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2017

Proposed reduction of the BC small business - Bill 8

May 03, 2017

The British Columbia Legislative Assembly was dissolved on April 11, 2017 and a provincial general election will be held on May 9, 2017. Consequently, Bill 8, which contained the proposed reduction of the BC small business rate from 2.5% to 2% effective April 1, 2017, no longer exists – it “died on the order paper”.

Bill 8 had received first reading on February 21, 2017. As such, the reduced small business rate was, but is no longer substantively enacted. If the post-May 9, 2017 government will want to reduce the small business rate to 2%, it will be required to formally propose the amendment by tabling a new bill in the Legislative Assembly.

Proposed regulations to reduce methane emissions in the oil and gas sector

May 25, 2017

On May 25, 2017, the Government of Canada proposed methane regulations that will require industry to conserve valuable natural gas by regularly checking and fixing gas leaks and adopting new practices that prevent the gas from being vented into the air during oil and gas production.

These requirements will apply to oil and gas facilities that are responsible for the extraction, production, processing, and transportation of crude oil and natural gas. This includes oil and gas wells and batteries, natural gas processing plants, compressor stations, and supporting pipelines.

Review the press release and the proposed regulations on the Government of Canada's website.

Also, a summary of the proposed regulations is available on the Norton Rose Fulbright's website.

SASB Foundation appoints inaugural members to SASB

May 11, 2017

On May 11, 2017, the SASB Foundation, responsible for the funding and oversight of the Sustainability Accounting Standards Board (SASB), announced the appointment of nine inaugural members to the SASB.

Established in 2011, the Sustainability Accounting Standards Board (SASB) is an independent standards-setting organization dedicated to enhancing the efficiency of the capital markets by fostering high-quality disclosure of material sustainability information that meets investor needs. The mission of the SASB is to maintain sustainability accounting standards that help public corporations disclose material information to investors in SEC filings, such as the Forms 10-K, 20-F, and 40-F, in a cost-effective and decision-useful manner. The SASB maintains standards for 79 industries, focusing on sustainability-related factors that are reasonably likely to have financially material impacts.

Established in 2017, the SASB Foundation is responsible for the financing, oversight, administration and appointment of the SASB.

According to the SASB’s rules of procedure, the SASB consists of five to nine members who are appointed by the SASB board of directors for a term of three years, with a two-term limit. The nine inaugural members are:

  • Jean Rogers, chairman
  • Jeffrey Hales, vice-chairman
  • Verity Chegar
  • Daniel L. Goelzer
  • Robert B. Hirth, Jr.
  • Kurt Kuehn
  • Lloyd Kurtz
  • Elizabeth Seeger
  • Stephanie Tang

Review the press release and the SASB board member page on the SASB’s website.

SEC offers guidance on accounting effects of Tax Cuts and Jobs Act

Dec 22, 2017

On December 22, 2017, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 118 and Compliance and Disclosure Interpretation 110.02, which give companies some leeway as they prepare their quarterly financial statements after passage of the Tax Cuts and Jobs Act.

The SEC issued SAB No. 118 laying out the views of the SEC staff about applying U.S. GAAP when preparing an initial accounting of the income tax effects of the Act. It also issued Compliance and Disclosure Interpretation 110.02, which gives the views of the SEC staff about the applicability of  Item 2.06 of Form 8-K in terms of reporting the impact of a change in tax rate or tax laws in terms of the new Tax Cuts and Jobs Act.

Review the full article on Accounting Today's website.

Senate tax reform bill crosses finish line after major rewrite

Dec 01, 2017

The Senate has voted almost entirely along party lines to approve its version of comprehensive tax reform legislation, but not before Republican leaders made some significant modifications to win support from wavering members within their own ranks.

As approved, the modified Senate version of the Tax Cuts and Jobs Act (H.R. 1), which cleared the chamber by a vote of 51-49, follows the broad contours of the measure that was reported out of the Senate Finance Committee on November 16 by providing permanent tax relief – including a significantly lower top rate – for corporations and temporary tax relief for individuals and passthrough entities, with those costs offset in part by eliminating or paring back dozens of current-law deductions, credits, and incentives.

