The Core Principles are a set of global supervisory standards, setting a crucial basis for governments and regulators to draw on when establishing or revising their own rules and regulations. Their revision, which reflects an extensive consultation process, marks a significant development in banking supervision.

The Core Principles have explicitly included three new topics: operational resilience, business model sustainability, and climate-related financial risks. These additions underscore a global consensus on the significance of these risks and the need for supervisors to take proactive measures.

Recognizing the importance of sound business strategies, the revised Core Principles also include the assessment of business model sustainability, aiming to foster banks' long-term viability. The update also addresses the systemic risks posed by climate change. Recognizing the urgency of climate-related threats, supervisors now have explicit mandates to assess and mitigate these risks in their supervisory practices.

By integrating these three new pillars of action into the supervisory toolkit, regulators aim to build a more resilient and sustainable banking system capable of navigating the challenges of the 21^st century.

Access the press release on the BIS’s website.

Within the SWP, the IESBA has identified two high-priority strategic areas of focus, namely:

• Accounting firm culture and governance, which seeks to identify potential actions the IESBA might take within or outside the Code to respond to the persistent high-profile cases of unethical behaviour in accounting firms.
• Exploring the opportunity to extend the impact of the Code beyond the accountancy profession to a broader array of individuals who perform similar work as professional accountants, building on its current project to develop profession-agnostic ethics, including independence, standards for all sustainability assurance practitioners. Among other matters, this will include a new workstream to explore expanding the scope and applicability of the Code beyond professional accountants to all preparers of sustainability information.

The SWP also emphasizes the need to monitor the impact of rapid technological changes on the services provided by professional accountants, determining whether further standard-setting or actions are required in the public interest. Furthermore, it underscores the commitment to closely collaborate with the International Auditing and Assurance Standards Board (IAASB) and other standard-setters to ensure seamless interoperability between different standards.

The SWP represents the culmination of careful assessment of market developments and thoughtful consideration of stakeholder feedback from the IESBA’s extensive outreach and consultation activities over a two-year period.

Access the press release and the SWP on the IESBA’s website.

The report states, “More countries use AI, including machine learning, to understand current and future compliance risks, sharpen risk management, and develop intervention actions. 82.5% of countries surveyed in the OECD’s Tax Administration 2023 report already use AI for risk assessments and detecting fraud in their tax systems or are in the implementation phase for future use.” Jurisdictions also use AI to support taxpayer compliance and reduce taxpayer burdens. However, the report acknowledges that certain risks and challenges remain in using AI to counter fraud and corruption in tax systems.

A replay also is available of a session from the 2024 OECD Global Anti-Corruption and Integrity Forum that covered some examples of national approaches to tax transparency, critical challenges in developing and implementing anti-corruption strategies, and the role of international collaboration in combating tax fraud and illicit financial flows.

Access the press release and the report on the OECD’s website.

It aims to protect fundamental rights, democracy, the rule of law and environmental sustainability from high-risk AI, while boosting innovation and establishing Europe as a leader in the field. The regulation establishes obligations for AI based on its potential risks and level of impact.

The new rules ban certain AI applications that threaten citizens’ rights, including biometric categorization systems based on sensitive characteristics and untargeted scraping of facial images from the internet or CCTV footage to create facial recognition databases.

The regulation is still subject to a final lawyer-linguist check and is expected to be finally adopted before the end of the legislature. The law also needs to be formally endorsed by the Council. It will enter into force twenty days after its publication in the Official Journal and be fully applicable 24 months after its entry into force, except for bans on prohibited practices, which will apply six months after the entry into force date.

Access the press release on the EU’s website.

One report provides an update on developments in international tax reform, while the other report provides an update on the work of the Inclusive Forum on Carbon Mitigation Approaches (IFMCA).

The report on international tax reform covers the following topics:

• The work on a two-pillar solution to address the tax challenges arising from the digitalization and globalization of the economy.
• The implementation of the BEPSminimum standards
• Tax transparency
• Inequality and progressivity of tax systems
• Tax and development
• Tax and crime
• Indirect tax

The IFCMA brings together government experts in climate, tax, and economic policy from developing, emerging, and developed economies. The report on the IFCMA provides details on its work, membership, governance, and forthcoming deliverables.

