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IESBA Meeting Highlights December 12 - 15, 2016

Dec 30, 2016

In December 2016, the International Ethics Standards Board for Accountants (IESBA) released the highlights of its December 12 - 15, 2016.

Discussion points included:

  • Professional Skepticism
  • Structure of the Code
  • Safeguards
  • Part C of the Code
  • Fees
  • Non-Compliance or Suspected Non-Compliance with Laws and Regulations (NOCLAR)
  • Long Association
  • Strategy Survey

Review the highlights on the IESBA's Web site.

IESBA Meeting Highlights June 27 - 29, 2016

Jul 05, 2016

On July 5, 2016, the International Ethics Standards Board for Accountants (IESBA) released the highlights of its June 27 - 29, 2016 meeting.

Discussion points included:

  • Structure of the Code
  • Safeguards
  • Professional Skepticism
  • Non-Compliance or Suspected Non-Compliance with Laws and Regulations (NOCLAR)
  • Long Association
  • Review of Part C of the Code – Phase I

Review the highlights on the IESBA's Web site.

IFAC report on how accountancy can contribute to the UN's Sustainable Development Goals

Nov 09, 2016

On November 9, 2016, the International Federation of Accountants (IFAC) published a report "The 2030 Agenda for Sustainable Development: A Snapshot of the Accountancy Profession’s Contribution" that highlights the importance of the Sustainable Development Goals to business and to the profession and considers how accountancy contributes to eight specific goals.

The report features existing activities and initiatives within the profession that support these goals and considers questions for professional accountancy organizations and professional accountants to consider.

The eight goals identified are:

  • Goal 4: Quality education
  • Goal 5: Gender equality
  • Goal 8: Decent work and economic growth
  • Goal 9: Industry, innovation, infrastructure
  • Goal 12: Responsible consumption and production
  • Goal 13: Climate action
  • Goal 16: Peace and justice and strong institutions
  • Goal 17: Partnership for the goals

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

Investors want and need better disclosure of material sustainability-related information in SEC filings

Sep 13, 2016

On September 13, 2016, the Sustainability Accounting Standards Board (SASB) published an analysis of the comment letters the Securities and Exchange Commission (SEC) has received on its Concept Release: Business and Financial Disclosure Required by Regulation S-K published in April 2016.

The SEC received over 276 non-form comment letters in response to the Concept Release, with a strong showing of support for improved disclosure of sustainability-related information in SEC filings. Two-thirds of comment letters address sustainability-related concerns. Most of these letters support improved sustainability-related disclosures in SEC filings; for many commenters this was the only matter of concern.

In addition to climate change, sustainability-related areas of interest noted in comments to the SEC include a vast array of issues, including but not limited to: land tenure rights; water (access to, stewardship of); political spending and lobbying; gender pay equity; diversity; human rights; human capital management; international tax payments; sustainable palm oil; forestry, and; supply chain management.

The report is available on the SASB's Website.


Life underground

Dec 01, 2016

On December 1, 2016, CPA Canada released an article by Yan Barcelo, a journalist in Montreal, that discusses the shadow economy. Nobody knows the actual size, and estimates vary widely. But what’s certain is that it is a form of tax evasion.

In the article, Mr. Barcelo writes that housecleaning, though deeply embedded in the underground economy (UE), is but a small fraction of the UE whole. The major sectors are residential construction (28% of the total UE in 2012), finance, insurance, real estate, rental, leasing and holding companies (or FIRE, 13%), retail trade (13%) and accommodation and food services (12%).

How big is the UE? No one seems to agree on a number, and evaluations vary widely — if not wildly. The basic evaluation is from StatsCan, which places it at $45.6 billion in 2013, or about 2.4% of GDP (approximately $1.8 trillion). Other studies throw in higher numbers. Analyzing retrospectively the years 1998 and 2004, a 2010 Bank of Canada study rates the amount of underreported income at between 14% and 19% of GDP.

Review the article on the CPA Canada's website.

Ontario introduces cap-and-trade system

May 31, 2016

In May 2016, the Climate Change Mitigation and Low-carbon Economy Act (Act) was recently passed by the Ontario legislature. This Act introduces the new cap-and-trade system for Ontario. The corresponding Ontario Regulation 144/16 (the Regulation) setting out the details how cap and trade will be implemented has been filed and is set to come into force on July 1, 2016. The province anticipates the first auction under the new system will be held in March 2017.

While the Act as passed is very similar to the earlier version, one of the key changes will be enhanced accountability and public reporting on the cap-and-trade proceeds. For instance, the money raised will go to a Greenhouse Gas Reduction Account to invest in programs that reduce greenhouse gas emissions, and the minister is now required to make a report available to the public each year on initiatives that are funded from the Greenhouse Gas Reduction Account.

Review the Act and the article on the Norton Rose Fulbright's Web site.

