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October 2020

AcSB endorses IASB’s Amendments to IAS 1

Oct 01, 2020

On October 1, 2020, the Accounting Standards Board (AcSB) endorsed the IASB’s amendment to defer effective date of Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

The amendment, which defers the effective date of Classification of Liabilities as Current or Non-current (Amendments to IAS 1) by one year, is now in Part I of the CPA Canada Handbook. The amendments to IAS 1 are effective for annual reporting periods beginning on or after January 1, 2023. Earlier application is permitted.

Review the effective dates for new standards on the AcSB's website.

AcSB Response – General Presentation and Disclosures

Sep 30, 2020

On September 30, 2020, the Accounting Standards Board (AcSB) responded to the IASB’s Exposure Draft, issued in December 2019.

The IASB’s proposals take significant steps forward toward enhancing the relevance of financial statements. The AcSB’s letter encourages the IASB to consider the balance between users’ needs for better information about financial performance, and the effort and level of professional judgment required of preparers to generate that information.

Review the letter on the IASB's website.

Article on the impact COVID-19 might have on applying IFRSs

Oct 28, 2020

On October 28, 2020, the International Accounting Standards Board (IASB) released an article, by IASB Board member Mary Tokar and technical staff member Sid Kumar, that provides an overview of the key financial reporting considerations associated with COVID-19.

The article builds on a panel discussion at the IFRS Foundation Virtual Conference on 28 September 2020, which focused on what entities need to consider when developing assumptions in preparing financial statements in times of heightened uncertainty and what information to disclose about the assumptions used.

Review the press release and In Brief: Applying IFRS Standards in 2020 — impact of covid-19 on the IASB's website.

Chair of the IOSCO Task Force on Sustainable Finance reconfirms that IOSCO stands ready to support global sustainability reporting standards

Oct 28, 2020

On October 28, 2020, the International Organization of Securities Commissions (IOSCO) released an open response to the open letter sent by the CDP, Climate Disclosure Standards Board, Global Reporting Initiative, International Integrated Reporting Council and Sustainability Accounting Standards Board to Erik Thedéen, Chair of the Sustainable Finance Task Force of the IOSCO, on the need to work together to meet the needs of the capital markets as regards global sustainability reporting standards. Mr. Thedéen already acknowledged the letter and responded to it in a speech in September, however, he has now published an open response.

In his response, Mr. Thedéen repeats the April 2020 IOSCO statement that IOSCO is looking to play an important role in the area of sustainability reporting. Commenting once more on the IFRS Foundation sustainability reporting consultation and the statement of intent of CDP, CDSB, GRI, IIRC, and SASB, he notes again that while these initiatives are currently running in parallel, IOSCO is keen to see them come together.

On IOSCO's role and the path forward, Mr. Thedéen reconfirms that IOSCO stands ready to offer support and help. He writes:

As noted, we agree that there is an urgent need to improve the completeness, consistency and comparability of sustainability reporting. Together your joint initiative and that of the IFRS Foundation [...] can set the foundations of a global system architecture that will deliver a more coherent and comprehensive corporate reporting system. [...] We believe that IOSCO is in a unique position to help in this process - just as we did 20 years ago when we endorsed IFRS for use in cross-border offerings and listings and set the foundations of the current three-tier governance structure that the IFRS Foundation enjoys today. We look forward to continuing and deepening our collaboration with your organisations and the IFRS Foundation.

Review the full letter on the IOSCO's website.

FRC guidance on reporting in times of uncertainty

Oct 15, 2020

On October 15, 2020, the Financial Reporting Lab of the UK Financial Reporting Council (FRC) released guidance covering some critical areas of focus for 2020 year-ends.

In view of COVID-19, many companies are facing a challenging year-end. While the uncertainty creates risks for annual reporting it also presents opportunities. The two new guides look at key elements in respect of resources, action, and the future and in respect of going concern, risk, and viability. Both guides:

  • summarize key messages from earlier reports;
  • provide an update on recent developments in corporate reporting;
  • offer some thoughts regarding how corporate reporting can develop; and
  • contain practical examples from reports and presentations released by companies.

Review the COVID-19: Resources, action, the future - a look forward and COVID 19: Going concern, risk, and viability - a look forward on the FRC's website.

FRC publishes discussion paper on the future of corporate reporting

Oct 08, 2020

On October 8, 2020, the UK Financial Reporting Council (FRC) published a discussion paper proposing a future for corporate reporting based on a principles-based framework.

The discussion paper outlines a blueprint for a more agile approach to corporate reporting which challenges existing thinking about how companies can more effectively meet the information needs of investors and other stakeholders.

