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Letter Summary:
The CAC generally supports the proposed changes to NI 81-106. The CAC fully supports the adoption of IFRS for publicly accountable enterprises. None-the-less, the CAC is concerned about the potential for consolidation of some investments by Investment Funds and more generally by Investment Companies. The CAC is concerned that the application of the new consolidation standard proposed by the IASB will not provide the most decision-useful information to users.
Overview of the Council’s Comments:
We do agree that fair value may not fully meet user needs in some cases. When the entity bears legal responsibility (as general partner or guarantor, for example) for some or all of the liabilities of an investee, then supplementary disclosures should be required to inform shareholders of the additional risk. The CAC does not believe that the IASB will implement an acceptable solution in time for transition to IFRS by Canadian Investment Funds and Companies. We would encourage the CSA to explore alternatives to the approach set out in the proposed amendments to NI 81-106. We believe that users should continue to be provided with non-consolidated information on a fair value basis in substantially the same manner as is now provided by AcG–18.