Review the full article on our US firm's website.

The Bruce Column — Ensuring Climate-related financial disclosure goes mainstream

Jul 18, 2017

The final Report of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures has been published in June 2017. Our regular columnist Robert Bruce reports on its recommendations and how it is likely to move this issue into the mainstream.

The focus on climate-related concerns has changed. It has moved away from simple worries about global resources to a much more tangible concern about risks and opportunities. The final report from the Financial Stability Board’s Task Force on Climate-related Financial Disclosure is expected to change attitudes to the quality of and responsibility for climate-related corporate reporting fundamentally. The old idea that such issues can be downplayed as simply high-minded concerns rather than being seen as the arena for serious risk assessment and resulting action will then, in turn, change. The report focuses on the information that investors need.

It starts from the position that climate-change risks are one of ‘the most significant, and perhaps most misunderstood, risks that organisations face today’. Its recommendations and disclosures aim to ensure that investors, lenders and insurance underwriters are provided with a full understanding of those risks. And while the disclosure recommendations may be voluntary the clear expectation is that momentum and the market will demand their implementation.

There are four fundamental areas of disclosure. First an organisation’s governance around climate-related risks and opportunities, then the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning. Thirdly the processes used by the organisation to identify, assess, and manage climate-related risks; and finally the metrics and targets used to assess and manage relevant climate-related risks and opportunities.

Support has been swift from the asset owners and asset managers’ community. And it is clear they intend driving a swift and widespread adoption of the framework. For example, Stuart Gulliver, CEO at HSBC, said that: ‘These recommendations are very welcome. The impact of climate change and the transition to a lower-carbon economy deserve board-level scrutiny and governance. Independent research commissioned by HSBC shows that less than a quarter of companies currently disclose their environmental impact. This makes it very difficult for analysts and investors to assess and compare how sustainable these companies are. These recommendations are a practical and pragmatic response to the need for consistent and comparable climate-related financial disclosure’.

More than a hundred firms around the world with a total market cap of some $3.3 trillion have agreed to actively support implementation and encourage others to do so. The task force will remain in place until at least September 2018 to promote and monitor adoption and to evaluate ‘the extent to which the recommended disclosures are meeting the interests of users’. With the backing it has, the move mainstream of climate-related financial disclosure is well under way.

Read the en­tire col­umn on our Global IAS Plus web­site.

The Bruce Column — Putting integrated thinking at the heart of business

Jul 05, 2017

The latest report from the International Federation of Accountants, (IFAC), puts the integrated thinking which lies at the heart of integrated reporting as one of the critical elements in building trust and confidence in business and government. Our regular columnist, Robert Bruce, reports.

A new report, ‘Build Trust. Inspire Confidence’ puts forward a call to action by G20 countries. In a joint statement its President and its CEO say that: ‘Governments must promote coherent public policy and a consistent, transparent regulatory environment that inspires confidence while enabling progress. Professional accountants continue to play a crucial role enabling capital flows, economic activity, and higher standards of living’. They call for a series of actionable recommendations, a policy consensus backed up by tangible implementation and cooperation amongst G20 countries.

One of these recommendation is the use of integrated reporting.  ‘Integrated reporting’, says the report, ‘is an opportunity to focus on long-term value creation, and improve on a largely fragmented, complex, and compliance-driven system’. The way forward, says the report, is through harnessing the techniques of integrated thinking. ‘Integrated reporting’, says the report, ‘is founded on integrated organisational thinking and more likely to align capital allocation and corporate behaviours to the wider goals of financial stability and sustainable development’. It urges the G20 to action.

The report cites a recent survey carried out by the South African Institute of Chartered Accountants to illustrate how integrated thinking can improve decision making. 74% of executives, the report says, and 93% of non-executive directors were of the view that integrated thinking had improved decision-making at management level. And 72% of executives and 86% of non-executive directors thought integrated thinking had improved decision-making at board level.

