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Regulations

SEC names new chief accountant

Jul 03, 2019

On July 3, 2019 the Se­cu­ri­ties Ex­change Com­mis­sion (SEC) appointed Mr. Sagar Teotia as chief accountant in the SEC’s Office of the Chief Accountant.

Mr. Teotia had been serving as the Commission’s acting chief accountant since the departure of Wesley Bricker in June this year. Previously, he has held positions as SEC professional accounting fellow, SEC deputy chief accountant, and partner at Deloitte LLP.

For additional information, see the press release on the SEC’s Web site.

AICPA Survey: Business Executives Say Complex Financial Instruments Continue to Pose Risk

Jul 02, 2019

On July 2, 2019, the Amer­i­can In­sti­tute of CPA’s (AICPA) released the results of a recent survey which indicates that financial instruments are a growing presence on company balance sheets, and business executives say more market awareness is needed to prevent another financial crisis.

When asked about their company financial statements, 59 percent of the CPAs surveyed reported having complex financial instruments such as mortgage-backed securities, interest rate swaps or other derivatives on their company balance sheets. 

Of those respondents with complex financial instruments on their books:

  • 69 percent expect financial instruments to become more complex (57 percent slightly more complex, 12 percent substantially more complex) over the next one to three years, compared with 1 percent who expect them to decrease in complexity.
  • 53 percent believe there is not enough market awareness of complex financial instruments to prevent a financial crisis, compared with only 22 percent who believe there is adequate awareness.
  • 55 percent said they are concerned about the valuation of derivatives with 6 percent reporting significant concern and 49 percent reporting slight or moderate concern.
  • 56 percent said it would be easier to determine the value of complex financial instruments if they were measured and reported on a consistent and transparent basis.

Complex financial instruments historically have been difficult to value. That difficulty is seen as a major cause of the financial crisis that lead to the recession of 2008. The derivatives market exceeded $594 trillion in 2018. More than a quarter (28 percent) of respondents said they expect financial instruments to take a larger percentage of their balance sheets over the next one to three years, while only 15 percent see that decreasing.

For more in­for­ma­tion, see the press release on the AICPA’s Web site.

OSC takes action to reduce burden for investment fund managers

Jun 27, 2019

On June 27, 2019, the On­tario Se­cu­ri­ties Com­mis­sion (OSC) an­nounced that, effective immediately, it will no longer require investment fund managers of pooled funds to apply for approval to act as trustees. As registrants, investment fund managers are capable of acting as trustees and are already subject to a securities regulatory framework for safeguarding the assets of pooled funds.

Revised Approval 81-901 Mutual Fund Trusts: Approval of Trustees Under Clause 213(3)(b) of the Loan and Trust Corporations Act  which sets out this change, can be found on the OSC’s website. The change will come into effect immediately. 

Re­view the press re­lease on the OSC's web­site.

ASC consults on energizing Alberta’s capital market

Jun 27, 2019

On June 27, 2019, the Al­berta Se­cu­ri­ties Com­mis­sion (ASC) published ASC Consultation Paper 11-701, Energizing Alberta’s Capital Market. This consultation is seeking input on steps the ASC can take to foster a vibrant public and private capital market in Alberta while protecting investors.

The Consultation Paper summarizes research and input from preliminary consultations held to date, which were undertaken to help the ASC better understand the changes occurring in the Alberta capital market and the challenges being faced. It also includes a number of preliminary ideas designed to elicit feedback from market participants on enhancements that can be made and red tape that can be reduced. Comments and feedback should be submitted by September 20, 2019.

For further details of this initiative, refer to the press release on the ASC’s website.

IESBA Meeting Highlights June 17-19, 2019

Jun 24, 2019

On June 24, 2019, the In­ter­na­tional Ethics Stan­dards Board for Ac­coun­tants (IESBA) re­leased the high­lights of its June 17-19, 2019 meet­ing.

The Agenda was as follows:

  • Introduction
  • Highlights & Key Developments
  • Role & Mindset
  • Non-Assurance Services
  • Fees
  • eCode
  • Chairman’s Final Thoughts
  • Closing Remarks

Re­view the high­lights and the pod­cast on the IESBA's web­site.

