Canada’s Accounting Standards Board announced Friday that it is adopting measures that allow firms to reclassify financial assets.
The AcSB has announced amendments to permit reclassification of financial assets in specified circumstances. The group says that the change is being made to ensure consistency of Canadian standards with International Financial Reporting Standards and U.S. standards. They are effective for reclassifications made on or after July 1, but only for periods for which annual or interim financial statements have not been issued previously.
“The amendments allow entities to move financial assets out of categories that require fair value changes to be recognized immediately in net income,” said Paul Cherry, chair of the AcSB. “However, it must be stressed that assets will remain subject to impairment testing and the amendments involve extensive disclosure requirements. Transparency will remain for investors.”
The AcSB notes that it has already issued three staff commentaries to help companies apply fair value accounting requirements when dealing with Canada’s liquidity crunch. It reports that its staff is now considering additional commentary guidance to cover a wider range of investments, as well as possible enhancements to disclosures about liquidity risk and fair value measurements.
To get the change implemented as soon as possible, the AcSB is waiving its usual process. Instead, a draft will be published on the AcSB Web site for a “fatal flaw” review. The final amendments are expected to be published on the AcSB web site by October 24.
IE
Canadian accounting rules eased for financial assets
Changes will allow companies to reclassify some financial instruments to allow them to avoid fair-value accounting treatment
- By: James Langton
- October 19, 2008 October 19, 2008
- 13:10