This newsletter discusses the impact of the disclosure requirements of CICA Handbook Sections 3862 and 1536 on interim financial statements.
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Is it necessary to apply Sections 3862 and 1535 in interims? | FINANCIAL INSTRUMENTS – DISCLOSURES, Section 3862 and CAPITAL DISCLOSURES, Section 1535 apply to “interim and annual financial statements relating to fiscal years beginning on or after October 1, 2007”. We have been asked whether this means that an entity must fully apply the Sections in each and every interim financial statement after the Sections become effective. |
| Our position | Our position is that Section 3862 and 1535 disclosures are not required in interim financial statements if (a) the entity has applied the Sections in its annual financial statements for the preceding year; and (b) disclosure is not otherwise required by INTERIM FINANCIAL STATEMENTS, Section 1751 (see CICA 1751.13 and .14 as to when disclosure might be necessary). Our interpretation is consistent with the Basis of Conclusions to the Sections and has been discussed with the CICA staff. |
| Consider early adoption | Companies can adopt the Sections early, in their 2007 annual financial statements. We recommend that management and audit committees consider this option as it would minimize, and possibly eliminate, the need for providing Section 3862 and 1535 type disclosures in interim financial statements for 2008. |
| What are the Sections all about? | Newsletter 2007-11-12 High Level Overview of CICA Handbook Section 3862, Financial Instruments — Disclosures, and Section 1535, Capital Disclosures provides a high level overview of the major changes to disclosures arising from Sections 3862 and 1535. A more detailed analysis will be issued shortly. |
| Other standards with similar transitional provisions | Other new Handbook Sections on specific topics, such as INVENTORIES, Section 3031, have similar transitional provisions. Our position is the same for these sections as it is for Sections 3862 and 1535. |
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