraphs of Section 5300. Objective of the proposal is to update the standards and rewrite them in a clarity format. The proposed standards will cover both audit and review engagements.

The AASB issued this re-exposure draft in April 2017. Comment period ended on July 28, 2017.

Communication with Law Firms

The new Joint Policy Statement Concerning Communications with Law Firms Regarding Claims and Possible Claims in Connection with the Preparation and Audit of Financial Statements (“Statement”) replaces the existing Statement and AuG-46.  The new Statement includes an expanded scope that also includes in-house legal counsel, excludes guidance relating to a specific financial reporting framework, clarifies the communication protocols and timelines, and includes new guidance with respect to the auditor's role, updated response letters, and format and content of the inquiry and response letter.

Effective for inquiry letters dated on or after December 1, 2016.

Responding to Non-Compliance or Suspected Non-Compliance with Laws or Regulations

The Revised CAS 250 incorporates changes to address actual or perceived inconsistencies in the approach to identifying and responding to instances of identified or suspected non-compliance with laws and regulations between the standard and relevant ethical requirements.

CPA Canada Audit and Assurance Alert: CAS 250 non-compliance with laws and regulations

Effective for audits of financial statements for periods beginning on or after December 15, 2018.

New and Revised Auditor Reporting Standards and Related Conforming Amendments

AASB issued new CAS 701, Communicating Key Audit Matters in the Independent Auditor’s Report and revised CAS 260, 570, 700, 705, 706, 800, 805 and 810, along with some conforming amendments to other CASs. Communication of key audit matters is required when the auditor is required by law or regulation or when the auditor decides to do so. The requirement in ISA 701 for auditors of listed entities to communicate key audit matters has been excluded from CAS 701 at this time.  Amendments include enhanced reporting on going concern, affirmative statement about the auditor’s independence, enhanced description of the responsibilities of the auditor and key features of an audit, and change in order of the opinion and basis for opinion sections. 

CPA Canada Audit and Assurance Alert: New and revised auditor reporting standards

CPA Canada Audit and Assurance Alert: CAS 701 Key audit matters

Effective for audits of financial statements for periods beginning on or after December 15, 2018.

Addressing Disclosures in the Audit of Financial Statements

The changes to various CASs clarify the concept of disclosures as an integral part of the financial statements and emphasize the need for auditor consideration of disclosures earlier in the audit process, including understanding of relevant aspects of the information system relating to information disclosed in the financial statements, identifying and assessing the risks of material misstatements in quantitative and qualitative disclosures, obtaining sufficient appropriate audit evidence relating to disclosures, and evaluating the overall presentation of the financial statements, including their relevance and understandability.

Effective for audits of financial statements for periods beginning on or after December 15, 2018.

The Auditor’s Responsibilities Relating to Other Information

Revised CAS 720 specifies responsibilities of auditors relating to the range of other information in documents containing audited financial information and improves transparency by requiring auditors to articulate in their reports their responsibilities and the outcome of their work.

CPA Canada Audit and Assurance Alert: CAS 720 Other information

Effective for audits of financial statements for periods beginning on or after December 15, 2018.

Section 7170, Auditor’s Consent to the Use of the Auditor’s Report Included in a Business Acquisition Report

Section 7170 sets out new requirements relating to the auditor's responsibilities in responding to requests to consent to the use of the auditor's report on the audited financial statements of the acquired business that are to be included in a business acquisition report issued by the acquirer. In addition, the standard sets out requirements for the format and content of the auditor's consent.

Effective for an auditor's consent to the use of the auditor's report in a business acquisition report issued on or after June 1, 2017.

CSOA 5000, Use of the Practitioner’s Communication or Name

CSOA 5000 replaces Section 5020 and sets out requirements relating to:

• use of the practitioner's communication or name in connection with accompanying information;
• translated practitioner's communication or information on which the practitioner reported; and
• inappropriate use of the practitioner's communication or name.

The fundamental principles underlying CSOA 5000 are consistent with Section 5020 being replaced. 

CPA Canada Audit & Assurance Alert: CSOA 5000 – Use of the Practitioner’s Communication or Name

Effective as of, and applicable to a practitioner’s consent provided on or after, June 1, 2017.

CSAE 3000, Attestation Engagements Other than Audits or Reviews of Historical Financial Information and CSAE 3001, Direct Engagements

Replaces Sections 5025, 5030, 5049 and 5050. CSAE 3000 is adopted from ISAE 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information. CSAE 3000 contains Canadian amendments to address differences between ISAE 3000 and the applicable Canadian assurance standards. These differences include narrowing the scope of CSAE 3000 to address attestation engagements only, references to relevant ethical requirements and terminology. CSAE 3001 sets out requirements related to planning, performing and reporting on direct engagements. Differences in wording between CSAE 3000 and CSAE 3001 relate only to differences between the performance of an attestation engagement and the performance of a direct engagement.

Effective for attestation and direct engagements where the assurance report is dated on or after June 30, 2017

CSRE 2400, Engagements to Review Historical Financial Statements

This new standard sets out requirements related to quality control, acceptance, communication with management and those charged with governance, performance of the engagement, reporting and documentation. CSRE 2400 replaces Sections 8100, 8200, 8500, AuG-20 and AuG-47.
CPA Canada Practitioner Client Briefing

Effective for reviews of financial statements for periods ending on or after December 14, 2017.