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News

IFRS - IASB Image

IASB discusses redeliberation plan for proposed IFRS 17 amendments

Nov 20, 2019

On November 19-20, 2019, the International Accounting Standards Board (IASB) held its meeting in London and was given an overview of the feedback received on the exposure draft ED/2019/4 "Amendments to IFRS 17" and discussed a plan for redeliberating the proposed amendments.

There were four papers for the meeting (all links to the IASB website):

  • Agenda Paper 2A provided an overview of the comment letters and overall feedback on the exposure draft.
  • Agenda Paper 2B summarized the feedback from the comment letters on the ten questions in the exposure draft.
  • Agenda Paper 2C summarized comments on areas for which amendments to IFRS 17 were considered but not proposed and other comments.
  • Agenda Paper 2D set out the staff recommended plan for redeliberations and asked whether the Board agreed with that plan.

The proposed redeliberation plan summarized staff recommendations for each point for the Board to decide whether it could confirm the proposed amendment at a future meeting, should consider further the feedback from respondents on the topic, or did not intend to consider further the topic.

The Board did not discuss each of the topics individually. Rather, the staff grouped the topics together into three groups:

  1. Proposed amendments that could be confirmed without further discussion because of general support in the comment letters (listed in Agenda Paper 2D paragraph 7).
  2. Proposed amendments amendments that warranted further discussion as the feedback in the comment letters was constructive and provided at least a "little element" of new information (listed in Agenda Paper 2D paragraph 9).
  3. Topics that did not warrant further discussion as either there was support in the comment letters for the Board not picking them up or as the feedback in the comment letters did not provide any new information (listed in Agenda Paper 2D paragraph 10).

The Board's votes translate as follows into the staff's table of proposed further actions included as Appendix A in Agenda Paper 2D:

Question/Topic Detailed description in Agenda Paper, paragraphs Staff recommendation Board decision
Question 1(a) — Scope exclusion for credit cards 2B, 6‒9 Consider further the feedback from respondents 14 Yes
Question 1(b) — Scope exclusion for loans 2B, 10-14 Confirm the proposed amendment 14 Yes
Question 2 — Expected recovery of insurance acquisition cash flows 2B, 15-21 Consider further the feedback from respondents 14 Yes
Question 3(a) — Contractual service margin attributable to investment services | Coverage units for insurance contracts without direct participation features 2B, 22‒24 Consider further the feedback from respondents 14 Yes
Question 3(b) — Contractual service margin attributable to investment services | Coverage units for insurance contracts with direct participation features 2B, 25‒27 Confirm the proposed amendment 14 Yes
Question 3(c) — Contractual service margin attributable to investment services 2B, 28‒31 Consider further the feedback from respondents 14 Yes
Question 4 — Reinsurance contracts held — recovery of losses 2B, 32‒36 Consider further the feedback from respondents 14 Yes
Question 5 — Presentation in the statement of financial position 2B, 37‒41 Confirm the proposed amendment 14 Yes
Question 6 — Applicability of the risk mitigation option 2B, 42‒47 Confirm the proposed amendment for reinsurance contracts held and consider further the feedback from respondents on non-derivative financial instruments measured at fair value through profit or loss 14 Yes
Question 7(a) — Effective date of IFRS 17 2B, 48‒53 Consider further the feedback from respondents 14 Yes
Question 7(b) — IFRS 9 temporary exemption in IFRS 4 2B, 54‒59 Consider further the feedback from respondents 14 Yes
Question 8(a) — Transition reliefs for business combinations 2B, 60‒66 Confirm the proposed amendment and consider further the feedback from respondents on contracts acquired in their settlement period 14 Yes
Question 8(b)–(c) — Transition reliefs for the risk mitigation option 2B, 67‒72 Confirm the proposed amendment and consider further the feedback from respondents on the prohibition from applying the risk mitigation option retrospectively 14 Yes
Question 9 — Minor amendments 2B, 73‒77 Consider further the feedback from respondents 14 Yes
Question 10 — Terminology 2B, 78‒82 Consider further the feedback from respondents as part of the discussion of Question 3 14 Yes
Level of aggregation 2C, 7‒13 Consider further the feedback from respondents on some specific contracts 14 Yes
Cash flows in the boundary of a reinsurance contract held 2C, 14‒19 Do not plan to consider further the topic 13 Yes
Subjectivity in the determination of discount rates and the risk adjustment for non-financial risk 2C, 20‒24 Do not plan to consider further the topic 13 Yes
Risk adjustment for non-financial risk in a consolidated group of entities 2C, 25‒29 Do not plan to consider further the topic 13 Yes
Discount rate used to determine adjustments to the contractual service margin 2C, 30‒36 Do not plan to consider further the topic 13 Yes
Other comprehensive income option for insurance finance income or expenses 2C, 37‒41 Do not plan to consider further the topic 13 Yes
Business combinations| Contracts acquired in their settlement period 2C, 42‒48 Consider further the feedback from respondents 14 Yes
Business combinations| Classification of contracts acquired 2C, 49‒55 Do not plan to consider further the topic 13 Yes
Scope of the variable fee approach| Reinsurance contracts issued 2C, 56‒62 Do not plan to consider further the topic 13 Yes
Interim financial statements 2C, 63‒74 Consider further the feedback from respondents 14 Yes
Mutual entities issuing insurance contracts 2C, 75‒79 Do not plan to consider further the topic and confirm the addition of the proposed footnote to the Basis for Conclusions on IFRS 17 13 Yes
Additional transition modifications and reliefs 2C, 80‒81 Consider further the feedback from respondents on additional specific transition modifications and reliefs 14 Yes
New concerns and implementation questions 2C, 82‒85 Consider further the feedback from respondents 14 Yes