Read the en­tire col­umn on our Global IAS Plus web­site.

The Government of Canada releases technical paper on pricing carbon pollution

May 18, 2017

On May 18, 2017, the Government of Canada released a technical discussion paper that outlines a proposed federal carbon pricing option for provinces that choose not to have their own system in place in 2018.

On October 3, 2016, the Government of Canada released “The pan-Canadian approach to pricing carbon pollution” – the benchmark  – outlining the criteria that carbon pricing systems implemented by provinces and territories need to meet. The goal of the benchmark is to ensure that carbon pollution pricing applies to a broad set of emission sources with increasing stringency over time in order to reduce GHG emissions at lowest cost to business and consumers and support innovation and clean growth.

The pan-Canadian approach to pricing carbon pollution provides jurisdictions the flexibility to implement either an explicit price-based system (a carbon tax such as the one in British Columbia, or a hybrid approach composed of a carbon levy and an output-based pricing system, such as in Alberta) or a cap-and-trade system (such as those in Quebec and Ontario).

The Pan-Canadian Framework includes a commitment for a review of the overall approach to pricing carbon by early 2022 to confirm the path forward. An interim report will also be completed in 2020, which will be reviewed and assessed by First Ministers. As an early deliverable, the review will assess approaches and best practices to address the competitiveness of emissions-intensive, trade-exposed sectors.

The federal government plans to introduce new legislation and regulations to implement a carbon pollution pricing system – the backstop – to be applied in jurisdictions that do not have carbon pricing systems that align with the benchmark.

All elements of the backstop will apply in a jurisdiction that does not have a carbon pricing system in place. The backstop will also supplement (or “top-up”) systems that do not fully meet the benchmark. For example, the backstop could expand the sources covered by provincial carbon pollution pricing or it could increase the stringency of the provincial carbon price.

As committed in the October 3, 2016 document Pan-Canadian Approach to Pricing Carbon Pollution, the federal system will return direct revenues from the carbon price to the jurisdiction of origin. The federal government is open to feedback on the best mechanism to achieve this.

Comments on the proposed federal option are welcome until June 30, 2017.

Review the press release and Discussion Paper on the Government of Canada's website and highlights of the discussion paper on Tory's website.

The SASB Publishes Exposure Draft Standards for Comment

Oct 02, 2017

On October 2, 2017, the Sustainability Accounting Standards Board (SASB) published its Exposure Draft Standards and has officially opened a 90-day public comment period - the last before codification of its standards. Comments are requested by December 31, 2017.

The Exposure Draft Standards for 79 industries in 11 major sectors will be open for feedback, from corporate professionals, market participants, and public interest and intermediary stakeholders.

The SASB’s Standards are for use by U.S. and foreign public companies in their disclosures to investors, such as in annual reports and filings with the U.S. Securities and Exchange Commission (SEC), including Forms 10-K, 20-F, 40-F, 10-Q, 8-K, as well as S-1 and S-3. The SASB Standards identify sustainability topics that are reasonably likely to constitute material information for a company within a particular industry.

Review an article and the Exposure Draft on the SASB's website.

The Smart Contract Trend

Sep 19, 2017

On September 19, 2017, Fasken Martineau DuMoulin LLP released an article on the smart contract, which is computer code that may allow a legal contract to self-perform in one way or another upon the fulfillment of certain conditions. Smart contract code may also verify and enforce performance of the legal contract in question.

In theory, this offers two main advantages over purely text-based legal contracts:

  1. it limits debate with respect to the meaning of the agreement, since code is precise and free from fallible human interpretation; and
  2. it reduces transaction costs, as the contract is performed automatically once the requisite conditions materialize.

However, code often has its own flaws and deficiencies, and the realized efficiencies will depend on whether the transaction in question benefits from being hosted on a distributed platform.

Review the article on Fasken Martineau's website.

Correction list for hyphenation

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