Canada provides guidance on timing of disclosures on new and revised IFRSs
14 Dec 2012
The Accounting Standards Board of Canada (AcSB) has issued proposed amendments to the Preface to the CICA Handbook to clarify the authority for financial reporting requirements in Canada and the basis for adopting IFRSs into Canadian GAAP. The proposals discuss whether entities can adopt pronouncements issued by the IASB before incorporation into Canadian GAAP, and how the disclosure requirements of IAS 8 should be applied in the context of an endorsement regime. As such, the observations in the proposals may be relevant for other regimes adopting an 'endorsement' regime for IFRS.
The proposed amendments would clarify that new, amended or revised International Financial Reporting Standards issued by the IASB are part of Canadian generally accepted accounting principles only after they are approved by the Accounting Standards Board in accordance with its due process. This means that entities reporting under Canadian GAAP cannot adopt any IASB pronouncement until such time as this process has occurred.
The explanatory material accompanying the proposals note that paragraph 30 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors is already part of Canadian GAAP. Read literally, this paragraph requires disclosure of new or amended IFRSs issued by the IASB but not yet applied, regardless of whether the AcSB has incorporated the changes in the Handbook.
Accordingly, in order for Canadian entities to make an unreserved statement of compliance with IFRSs (required under paragraph 16 of IAS 1 Presentation of Financial Statements, which is also part of Canadian GAAP), they would need to include disclosures under IAS 8 about pronouncements made by the IASB which had not yet been adopted by the AcSB and incorporated into Canadian GAAP.
The AcSB discusses the difficulties facing certain entities in meeting these requirements. For instance, the AcSB is required to make any changes to the Handbook in both official Canadian languages (English and French) and the AcSB acknowledges that "new or amended IFRSs that have not been translated are inaccessible to francophone stakeholders, who would be unable to develop the disclosures required".
However, the AcSB notes there are "no compliance problems with any of the applicable requirements if an entity chose to make the IAS 8 disclosure before the new or amended IFRS is incorporated into the Handbook".
The proposals in effect provide guidance on the issue of when disclosure is required under paragraph 30 of IAS 8, and so are of interest to all regimes that adopt an 'endorsement' approach to IFRSs.
The proposals are open for comment until 28 February 2013. Click for access to the proposals (link to the AcSB website).
