(May 31 – 10:55 ET) – The Accounting Standards Board of the Canadian Institute of Chartered Accountants has issued an exposure draft concerning the reporting of earnings per share. Any one involved with the preparation, auditing or analysis of financial statements is invited to comment.

Comments on the new standard are due by August 15. The new standard is designed to help harmonize Canadian standards with U.S. and international standards, which were themselves harmonized two years ago.

While the proposed changes aren’t expected to have a huge practical impact, they will make a difference to some firms. The more significant changes include:

  • The treasury stock method would be used instead of the imputed earnings approach for determining the dilutive effect of warrants and options.
  • Contracts that may be settled in cash or shares at the issuers option would be presumed to be settled in shares, and related potential common shares included in the diluted earnings per share computation if dilutive.
  • There would be no time limit on the recognition of potentially dilutive factors.
  • Presentation of adjusted and pro-forma earnings per share would no longer be required.
  • Disclosure would be required of reconciliations of the numerators and denominators of the per share computations; and potentially dilutive securities not included in the computations of diluted earnings per share amounts for the period.

The exposure draft can be obtained from the CICA web site: www.cica.ca/ed
-James Langton