The staff plan to present papers on the above topics to the Board at future meetings in the period from December 2019 to February 2020. The staff expect that there will sufficient time for the Board to consider the detailed feedback and finalize any resulting amendments by mid-2020.

IFRS - IASB Image

Summary of the October 2019 GPF meeting

Nov 19, 2019

On November 19, 2019, the International Accounting Standards Board (IASB) released a summary of its meeting with the Global Preparers Forum (GPF) in London on October 8, 2019.

The topics discussed at the meeting included:

  • IASB update
  • IBOR — Phase 2 update
  • Primary financial statements — Project update
  • Accounting policies disclosure — Summary of exposure draft and gathering preliminary views from GPF members
  • Post-implementation reviews of IFRS 10, IFRS 11, and IFRS 12 — Gathering GPF’s views to be considered in the Request for Information.
  • Agenda consultation — Gathering GPF’s views on potential financial reporting priorities for a Request for Information related to the 2020 Agenda Consultation

The next GPF meeting will be held on March 5, 2020.

Review the press releasemeeting page and the meeting summary on the IASB's website.

Securities - OSC Image

OSC makes doing business easier for Ontario market participants

Nov 19, 2019

On November 19, 2019, the Ontario Securities Commission (OSC) moved forward with more than 100 specific actions to reduce burden for market participants doing business in Ontario’s capital markets. As these changes are made, individuals and businesses regulated by the OSC can expect to see enhanced service levels, less duplication and a more tailored regulatory approach.

The changes will make it easier to start, fund and grow a business in Ontario, and make Ontario’s markets more competitive. While these initiatives will benefit businesses of all sizes, the OSC has carefully considered opportunities to benefit small and medium-sized companies, which make up nearly 70 per cent of those regulated by the OSC, and smaller registrant firms, which make up nearly a third of Ontario registrants.

Highlights include:

  • Small and medium-sized businesses that are registrants will see clear service standards for compliance reviews, and, in appropriate cases, be able to hire a Chief Compliance Officer (CCO) who acts in that role for other, unaffiliated firms. Companies will see more support for raising capital in the public markets, through a confidential prospectus review process prior to announcing an IPO or other financing.
  • Innovative businesses and startups will receive more flexibility in the OSC’s approach to registration, resales in the secondary market, and other regulatory requirements. Individuals applying to be CCO of fintech firms will be assessed based on their qualifications and on their broader business experience, and how the experience aligns with the firm’s business model. Startups seeking financing will see crowdfunding rules harmonized across the country.
  • Large businesses will see duplicative filing requirements eliminated in investment funds and registration rules; delivery of documents, like prospectuses, electronically; and measures to facilitate the registration of multiple CCOs for large registrants with multiple lines of business. Public companies will have the ability to conduct at-the-market offerings without obtaining prior exemptive relief.

