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March 2016

AcSB 2016-2021 Strategic Plan – Accounting Standards in Canada: At the Leading Edge of Financial Reporting

Mar 30, 2016

On March 30, 2016, the Accounting Standards Board (AcSB) released its new five-year Strategic Plan, which takes effect on April 1, 2016. The Plan continues the overall strategies already adopted for the different categories of private sector reporting entities, and improves how they are being implemented.

Review the Strategic Plan on the AcSB's Web site.

AcSB Due Process Activities – 2015 Changes to Part I

Mar 24, 2016

March 24, 2016, the Accounting Standards Board (AcSB) released a document that summarizes the due process activities the AcSB undertook in support of the changes made to Part I of the Handbook during 2015.

During 2015, the AcSB approved and incorporated, into Part I of the CPA Canada Handbook – Accounting, new or amended International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB).

The AcSB has approved for publication the contents of this document summarizing the due process activities it undertook in support of the changes made to the IFRSs in Part I during 2015.

Review the document on the AcSB's website.

AcSOC Gets New Leadership; AcSB Chair Reappointed

Mar 10, 2016

On March 10, 2016, the Accounting Standards Oversight Council (AcSOC) announced new leadership appointments to the Council and the reappointment of the Accounting Standards Board (AcSB) Chair. Effective April 1, 2016 for three-year terms, Peter Jewett and Miville Tremblay will act as AcSOC’s new Chair and Vice-Chair, respectively. Also effective April 1, 2016 and set for an extended five-year term, Linda Mezon was reappointed as the AcSB’s Chair.

Review the media release on the AcSOC's Web site.

Chief Accountant of the SEC comments on revenue recognition

Mar 24, 2016

On March 24, 2016, the Securities and Exchange Commission (SEC) released a speech from Jim Schnurr, Chief Accountant of the SEC, where he shared some of his thoughts and perspectives on the continuing transition activities for the new revenue standard at an accounting and reporting congress in Philadelphia.

One of the aspects Mr. Schnurr elaborated on was the status of the revenue transition resource group (TRG) formed jointly by the IASB and the FASB. In January this year, the IASB announced that it will no longer attend TRG meetings. The FASB declared in February that it will continue to address implementation issues and has scheduled three TRG meetings for 2016.

On this development, Mr. Schnurr commented:

While I am optimistic that the key practice issues that require standard setting have been identified through the implementation activities of preparers, auditors and standard setters, I am concerned that there are still a number of questions that would benefit from the TRG process. [...] Without joint participation of the IASB’s TRG in the coming scheduled FASB TRG meetings, there is a concern that IFRS 15 may be interpreted through a U.S. GAAP lens without the perspective of IFRS preparers.

He even went as far as suggesting that IFRS preparers could "provide input to the FASB staff and the FASB TRG participants to the extent they believe they have important factors that should be considered for discussion by the FASB TRG". At a minimum, he noted, he expected SEC registrants to monitor the TRG discussions and meeting minutes to inform their selection and implementation of reasonable policies.

Review the full text of Mr. Schnurr's speech on the SEC's website.

Comparison of materiality definitions and approaches by Corporate Reporting Dialogue participants

Mar 30, 2016

On March 30, 2016, the Corporate Reporting Dialogue (CRD), which brings together organizations that have significant international influence on the corporate reporting landscape, issued a statement comparing the definitions and approaches to materiality by CRD participants.

The statement includes a comparison of materiality from the following organizations:

  • CDP
  • Climate Disclosure Standards Board (CDSB)
  • Financial Accounting Standards Board (FASB)
  • Global Reporting Initiative (GRI)
  • International Accounting Standards Board (IASB)
  • International Integrated Reporting Council (IIRC)
  • International Organization for Standardization (ISO)
  • Sustainability Accounting Standards Board (SASB)

In October 2015, the IASB published an exposure draft on the concept of materiality, which explains and illustrates the concept of materiality and helps preparers of financial statements when applying the concept.

For more information, see the statement on the CRD’s website.

EFRAG and ICAS issue financial reporting research report

Mar 09, 2016

On March 9, 2016, the European Financial Reporting Advisory Group (EFRAG) and the Institute of Chartered Accountants of Scotland (ICAS) issued a research report, “Professional investors and the decision usefulness of financial reporting,” which examines the use of financial reporting by professional investors and how the results of the research may have standard setting implications.