Access the news on the Deloitte’s website.

This framework would be designed to provide principles-based guidance for organizations of all sizes and types, helping them build effective governance practices. Both COSO and NACD recognize the increasing need for strong governance, as it plays a crucial role in shaping ethical business practices, ensuring stakeholder alignment, and driving long-term sustainability.

The CGF is intended to be used by:

• public companies seeking to self-assess and enhance governance practices, and by start-up businesses desiring to build up their governance practices and processes;
• private organizations seeking best practices or as part of readiness activities related to initial public offering efforts; and
• external auditors, internal auditors, rating agencies, investors, listing agencies and/or regulators finding such a framework useful in assessing governance practices at related entities.

Organizations intending to respond to the RFP must provide a Notice of Intent to Respond by February 20, 2024.

Access the press release on the NACD’s website.

The Government's new guidance will allow companies to determine more accurately:

• whether they will be required to complete and file the report
• what to include in the report and what information will be accepted, and
• how to package the report and make it available to the public.

Of interest, the Government of Canada published an online questionnaire that is mandatory but may also assist in the preparation of the report itself. The questionnaire directs companies to answer specific questions about their business which reflect many of the report's legislative content requirements.

The Guidance clearly indicates that no industry can be assumed to be entirely free of forced labour or child labour risks. The Government does not want companies to certify that they or their supply chains are "risk-free" but rather are asking companies to demonstrate steps they have taken to identify and address those risks. Some industries have higher risks than others and those higher risk industries should take greater care in preparing this report because it may have knock-on impacts on enforcement efforts in the future. However, even those industries without previously demonstrated risks of forced labour in their supply chains should take this report seriously.

Access the Guidance on the Government of Canada website

The Q&A publication is designed to highlight, illustrate, or explain aspects of the revisions in the Code and is intended to complement the Basis for Conclusions for the final pronouncement. It will assist firms, national standards setters, and professional accountancy organizations in adopting and/or implementing the revisions. The Q&As will also assist regulators and audit oversight bodies, the corporate governance community, investors, preparers, educational bodies or institutions, and other stakeholders in understanding the revisions to the Code. 

The development of the Q&As has been informed by the IESBA’s extensive discussions and consultations with a wide range of stakeholders and the IESBA’s own deliberations during the development and finalization of the pronouncement.

The pronouncement is coming into effect for audits of financial statements and group financial statements for periods beginning on or after December 15, 2023, with early adoption permitted.

Access the Staff Q&A on the IESBA website.

The draft Integrity and Security Guideline provides clarity on what integrity and security entail for financial institutions, how they relate to one another, and where they are already reflected in our current guidelines. Enhanced Guideline E-21 sets expectations for operational resilience. It modernizes OSFI’s guidance on operational risk management, including new expectations for business continuity management, crisis management, change management, and data risk management.

The two consultations were announced at the same time given that operational resilience and operational risk management contribute to the integrity and security of financial institutions.

The feedback on the Integrity and Security Guideline is expected by November 24, 2023 while feedback on Guideline E-21 is expected by February 5, 2023.

Review the Draft Integrity and Security Guideline and Guideline E-21 on the OSFI website.

Here are some excerpts from the speech:

“These new changes to our mandate charged us with:

• Supervising federally regulated financial institutions (FRFIs) to determine whether they have adequate policies and procedures to protect themselves against threats to their integrity or security, including foreign interference
• As part of this supervision, examining FRFIs at least annually to determine whether they have adequate policies and procedures to protect themselves against threats to their integrity or security, including foreign interference
• And reporting to the Minister of Finance at least annually on these examinations.

Our role is to ensure federally regulated financial institutions manage risk responsibly, and our new mandate will be to determine whether the policies and procedures they put in place are adequate to protect themselves against those types of threats.”

Re­view the speech on OFSI's web­site.