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Regulations

IESBA releases technology initiative update

Apr 19, 2021

On April 19, 2021, the International Ethics Standards Board for Accountants (IESBA) released an update on its technology initiative.

In March 2021, the IESBA reflected on the progress made to date on its technology Initiative, and considered next steps and timing, also recognizing the increased burdens stakeholders have shouldered as a result of the pandemic.

Review the update on the IESBA's website.

IESBA launches post-implementation review of long association international independence standard

Apr 14, 2021

On April 14, 2021, the International Ethics Standards Board for Accountants' (IESBA) Long Association Post-Implementation Review (LAPIR) Working Group released a questionnaire seeking stakeholder feedback on key matters relating to Phase 1 of the LAPIR. Responses are required by May 31, 2021.

The questionnaire forms part of the Working Group’s information gathering and will help inform the IESBA’s review of the implementation of the five-year cooling-off requirement for engagement partners on audits of public interest entities. This review is being undertaken before the “jurisdictional provision” in the standard expires for audits of financial statements for periods beginning on or after December 15, 2023. The jurisdictional provision permits jurisdictions to apply a cooling-off period less than five years subject to specified conditions.

Review the press release and questionnaire on the IESBA's website.

IESBA initiates first phase of the post-implementation review of its long association international independence standard

Apr 01, 2021

On April 1, 2021, the International Ethics Standards Board for Accountants (IESBA) released an update on its Long Association Post-Implementation Review (LAPIR).

This update provides an overview of Phase 1 of the LAPIR which will review the implementation of a specific partner rotation provision for engagement partners around the world with respect to audits of public interest entities. Phase 1 commences with information gathering activities. Phase 2 is due to commence in Q2 2023.

Review the press release and update on the IESBA's website.

World Economic Forum calls for global standardization and coordination in ESG reporting

Mar 26, 2021

On March 26, 2021, the World Economic Forum (WEF) released a letter to fellow CEOs calling for support for global ESG reporting standards as the private sector could only make its full contribution to creating a sustainable society through global standards.

The letter notes the developments of the last few months beginning with the WEF publication Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation, then citing the IFRS Foundation consultation on setting up a global sustainability standards board and the statement of intent of CDP, CDSB, GRI, IIRC, and SASB to work together towards a comprehensive corporate reporting system.

The letter states that the same global standardisation and coordination as is already in place for financial reporting is needed for ESG reporting as well so that that companies of any industry or country are comparable and can be held accountable to investors. The letter outlines three steps for achieving this:

  1. An independent global standard setting body should develop ESG standards that can be adopted worldwide. The letter notes that the IFRS Foundation is well positioned to do this and that the WEF supports the proposal to establish a Sustainability Standards Board (SSB) that would sit alongside the International Accounting Standards Board (IASB).
  2. For the standards to be enforced in individual capital markets, regulatory authorities must endorse their use. The letter cites the support of the International Organization of Securities Commissions (IOSCO) for the IFRS Foundation initiative and the suggested "building blocks" approach and welcomes the statements.
  3. For the IFRS Foundation standard setting process to best succeed, it should build on the main reporting initiatives already in use. The letter points at the work of CDP, CDSB, GRI, IIRC, and SASB and notes that the WEF's work has included helping to facilitate the collaboration among the five organisations and that the WEF looks forward to working even more closely with them in support of creating sustainability reporting standards through the SSB.

The WEF, which is also a member of the recently announced IFRS Foundation sustainability working group, concludes its letter by stating:

These, then, are the steps we need to complete to get to system change on ESG metrics. We support this process and the organizations that are working to achieve it. Concretely, we look forward to supporting the IFRS’s Sustainability Standards Board, as appropriate, during its establishment and as it delivers on its mandate. We will promote opportunities for high-level public-private dialogue to strengthen strategic alignment on these objectives and will mobilize corporate support at the chief executive level in the global business community. We also encourage capital market regulatory bodies to work with the IFRS Foundation and IOSCO to support the Sustainability Standards Board.

Review the full letter on the WEF’s website.

Financial targets don’t motivate employees

Mar 18, 2021

It’s natural for leaders to emphasize the importance of hitting financial targets but making numbers the centerpiece of your leadership narrative is a costly mistake. Financial results are an outcome, they’re not a root driver for employee performance, and a growing body of evidence tells us that overemphasizing financial targets erodes morale and undermines long-term strategy.

