At its meeting on June 13-14, 2019, the AASOC received a presentation from Mr. Richard Talbot who is currently a Senior Advisor to the CFA Societies of Canada and was most recently the Chief Operating Officer of RBC Capital Markets. The Chair noted that Mr. Talbot and Mr. Tom Trainor, Managing Director, Hanover Private Client Corporation, have been leading a Canadian initiative on Alternative Performance Measures. Mr. Talbot informed the Council of concerns that audited financial statements are losing their relevance.

Investors are increasingly allocating capital using unaudited information, or APMs, that is not covered by GAAP. In speaking to a group of senior investors, Mr. Talbot reported that they stated that 15 to 20 per cent of the information investors use to make their investing decisions are obtained from the audited financial statements.

Mr. Talbot noted that APMs are different from GAAP information because they are typically sector-specific and, therefore, requiring the standard setters to know the subject industry in detail. He informed AASOC that the Alternative Performance Measures Working Group was created in May 2018 at the suggestion of the Governor of the Bank of Canada. The Group’s goal is to develop a set of industry-specific standards that can be implemented and ultimately improve corporate disclosures. The Group will form industry-specific teams that will utilize a collaborative approach with an agile cycle time. Mr. Talbot invited the AASB to support this initiative by being represented on the Group.

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At its meeting on June 13-14, 2019, following a presentation by Mr. Eric Turner, Director, Auditing and Assurance Standards, regarding the AASB’s project re CSAE 3416, the AASOC concluded that the AASB had followed due process with proper regard for the public interest in developing and approving CSAE 3416.

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At its meeting on June 13-14, 2019, the AASOC received a presentation from the AASB Chair regarding this issue. Mr. Charbonneau highlighted that the AASB staff had received 20 comment letters and consulted with 75 individuals.
One of the proposals set out in the Exposure Draft relates to communicating KAM for entities listed on exchanges other than the Toronto Stock Exchange (TSX). He commented that six letters were in support of extending KAM to entities listed on exchanges other than the TSX, three letters did not support this idea and the remaining letters did not comment on this proposal.

On the issue of entities that are required to comply with National Instrument (NI) 81-106, the AASB proposed to expand KAM to apply to entities that are required to comply with NI 81-106, which applies to both listed and unlisted investment funds. The Board received two letters supporting the proposal, 10 letters not supporting, and the remaining letters not commenting on it. The AASB received mixed feedback on the new standard’s effective date. The Board will provide further information on its findings at the Council’s meeting on July 8, 2019. The Board intends to approve Handbook changes in September 2019 and issue the new standard in December 2019.

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At its meeting on June 13-14, 2019, the AASOC received a presentation from Ms. Berger of the AASB staff. She updated the Council on this project, including a discussion of the key issues respondents raised to the Exposure Draft and the Board’s preliminary conclusions. She also outlined the breadth of the feedback the Board received on this project and the Board’s activities to date in considering stakeholder feedback. This included using a Task Force to discuss and analyze feedback. The AASB’s next steps include approving the final standard in September 2019, obtaining Council’s assessment of due process and consideration of the public interest in October 2019, and issuing the new standard in the Handbook by the first quarter of 2020.

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At its meeting on June 13-14, 2019, the AASOC received a presentation from the AASB Chair regarding this issue. Mr. Charbonneau advised that the one-year deferral the AASB approved in January 2019 will not be required after the stated December 15, 2019, end date. The International Practices Task Force’s (IPTF), a task force of the SEC Regulations Committee, minutes were issued as expected and confirm the SEC’s view that for certain Canadian entities that report to the SEC, a Canadian Auditing Standards report is not “filed” in the U.S.; it is “furnished.” A furnished audit report does not attract the same liability concerns as a filed report. Therefore, personal liability should not be a concern. Mr. Charbonneau also indicated the Board is not currently working on any project related to the engagement partner name. However, the Board knows the large firms are working through their legal counsel to resolve related issues.

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