Annual publication covering Canadian, international, and US developments in the financial reporting field.
The past couple of years have seen a number of significant new standards being released, such as Revenue, Leases, and Financial Instruments. Additionally, there have been a number of amendments issued to various standards. Recently the International Accounting Standards Board (IASB) confirmed that the theme for its activities until 2021 will be “Better Communication” in financial statements. The IASB aims to improve the communication effectiveness of financial statements by taking a fresh look at how financial information is presented and grouped together. The US Financial Accounting Standards Board (FASB) has also moved its focus away from the major standards (revenue recognition, leases, and financial instruments) during the latter half of 2016, and has shifted its efforts to foundational issues, such as the statement of cash flows and the disclosure framework. While the objectives of the IASB and FASB are similar, the projects are no longer being jointly developed.
The IASB’s and FASB’s new Revenue and Financial Instruments Standards will take effect in 2018 (and in 2019 for the FASB’s Impairment Standard), followed by Leases one year later (in 2019). Collectively, the adoption of these standards will require significant time and resources. With just over a year to complete implementation efforts for those standards effective in 2018, public companies should strive to finalize their detailed assessments as quickly as possible to allow sufficient time to design and implement new processes and controls and calculate the transition adjustment.
The rapidly approaching effective dates have also drawn the attention of regulators. Both European and US regulators have issued statements with respect to their expectation of transparent disclosures regarding the impact of the new standards on the financial statements. Specifically, they have indicated that they would expect disclosures of the expected impact of the new standards and status of implementation projects as early as the 2016 annual financial statements.
With respect to private enterprises, the Accounting Standards Board (AcSB) has seen a change in the private world as domestic enterprises are now operating globally and entering into more complex transactions. As part of the strategic plan for the period 2016–2021, the AcSB goals remain focused on a high-quality set of standards which will produce decision-useful information for creditors and other frequent users of the financial statements while responding to the changes seen in the domestic enterprise environment.
The AcSB recently established the Not-for-Profit Advisory Committee to provide input on standard-setting matters of interest to private sector not-for-profit organizations (NFPOs). The objectives for the next five years include carrying out improvement initiatives after consideration of the advice of the Advisory Committee and feedback from stakeholders, conducting research, including considerations, on recognizing revenues from contributions, and developing and implementing a process to manage the maintenance of Part III – Accounting Standards for Not-for-Profit Organizations.
The information in this edition is based on pronouncements released prior to November 15, 2016. For pronouncements released after this date, please refer to the website of the standard setter or regulator, or contact your KPMG adviser.