IESBA Alert re the June 2019 Launch of its eCode

May 31, 2019

On May 31, 2019, the In­ter­na­tional Ethics Stan­dards Board for Ac­coun­tants (IESBA) re­leased an alert regarding the proposed launch on June 26, 2019 of its eCode—an innovative digital product that offers professional accountants a new way to engage with the International Code of Ethics for Professional Accountants (including International Independence Standards).

The alert also advises that the IESBA will hold a 30-minute webinar on Wednesday, June 12, 2019 at which IESBA Member Brian Friedrich will explain IESBA’s vision for the eCode and provide a quick walkthrough to demonstrate the eCode’s structure, key features and functionalities.

Re­view the press re­lease on the IESBA's web­site.

International community agrees on a road map for resolving the tax challenges arising from digitalization of the economy

May 31, 2019

On May 31, 2019, the Or­gan­i­za­tion for Eco­nomic Co-op­er­a­tion and De­vel­op­ment (OECD) announced that the international community has agreed on a road map for resolving the tax challenges arising from the digitalization of the economy, and committed to continue working toward a consensus-based long-term solution by the end of 2020.

The 129 members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) adopted a Programme of Work laying out a process for reaching a new global agreement for taxing multinational enterprises. The document, which calls for intensifying international discussions around two main pillars, was approved during the May 28-29, 2019 plenary meeting of the Inclusive Framework. It will be presented by OECD Secretary-General Angel Gurría to G20 Finance Ministers for endorsement during their June 8-9, 2019 ministerial meeting in Fukuoka, Japan.

The Programme of Work will explore the technical issues to be resolved through the two main pillars. The first pillar will explore potential solutions for determining where tax should be paid and on what basis ("nexus"), as well as what portion of profits could or should be taxed in the jurisdictions where clients or users are located ("profit allocation"). The second pillar will explore the design of a system to ensure that multinational enterprises – in the digital economy and beyond – pay a minimum level of tax. This pillar would provide countries with a new tool to protect their tax base from profit shifting to low/no-tax jurisdictions, and is intended to address remaining issues identified by the OECD/G20 BEPS initiative.

Re­view the press re­lease  on the OECD's web­site.

TCFD Implementation Guide

May 23, 2019

In May 2019, the Sustainability Accounting Standards Board (SASB) and the Climate Disclosure Standards Board (CDSB) have jointly released the TCFD Implementation Guide, which offers an effective solution for organizations around the world, in all industries and sectors, drawing on both organizations’ well-established reporting frameworks to provide companies with how-to guidance.

The guide is intended to help companies to more effectively take the TCFD recommendations from principles to practice, to offer greater insight into the material climate-related financial risks and opportunities they face, equipping investors with reliable, comparable, decision-useful information, and enhancing the resilience and stability of global capital markets to drive sustainable, long-term economic development.

Review the guide on the SASB's website.

Nasdaq launches global environmental, social and governance reporting guide for companies

May 15, 2019

On May 15, 2019, the United Nation's Sustainable Stock Exchanges (SSE) launched of its new global ESG reporting guide for public and private companies.

The 2019 ESG Reporting Guide 2.0 includes the latest third-party reporting methodologies widely adopted by the industry, and aims to help companies navigate the evolving standards on ESG data disclosure, regardless of geography or market capitalization.

Review the press release on the SSE's website.

Proactive defense for tomorrow’s security demands

May 13, 2019

On May 13, 2019, the National Association of Corporate Directors (NACD) published an article on how the digital age brings many benefits—but opening the door to cyberattacks is not one of them.

According to the Accenture Ninth Annual Cost of Cybercrime Report, in 2018, the average annual cost of cybercrime in the United States was $27.37 million, up more than 25 percent on the year before. Although a relatively modern phenomenon, cybercrime is increasing both in numbers and in scope. The average number of breaches in the United States was 178 in 2018, up 14 percent from the year before, with malware, botnet attacks, and malicious insider incidents all up in 2018. Whatever the industry, these are worrying trends. But aside from the costs needed to resolve cybercrime, there is another far more dangerous consequence—the erosion of trust.

Review the full article on the NACD's website.

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