Leaders looking to motivate employees must instead use their time with their teams to build belief in the organizational purpose, the intrinsic value of the employees’ work, and the impact they have on customers, and each other. To do so, the authors recommend three tactics: 1) Reevaluate how you use your leadership airtime; 2) Discuss your customers with specificity and emotion; and 3) Resist the urge to widely share every measure of financial performance.

Review the full article on the Harvard Business Review's website.

Public input welcomed on climate change disclosures

Mar 15, 2021

On March 15, 2021, the Securities and Exchange Commission (SEC) issued a statement from Acting SEC Chair, Allison Herren Lee, in which she requests for public input from investors, registrants, and other market participants on climate change disclosure.

She encourages commenters to submit empirical data and other information in support of their comments. Original data from respondents, including academics, data providers, and other organizations, may assist in assessing the materiality of climate-related disclosures, and the costs and benefits of different regulatory approaches to climate disclosure.

Review the statement on the SEC's website.

IESBA releases additional guidance on its proposed definition of a public interest entity

Mar 12, 2021

On March 12, 2021, the International Ethics Standards Board for Accountants (IESBA) released a new staff publication providing additional context to the Board’s recently proposed revisions to the definition of a public interest entity (PIE).

This staff publication supplements the guidance material in the explanatory memorandum of the Exposure Draft "Proposed Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code" (PIE ED), which was released in January.

It will assist local regulators, national standard setters or other relevant local bodies in considering and planning adoption of the revised PIE definition when finalized and issued by the IESBA. The IESBA recognizes that there may be refinements to the proposals as a result of the comments received on exposure.

Review the press release and publication on the IESBA's website.

SEC announces enforcement task force focused on climate and ESG issues

Mar 04, 2021

On March 4, 2021, the Securities and Exchange Commission announced the creation of a Climate and ESG Task Force in the Division of Enforcement.

Consistent with increasing investor focus and reliance on climate and ESG-related disclosure and investment, the Climate and ESG Task Force will develop initiatives to proactively identify ESG-related misconduct.  The task force will also coordinate the effective use of Division resources, including through the use of sophisticated data analysis to mine and assess information across registrants, to identify potential violations.

The initial focus will be to identify any material gaps or misstatements in issuers’ disclosure of climate risks under existing rules.  The task force will also analyze disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies.

Review the press release on the SEC's website.

SASB advances structured ESG disclosure via issuing SASB XBRL Taxonomy

Mar 02, 2021

On March 2, 2021, the Sustainability Accounting Standards Board (SASB) announced that the SASB eXtensible Business Reporting Language (XBRL) taxonomy is available for public review. Comments are requested by May 3, 2021.

XBRL is the open international standard for digital business reporting, managed by a global not for profit consortium, XBRL International. The XML standard is used for tagging business and financial reports to increase the transparency and accessibility of business information by using a uniform format.

Public comment period details:

SASB seeks public feedback on the draft taxonomy to ensure that it is useful both for data producers as well as data consumers. They encourage you to also consider the following questions as you consider providing a public comment:

  1. Do you foresee any issues with the taxonomy being used globally across jurisdictions?
  2. Do you have any recommendations to enable wider adoption of XBRL-based SASB reporting?
  3. Do you agree with the recommendation of anchoring that we have proposed for taxonomy extension?
  4. Should the SASB XBRL taxonomy use elements from GAAP/IFRS taxonomies where applicable?
  5. Should the SASB XBRL taxonomy use typed dimensions?
  6. Has the taxonomy adequately addressed tagging of TCFD disclosures?

Review the press release and SASB XBRL Taxonomy on the SASB's website.

SEC Chair statement on the review of climate-related disclosure

Feb 24, 2021

On February 24, 2021, the Securities and Exchange Commission (SEC) issued a statement from Acting SEC Chair, Allison Herren Lee, in which she directed Corp Fin to take a hard look at companies’ climate change disclosures.

She is directing the Division of Corporation Finance to enhance its focus on climate-related disclosure in public company filings. The Commission in 2010 provided guidance to public companies regarding existing disclosure requirements as they apply to climate change matters.

As part of its enhanced focus in this area, the staff will review the extent to which public companies address the topics identified in the 2010 guidance, assess compliance with disclosure obligations under the federal securities laws, engage with public companies on these issues, and absorb critical lessons on how the market is currently managing climate-related risks. The staff will use insights from this work to begin updating the 2010 guidance to take into account developments in the last decade.

Review the statement on the SEC's website and the 2018 GAO report on the US Government Accountability Office'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.