The research report discovered that:

  • “The objective of investors (valuation or stewardship) does matter.
  • Investors are strongly anchored on the income statement.
  • Investors have strong reservations about the representational faithfulness of bottom line figures.
  • Regardless of its shortcomings, financial accounting information is a key input factor for investors' decision making.
  • The quality of corporate governance, including audit, influences investors' assessment of the representational faithfulness.”

In addition, the research report noted that (1) different objectives for financial reporting need to be prioritised by standard setters; (2) income statements were considered more useful than the balance sheet; (3) standardised performance measures for the income statement need to be enhanced; and (4) "investors' perceptions of corporate governance significantly affect their views of representational faithfulness."

For more information, see the press release and report on the EFRAG’s website.

FASB issues ASU on principal-versus-agent considerations

Mar 17, 2016

On March 17, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-08, “Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net),” to clarify certain aspects of the principal versus agent guidance in its new revenue recognition standard in response to feedback received from the FASB-IASB joint revenue recognition transition resource group.

The ASU clarifies the following implementation guidance on principal-versus-agent considerations:

  • How “an entity determines whether it is a principal or an agent for each specified good or service promised to the customer.”
  • How “an entity determines the nature of each specified good or service.”
  • “When another party is involved in providing goods or services to a customer, an entity that is a principal obtains control of (a) a good or another asset from the other party that it then transfers to the customer; (b) a right to a service that will be performed by another party, which gives the entity the ability to direct that party to provide the service to the customer on the entity’s behalf; or (c) a good or service from the other party that it combines with other goods or services to provide the specified good or service to the customer.”

In addition, ASU 2016-08 updates the indicators in ASC 606-10-55-39 and revises the existing examples in ASC 606 to better illustrate the application of the principal-versus-agent guidance.

The amendments to the principal versus agent considerations implementation guidance in this Update are the same as the amendments the IASB decided to make to its principal versus agent
considerations application guidance in its forthcoming final standard, Clarifications to IFRS 15. Accordingly, the FASB’s and the IASB’s amendments to the guidance on principal versus agent considerations remain converged.

The amendments in the ASU are effective at the same time as those in ASU 2014-09 (as amended by ASU 2015-14).

For more information, see the ASU on the FASB’s Web site.

FASB issues ASU simplifying equity method

Mar 16, 2016

On March 16, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-07, “Simplifying the Transition to the Equity Method of Accounting,” as part of its simplification initiative.

The ASU simplifies the equity method of accounting by eliminating the requirement to retrospectively apply the equity method to an investment that subsequently qualifies for such accounting as a result of an increase in the level of ownership interest or degree of influence. Further, the ASU requires that unrealized holding gains or losses in accumulated other comprehensive income related to an available-for-sale security that becomes eligible for the equity method be recognized in earnings as of the date on which the investment qualifies for the equity method.

The amendments improve consistency with IFRS, which do not require retroactive adjustment when an investment becomes qualified for the equity method.

The amendments in the ASU are effective for annual reporting periods, and interim periods therein, beginning after December 15, 2016. Early adoption is permitted.

For more information, see Deloitte’s related journal entry as well as the ASU on the FASB’s Web site.

IASB issues "Investor Update" newsletter

Mar 22, 2016

On March 22, 2016, the International Accounting Standards Board (IASB) issued the ninth edition of its newsletter “Investor Update,” which provides investors with quick access to information about current accounting and financial reporting topics.

This issue fea­tures:

  • An interview with the President of the Asian Infrastructure Investment Bank, Mr Jin Liqun.
  • An overview of key features in the new leases standard, IFRS 16.
  • Current pro­jects that need input from the in­vest­ment com­mu­nity.
  • A cal­en­dar of current events.

The In­vestor Update newslet­ter is avail­able on the IASB’s website.

IASB member discusses the disclosure initiative

Mar 18, 2016

On March 18, 2016, the International Accounting Standards Board member, Gary Kabureck, issued an article, “Footnotes of the Future — Reflections from the Disclosure Initiative.” In his article, he discusses the progress the Board has made to improve disclosure effectiveness and looks at the next steps for this project.

The article features:

  • Examples of how the amendments to IAS 1 in December 2014 helped preparers improve their financial reporting.
  • The importance of identifying the primary users.
  • An assessment of disclosure materiality.
  • Discussion on material and immaterial errors.

The full article is available on the IASB’s website.

Correction list for hyphenation

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