Cloud Computing – AcSB

Date recorded:

At its meeting on December 6-7, 2021, the AcSB discussed the feedback from its Not-for-Profit Advisory Committee and its Private Enterprise Advisory Committee. The Board also reviewed a preliminary draft of the accounting guideline. The AcSB tentatively decided to provide an optional simplification approach to permit an entity to expense as incurred all intangible elements in a cloud computing arrangement. If the simplification approach is not applied, the Board tentatively decided to also provide an accounting policy choice to account for certain directly attributable implementation costs when the arrangement is considered a software service. The accounting policy choice will allow entities either to expense as incurred or to capitalize these costs as prepaid expenses. The AcSB then discussed the proposed guidance in the accounting guideline for analyzing a cloud computing arrangement for the various goods and services received. The Board directed staff to redraft the proposed guidance to include using judgment in determining the extent of analysis needed. The AcSB also discussed the proposed disclosure and transition requirements. The Board tentatively decided not to allow prospective application of the accounting guideline to improve comparability between the financial statements of different preparers. The Board directed staff to explore a modified retrospective transition method. The AcSB’s next step is to review a revised draft of the accounting guideline and other information to include in the exposure draft. The Board plans to issue the exposure draft in the first quarter of 2022, with a 90-day comment period.

Review the Executive Summary on the AcSB's Web site.

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