-" .. ... -

IQBRITISH

COLUMBIAThe Best Place on Earth

January 11, 2008 Cliff #174480E-mail: ed.accounting@cica.ca

Peter MartinDirector, Accounting StandardsAccounting Standards Board277 Wellington Street WestToronto ON MSV 3H2

Dear Mr. Martin,

RE: Joint Arr~ngements Exposure Draft (ED)

Thank you for the opportunity to provide further feedback on IASB's Exposure DraftNine regarding Joint Arrangements. We agree that the equity method of consolidation ismore appropriate for joint arrangements than the proportionate consolidation method.This is because it is more representative of the underlying substance of thesearrangements. We also feel that further discussion is necessary in certain areas.

One area that we believe needs to be discussed further is what the most appropriateaccounting standard will be for government entities on implementation of InternationalFinancial Reporting Standards. Canadian accounting guidance for the private sector,public sector and not-for-profit sector each prescribes a different accounting standard forjoint arrangements. It is still under debate what the most appropriate accounting standardwill be for government entities on implementation of International Financial ReportingStandards. Based on the outcome of these ongoing discussions this exposure draft mayor may not apply to government entities.

Our view is that all government entities should be directed to prepare their auditedfinancial statements according to either IFRS GAAP or PSAB GAAP. We believe thatgovernment entities must not be permitted to prepare their audited financial statementsusing the Small and Medium sized entity GAAP of the IASB, or the Private Enterpriseguidance being developed by the AcSB.

.../2

Ministry of Finance Officeof theComptroller General

Mailing Address:PO Box 9413 Stn Prov GovtVictoria BC V8W 9V1

www.gov.bc.calfin

Location Address:

id Roor617 Government StreetVictoriaBC

- - - - -- - - ----

* - *.. *

-2-

"Assuming that ED 9 is approved by the IASB as afinal standard, do you believe thatthere are aspects of the Exposure Draft that make some or all of its proposalsinappropriate for Canadian entities even though they are appropriate for entities in therest of the world? If so, please specify which aspects and what circumstances make theaccounting requirements in ED 9 inappropriate for Canadian entities. "

We believe that the proposals in Exposure Draft # 9 are appropriate for all CanadianEntities. In our view, Canadian joint arrangements are very similar to those in the rest ofthe world. Therefore,the accountingtreatmentshouldbe consistent. .

"The AcSB has determined that it will not generally issue applications or interpretativeguidance on IASB standards. An exception might be when an aspect of a standard needsinterpreting in light of specific Canadian legal, tax, regulatory or other circumstancesthat do not apply in other countries and that therefore will not be addressed by the IASB.Does the standard proposed in ED 9 require such application or interpretive guidance?"

We believe that the AcSB needs to define the term partnership. A joint arrangement thatinvolves a specific project and occurs for a specified period of time is usually called ajoint venture. Alternatively, a joint arrangement that involves several parties running anenterprise together on an ongoing basis is usually called a partnership. In our view, thedistinction between these two terms, if any, needs to be clarified.

"Since the proposals in ED 9 will, if included in thefinal standard, form part of the bodyof IFRS adopted as Canadian GAAP, the transitional provisions of InternationalFinancial Reporting Standard IFRS 1, "First-time Adoption of International FinancialReporting Standards, " will apply. Are any amendments to IFRS 1 required to providespecial transition provisions for adopting the ED 9 proposals? "

We believe that no amendments to IFRS 1 are required to provide special transitionprovisions for adopting the ED 9 proposals.

"At this time, the AcSB has not determined how to implement its strategy for privateenterprises. However, it will be importantfor the AcSB to know whether the proposals inED 9 are appropriate for application by private enterprise that prepare general purpose(GAAP) financial statements. Are the proposals in ED 9 appropriate for privateenterprises? If not, please specify why not. "

We believe that the proposals in ED 9 are appropriate for application by privateenterprises. In our view, there is no need for a different accounting standard for privateenterprises and the users of private enterprise financial statements would benefit from theproposals outlined in ED 9.

"At this time, the AcSB has not determined how to implement its strategy for not-for-profit organizations. However, it will be important for the AcSB to know whether the

.../3

- ---- ---

. - -- -- ------

- 3 -

proposals in ED 9 are appropriatefor application by these entities. Are the proposals inED 9 appropriate for not-for-profit organizations? Ifnot, please specify why not. "

We believethat theproposalsin ED9 areappropriatefor applicationby not-for-profitorganizations. In our view, there is no need for a different accounting standard for jointarrangements that are entered into by not-for-profit organizations. The fundamentaldefinitions of assets and liabilities are, in our perspective, the same in the not-for-profitsectorandtheprofitorientedsector. Therefore,we believethat all entitiesshouldonlyrecognize an asset if they have a separable interest in it, and a liability if they have a trueobligation to pay.

"The AcSB intends that theproposals in ED 9 be adopted in Canada aspart of theoverall adoption of IFRSs. However it is consideringpermitting early adoption of theseproposals. Should early adoption of theseproposals bepermitted prior to the completeadoption of IFRS? If not,please specify why not. "

We believe that the AcSB should pennit early adoption of these proposals by profitoriented organizations. Our perspective is that the AcSB needs to conclude itsdiscussions on what the most appropriate accounting standard will be for government andnot-for-profit entities before it pennits them to adopt the proposals in this exposure draft.

Should you have any questions concerning this response, please contact me at250-387-6692 or bye-mail: Chervl.Wenezenki-Yolland@gov.bc.ca.or Carl Fischer,Executive Director, Financial Reporting and Advisory Services Branch at 250-356-9272or bye-mail: Carl.Fischer@gov.bc.ca.

Sincerely,

Cheryl Wenezenki- Yolland, CMA, FComptroller General

pc: Carl Fischer, Executive DirectorFinancial Reporting and Advisory ServicesMinistry of Finance

Coos Trumpy, Deputy MinisterMinistry of Finance

Nick Paul, Deputy Secretary to the Treasury BoardMinistry of Finance

Auditor General of British Columbia

--- - --