Patchwork Regulation Threatens Global Growth and Stability

Feb 03, 2016

On February 3, 2016, the International Federation of Accountants (IFAC) issued a report calling for political leaders and governments around the world to follow ten principles for consistent, high-quality global regulation, to aid global economic growth.

While business and finance are increasingly global, the report warns that important regulation is not. Instead, it is frequently focused on national interests, which can create barriers and impediments to inclusive growth and jeopardize global financial stability.

The ten principles for high quality financial regulation state that regulation needs to be evidence-based, proportionate, appropriately resourced, collaboratively developed/implemented, consistent, subject to active oversight, systematically reviewed, have clear objectives, and be properly targeted and enforced to address intended issues.

Please click to access the report From Crisis to Confidence: A Call for Consistent, High-Quality Global Regulation and a corresponding press release on the IFAC's Web site.

Quick overview of key attributes and approaches to reporting business models

Dec 09, 2016

In October 2016, the UK Financial Reporting Council's (FRC) Financial Reporting Lab published a report on business model reporting, which provides valuable insight for companies on the importance of business model information to investors and the type of information they are seeking. The findings have now been condensed into a single page graphic overview.

The UK Strategic Report Regulations, applicable for periods ending on or after September 30, 2013, introduced a requirement for quoted companies to disclose their business model. This brought a requirement to disclose the business model into law for the first time, having been required under the UK Corporate Governance Code since 2010 (on a ‘comply or explain’ basis), and is seen as having codified common market practice.

The new EU Directive on Disclosure of Non-Financial and Diversity Information, expected to come into effect for reporting years commencing on or after January 1, 2017, will also introduce the requirement for companies across Europe, within the scope of the Directive, to disclose their business models. Companies across the EU may find this Lab report helpful as they consider their disclosures.

No definition of business model is provided in either the UK regulations or the EU Directive, and no commonly agreed definition currently exists in academic research or business literature. In practice, discussions on business model often drift into strategy, with the lines between them blurred. At the request of the then Department for Business, Innovation and Skills (BIS), the FRC published non-mandatory Guidance on the Strategic Report in June 2014 which recommends the following information be described in the business model disclosure:

  • how the entity generates or preserves value over the longer term;
  • how the entity captures that value;
  • what the entity does and why it does it;
  • what makes the entity different from, or the basis on which it competes with, its peers;
  • high level understanding of how the entity is structured;
  • high level understanding of the markets in which it operates and how it engages with those markets; and
  • broad understanding of the nature of the relationships, resources and other inputs that are necessary for the success of the business.

This report examines the views of company and investor participants on the key attributes of business model reporting, the value and use of business model reporting, together with illustrative examples of reporting favored by investors.

Please click for the following information on the FRC website:

Recent sustainability and integrated reporting developments

Dec 06, 2016

In December 2016, the United States Sustainability Accounting Standards Board (SASB) published it's first annual "State of Disclosure Report" and the International Integrated Reporting Council (IIRC) published the results of a first stakeholder feedback survey.

The SASB's State of Disclosure Report is a reference document that provides an overview of the quality of existing corporate disclosure across 79 industries in hundreds of SEC filings across every major industry. The report shows 81 percent of all disclosures analyzed across all SASB disclosure topics indicate some level of disclosure in SEC filings. However, more than 53 percent use boilerplate language and less than 24 percent of these disclosures contain metrics – demonstrating that many companies take a minimally compliant approach to sustainability disclosure. Review the report on the SASB's website.

The purpose of the IIRC's stakeholder feedback survey was to obtain views on integrated reporting and on the work of the IIRC. While 87 percent of responses strongly agree or agree that integrated reporting promotes a more joined up and efficient approach to corporate reporting, views on the work of the IIRC are more mixed with 45 percent of the total global responses saying they do not know whether the institutional arrangements for the IIRC are appropriate to the overall aims of the IIRC relating to integrated reporting. Review the report on the IIRC's website.

Recent sustainability and integrated reporting developments

May 20, 2016

On May 20, 2016, the United Nations Environment Programme (UNEP) and GRI jointly published their annual report on regulation on sustainability reporting offering an overview of global trends and developments.

While Carrots & Sticks first and foremost provides a summarized quantitative overview of the current landscape of reporting instruments, the Annual Report recognizes that there are unanswered questions. As the Advisory Committee noted, questions can be asked about the impact, context and drivers behind each instrument, and the sector or economy in which it is issued.

For example, how effective are these instruments? How successful is action by governments in achieving their objectives? What is the quality of the reported information that results from these instruments? How valuable is the information in terms of enhancing transparency and accountability? To what extent does the reporting bring us closer to the sustainable world envisioned by the 2030 Agenda for Sustainable Development?

Please click to access the 2016 edition of Carrots & Sticks.

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