Proposals include:

  • unbundling the existing purpose, content, and intended audiences of the current annual report by moving to a network of interconnected reports;
  • a new common set of principles that applies to all types of corporate reporting;
  • objective-driven reports that accommodate the interests of a wider group of stakeholders, rather than the perceived needs of a single set of users;
  • embracing the opportunities available through technology to improve the accessibility of corporate reporting; and
  • a model that enables reporting that is flexible and responsive to changing demands and circumstances.

Comments on the discussion paper are invited by February 5, 2021.

Review the discussion paper and related documents on the FRC's website.

IASB publishes proposed IFRS Taxonomy update

Oct 29, 2020

On October 29, 2020, the International Accounting Standards Board (IASB) published PTU/2020/4 "IFRS Taxonomy 2020 — General Improvements and Common Practice — Presentation of information in primary financial statements". Comments are requested by January 5, 2021.

The proposed update includes elements to reflect common reporting practice and new and amended labels to clarify the accounting meaning and intended use of some existing elements.

Review the press release and proposed update on the IASB’s website.

IFRS Foundation Trustee discusses sustainability reporting

Oct 09, 2020

On October 9, 2020, the International Accounting Standards Board (IASB) issued an article by IFRS Foundation Trustee Teresa Ko which discusses the possible roles the IFRS Foundation may have for the development of internationally recognized standards on sustainability reporting.

Specifically, Ms. Ko discussed work done by the European Commission, CFA Institute, five ESG standard-setters, the World Economic Forum, and the IFRS Foundation Trustees towards establishing a common set of non-financial reporting standards. Ms Ko also discussed the new Sustainability Standards Board and the important role it will play in the development of sustainability standards and how the IFRS Foundation can aid in establishing effective synergies with existing financial reporting. She especially noted:

The Trustees of the Foundation are aware of the enormity of the task of developing a global set of sustainability standards. The Trustees are very clear that building on and working with regional initiatives is a ‘must’ in order to achieve global consistency and reduce complexity and hopefully cost too. [...] The new Sustainability Standards Board must develop a structure and culture that seeks to build effective synergies with existing financial reporting. This should give the IFRS Foundation an added advantage in playing a key role in the field of sustainability reporting. It would not be right to emphasise one form of reporting at the expense of another. [...] Approached in this way, everybody would benefit from the useful and globally comparable information and data that would result.

Review the full article on the IASB’s website.

New TCFD status report, additional guidance, public consultation

Oct 29, 2020

On October 29, 2020, the Task Force on Climate-related Financial Disclosures (TCFD) set up by the Financial Stability Board (FSB) to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders published a third status report providing an overview of the extent to which companies in their 2019 reports included information aligned with the core TCFD recommendations published in June 2017.

The TCFD surveyed disclosures of around 1,700 firms from diverse sectors with broad geographical representation (69 countries). It found that:

  • Nearly 60% of the world’s 100 largest public companies support the TCFD, report in line with the TCFD recommendations, or both.
  • Disclosure of climate-related financial information has increased since 2017, but continuing progress is needed.
  • Energy companies and materials and buildings companies lead on disclosure.
  • One in 15 companies reviewed disclosed information on the resilience of its strategy.
  • Asset manager and asset owner reporting to their clients and beneficiaries, respectively, is likely insufficient.

The report also notes that expert users find the impact of climate change on a company’s business and strategy as the “most useful” for decision-making, an insight which might provide a road map for preparers.

The TCFD also published guidance on climate-related scenario analysis for non-financial firms and on integrating climate-related risks into existing risk management processes. Additionally, the TCFD published a public consultation on forward-looking climate metrics for financial firms (with responses due by January 27, 2021).

Review the following additional information on the FSB's website:

SEC amends auditor independence rules

Oct 16, 2020

On October 16, 2020, the Securities and Exchange Commission (SEC) announced that it adopted final amendments to certain auditor independence requirements in Rule 2-01 of Regulation S-X. Informed by decades of staff experience applying the auditor independence framework, the final amendments modernize the rules and more effectively focus the analysis on relationships and services that may pose threats to an auditor’s objectivity and impartiality.

The final amendments reflect updates based on recurring fact patterns that the Commission staff has observed over years of consultations in which certain relationships and services triggered technical independence rule violations without necessarily impairing an auditor’s objectivity and impartiality.  These relationships either triggered non-substantive rule breaches or required potentially time-consuming audit committee review of non-substantive matters, thereby diverting time, attention, and other resources of audit clients, auditors, and audit committees from other investor protection efforts. The final amendments result in auditor independence requirements that will be used to evaluate specific relationships and services, with a focus on protecting investors against threats to the objectivity and impartiality of auditors.

Review the press release and the statements by SEC Chairman Jay Clayton and Commissioners Allison H. Lee and Caroline A. Crenshaw on the SEC’s website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.