The 107 initiatives outlined in the report address 34 underlying concerns identified by staff during the consultation process. The initiatives will address those concerns by clarifying regulatory expectations, improving technology, enhancing coordination with other regulators, and providing greater support during regulatory interactions.

Review the press release and report on the OSC's website.

IAASB - Assurance Image

ISA 540 (Revised) implementation support: Audit client briefing

Nov 19, 2019

On November 19, 2019, the International Standard on Auditing (ISA) 540 (Revised) Implementation Working Group released an Audit Client Briefing (Briefing) based on the Canadian Auditing Standard (CAS) Audit Client Briefing of the Chartered Professional Accountants of Canada (CPA Canada), published in October 2019 and is used with permission of CPA Canada.

The purpose of this Briefing is to make chief financial officers, other senior management responsible for financial statement preparation, and staff directly involved in determining accounting estimates aware of matters to consider in preparing for the auditor’s requests pertaining to ISA 540 (Revised), Auditing Accounting Estimates and Related Disclosures.

This Briefing provides an overview of:

  • Management’s responsibilities in determining when accounting estimates are needed;
  • Management’s responsibilities regarding the main components of an estimation process; and
  • The impact on management because of changes to the auditor’s responsibilities, including broad questions auditors are likely to ask those involved in the detailed aspects of the estimation process.

This Briefing does not constitute an authoritative pronouncement of the International Auditing and Assurance Standards Board (IAASB), nor does it amend, extend or override the ISAs or other of the IAASB’s International Standards. It is not meant to be exhaustive and reading this Briefing is not a substitute for reading the ISAs.

Review the press release and Briefing on the IAASB's website.

IFRS - IASB Image

Summary of the October 2019 ASAF meeting now available

Nov 18, 2019

On November 18, 2019, the International Accounting Standards Board (IASB) staff published a summary of the Accounting Standards Advisory Forum (ASAF) meeting held in London on October 3, 2019.

The topics covered during the meeting were the following (numbers in brackets are ref­er­ences to the cor­re­spond­ing para­graphs of the summary):

  • Financial instruments with characteristics of equity (1–7): The ASAF discussed the various project alternatives and were supportive of the IASB’s decision to make clarifying amendments to IAS 32. Several members also expressed that a fundamental review to develop a new approach to distinguishing financial liabilities from equity is warranted.
  • Dynamic risk management (8–16): The ASAF was given an update on the dynamic risk management project and provided feedback on how to perform an outreach on the core version of the DRM model.
  • IBOR reform and its effects on financial reporting (17–22): The ASAF was given an update on the IBOR reform project and provided feedback on potential accounting issues to be considered during the project’s Phase II.
  • Disclosure initiative — Accounting policy disclosure (23–30):  The ASAF provided preliminary views on Exposure Draft, Disclosure of Accounting Policies.
  • Agenda planning and 2020 Agenda Consultation (31–38) — The ASAF discussed the proposed agenda for its December 2019 meeting and the Request for Information for the 2020 Agenda Consultation.
  • Accounting policies and accounting estimates (39–43): The ASAF discussed KASB’s research project A Revisit to the Definition of Accounting Estimates.

Review the full summary on the IASB's website.

IAASB - Assurance Image

Deloitte Canada's Julie Corden appointed to the IAASB

Nov 18, 2019

On November 18, 2019, the International Auditing & Assurance Standards Board (IAASB) announced their new appointments and re-appointments.

"It is a pleasure to welcome Ms. Almond, Ms. Jackson, and Ms. Corden, now in a permanent capacity, to the International Auditing and Assurance Standards Board.  I look forward to the diverse perspectives they will bring to our group of passionate, dedicated volunteers.  I am also delighted that Fiona Campbell will serve as Deputy Chair for another year," said Tom Seidenstein, IAASB Chair.  " I want to thank Karin French and Marek Grabowski for their steadfast service to our board.  Their contributions were invaluable, and we are grateful for their dedication and commitment".

