Overview

The Accounting Standards Board (AcSB) has adopted an annual process to make minor improvements to accounting standards for private enterprises (ASPE) in Part II of the CPA Canada Handbook – Accounting as they are identified. The annual improvements process:

• clarifies guidance or wording in the standards; or
• corrects relatively minor unintended consequences, conflicts or oversights.

Major improvements to the standards, such as the issuance of a new standard, are not included in the annual improvements process. Annual improvements to Part II may also apply to not-for-profit organizations that use Part III.

In Oc­to­ber 2020, the AcSB is­sued an ex­po­sure draft propos­ing the 2021 An­nual Im­prove­ments to ac­count­ing stan­dards for pri­vate en­ter­prises and ac­count­ing stan­dards for not-for-profit or­ga­ni­za­tions. The proposals affected the following standards, as follows:

Part II

• Section 1500, First time adoption

This Section applies to an enterprise’s first set of financial statements prepared in accordance with accounting standards for private enterprises. Some stakeholders have noted that it is not clear whether enterprises who had applied accounting standards for private enterprises in a previous reporting period, but whose most recent annual financial statements were not prepared in accordance with accounting standards for private enterprises, can apply Section 1500 again. The proposed amendments clarify that such enterprises can apply Section 1500 or can apply accounting standards for private enterprises retrospectively in accordance with ACCOUNTING CHANGES, Section 1506. In addition, the proposed amendments include additional disclosure requirements in this regard.

• Section 1510, Current assets and current liabilities

Current assets and current liabilities, paragraph 1510.11, requires amounts owing on loans from directors, officers and shareholders, and amounts owing to parent and other affiliated companies, whether on account of a loan or otherwise, to be shown separately on the balance sheet. Some stakeholders have noted that disclosing these amounts in the notes to the financial statements meets the needs of users. The proposed amendment provides the option to present these amounts separately on the balance sheet or disclose them in the notes to the financial statements or supporting schedules.

• Section 1540, Cash flow statement

Cash flow statement, paragraph 1540.47(d), requires an enterprise to disclose, in aggregate, in respect of both business combinations and disposals of business units during the period, the total assets, other than cash or cash equivalents, and total liabilities acquired or disposed of. Some stakeholders have noted that decision useful information in this regard is available due to disclosure requirements in other Sections. The proposed amendment removes this disclosure requirement from paragraph 1540.47.

• Section 3856, Financial instruments

Example 3 in Section 3856 illustrates the initial measurement of common shares and a note receivable issued between related parties in exchange for land and a trade receivable. In this example, the common shares issued by Company G are measured at the assigned value of $25,000 in both Situations I and II, when the transaction is measured at the carrying or exchange amount of land, respectively. Some stakeholders think that this is inconsistent with Example 3 in Related Party Transactions, Section 3840, which measures common shares issued by Company B (Buyer) at different values in the exchange and carrying amount situations. The proposed amendment to Example 3 in Section 3856 clarifies that Company G assigned the same value of $25,000 regardless of whether the transaction is measured at the carrying amount or the exchange amount of the land.

Part III

• Section 1501, First-time adoption by not-for-profit organizations

This Section applies to an organization’s first set of financial statements prepared in accordance with accounting standards for not-for-profit organizations. The AcSB is proposing amendments to Section 1501 to be consistent with the proposed amendments to Section 1500. The proposed amendments clarify that an organization that had applied accounting standards for not-for-profit organizations in a previous reporting period, but whose most recent annual financial statements were not prepared in accordance with accounting standards for not-for-profit organizations, can apply Section 1501 again or can apply the standards retrospectively in accordance with Section 1506. In addition, the proposed amendments include additional disclosure requirements in this regard.

On April 1, 2021, these 2021 an­nual im­prove­ments to ac­count­ing stan­dards for pri­vate en­ter­prises and ac­count­ing stan­dards for not-for-profit or­ga­ni­za­tions were issued to the CPA Canada Handbook – Accounting. They are ef­fec­tive for annual financial statements relating to fis­cal years be­gin­ning on or af­ter Jan­u­ary 1, 2022 with ear­lier ap­pli­ca­tion per­mit­ted.

Other developments

April 2021

On April 1, 2021, the AcSB is­sued the 2021 an­nual im­prove­ments to ac­count­ing stan­dards for pri­vate en­ter­prises and ac­count­ing stan­dards for not-for-profit or­ga­ni­za­tions to the CPA Canada Handbook - Accounting. These amend­ments are ef­fec­tive for annual financial statements relating to fis­cal years be­gin­ning on or af­ter Jan­u­ary 1, 2022 with ear­lier ap­pli­ca­tion per­mit­ted.

October 2020

On October 15, 2020, the AcSB issued an exposure draft proposing annual improvements to accounting standards for private enterprises and accounting standards for not-for-profit organizations. Comments are requested by December 14, 2020.

July 2020

On July 7, 2020, the AcSB approved this project.