Canada announces important changes in the accounting for financial assets

    TORONTO, Oct. 17 /CNW/ - Canada's Accounting Standards Board (AcSB) is
initiating measures to ensure consistent financial asset classification with
other jurisdictions.
    The AcSB has announced amendments to Sections 3855, Financial Instruments
- Recognition and Measurement, and 3862, Financial Instruments - Disclosures.
The amendments permit reclassification of financial assets in specified
circumstances. They are being made to ensure consistency of Canadian standards
with International Financial Reporting Standards (IFRS) and US standards. They
are effective for reclassifications made on or after July 1, 2008, 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, 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."
    Financial markets around the world face unsettling conditions. "The
Accounting Standards Board continues to closely monitor developments at the
international level -- both in the United States and other jurisdictions,"
said Cherry.
    The amendments are not the first action taken by the AcSB. The Board has
already issued three staff commentaries to help companies apply fair value
accounting requirements when dealing with Canada's own liquidity crunch. These
commentaries provided companies with guidance on how to report to investors on
holdings of Asset-Backed Commercial Paper (ABCP). The first was issued almost
a year ago.
    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.
    Recognizing the urgent need for the amendments, the AcSB is waiving
formal exposure. Instead, a draft will be published on the AcSB website
( for a "fatal flaw" review. The final amendments are
expected to be published on the AcSB website by October 24, 2008.

    The Accounting Standards Board establishes financial accounting and
reporting standards for use by Canadian companies and not-for-profit
organizations. It also participates in the development of internationally
accepted accounting standards. The Board sets its financial accounting and
reporting standards after an extensive process of consultation with
organizations and individuals that are interested in or affected by the
standards. The standards contribute to enhanced decision making by
continuously improving the quality of financial and other information about
organizational performance reported by Canadian entities.

For further information:

For further information: or to arrange an interview, contact: Tobin
Lambie, CICA Manager, Media, (416) 204-3228,

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