Review the press release on the IAASB's website.

IESBA (International Ethics Standards Board for Accountants) (lt gray) Image

IAASB seeks public comment on exposure draft of conforming amendments to the international standards as a result of the revised IESBA Code

Nov 15, 2019

On November 15, 2019, the International Auditing and Assurance Standards Board (IAASB) released an Exposure Draft focused on conforming amendments to the International Standards as a result of the revised International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code). Comments are requested by January 10, 2020.

The project aims to align the IAASB’s International Standards with the revisions to the IESBA Code by way of conforming amendments, thus ensuring that the IAASB's International Standards can continue to be applied together with the IESBA Code.

This project falls under the umbrella of IAASB-IESBA coordination, a strategic commitment of the two Boards, and builds on their overarching commitment for enhanced connectivity and coordination to better serve the public interest.

Review the press release and Exposure Draft on the IESBA's website.

Securities - CSA Image

Canadian securities regulators outline corporate governance disclosure expectations for cannabis issuers

Nov 12, 2019

On November 12, 2019, the securities regulatory authorities in Ontario, British Columbia, Quebec, New Brunswick, Saskatchewan, Manitoba and Nova Scotia (the participating jurisdictions) published guidance to help cannabis issuers strengthen their governance disclosures, including disclosure of financial interests in significant corporate transactions.

The cannabis industry has experienced significant growth, along with merger and acquisition transactions (M&A Transactions), over the past few years. As the market has expanded, many cannabis issuers and their directors and executive officers have participated in the financing of other cannabis issuers, resulting in higher than usual crossover of financial interests. These interests may include overlapping debt and equity, or other business relationships. Staff in the participating jurisdictions have found instances where the quality of cannabis issuers’ disclosure in this area can be improved.

While the guidance is intended for cannabis issuers, all reporting issuers, especially issuers in other emerging growth industries, should ensure that governance disclosures address potential conflicts of interests. CSA staff will continue to monitor these areas. 

The CSA’s guidance can be found in Multilateral Staff Notice 51-359 Corporate Governance Related Disclosure Expectations for Reporting Issuers in the Cannabis Industry.

Review the press release on the CSA's website and the Multilateral Staff Notice on the participating jurisdictions' website.

AASB Image

Update – AASB expands key audit matter reporting

Nov 08, 2019

On November 8, 2019, the Auditing and Assurance Standards Board (AASB) released an update following the feedback it received on its Exposure Draft, Communication of Key Audit Matters in the Auditor’s Report.

After reviewing the feedback received, the AASB agreed to require key audit matter reporting for other listed entities, excluding listed entities required to comply with National Instrument 81-106.

Review the update on the AASB's website.

CPAB - Assurance Image

Auditing in the crypto-asset sector

Nov 07, 2019

On November 7, 2019, the Canadian Public Accountability Board (CPAB) released its 2019 inspections insights on auditing in the crypto-asset sector. There are currently 48 Canadian reporting issuers with activities in the crypto-asset sector. Those activities include a variety of crypto-asset trading strategies and crypto-asset mining.

They found significant findings (deficiencies in the application of generally accepted auditing standards that could result in a restatement of the company’s financials) in seven of eight audit files inspected to date. Remediation remains in progress for some of those audits.

The five most common deficiencies include:

  1. Auditors did not have an adequate understanding of audit risks when they designed their audit approaches.
  2. Auditors relied on information obtained from crypto-exchanges and custodians without evaluating the reliability of that information.
  3. For entities that hold self-custodied crypto-assets, auditors did not obtain sufficient evidence to support the entities’ ownership claims to those assets.
  4. Auditors did not evaluate the reliability of information obtained from blockchains.
  5. For entities engaged in crypto-asset mining activities, auditors that limited their audit work to vouching crypto-assets received to the blockchain did not obtain sufficient audit evidence.

Review the publication on the CPAB's website.

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