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2019

Adopting a smarter cybersecurity strategy

Apr 25, 2019

On April 25, 2019, the National Association of Corporate Directors (NACD) published a blog on enterprise cybersecurity. Cybersecurity was once considered an information technology (IT) function and a challenge for the IT team, but it’s safe to say that most directors of companies understand that much has changed in the past decade.

Today, cybersecurity is a strategic business imperative—boards and senior executives are actively involved in cybersecurity strategy because it has become a closely entwined part of enterprise risk management. Enterprises are increasingly digital, and decisions made at the board and C-suite level will ultimately have tremendous influence over an enterprise’s future business success or failure.

Review the full blog on the NACD's website.

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.

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.

CBCA corporations must begin tracking controlling shareholders

Jan 21, 2019

On January 21, 2019, Torys LLP published an article on how CBCA corporations will soon have to establish a securities register detailing all individuals with significant control over the corporation.

The new regulations under Bill C-86 Budget Implementation Act, 2018, No. 2 become effective on June 13, 2019. Existing record-keeping obligations under the CBCA pertain to registered shareholders only—those named on the corporation’s share certificates, who are often intermediaries holding shares on behalf of beneficial shareholders. The new share register requirements pertain to all individual shareholders, registered or beneficial, who have significant control, direct or indirect, over the corporation.

Review the full article on Torys LLP's website.

Change the conversation: Redefining how companies engage investors on sustainability

Feb 06, 2019

On February 6, 2019, Ceres, a sustainability nonprofit organization, released the report "Change the Conversation". Drawing from their interviews with Ceres investor partners, the report highlights key trends in investors’ evolving expectations for corporate sustainability.

It presents nine recommendations to guide companies toward more meaningful and effective investor engagement on ESG issues, helping them to not only meet investor expectations, but also capture competitive advantage.

Review the report on Ceres' website.

Consultation document released on tax challenges of digitalization

Feb 13, 2019

On February 13, 2019, as part of the ongoing work of the OECD/G20 inclusive framework for the global implementation of the BEPS project, the Organisation for Economic Co-operation and Development (OECD) released a consultation document "Addressing the Tax Challenges of the Digitalization of the Economy." Comments are requested by March 1, 2019.

The consultation document sets out four proposals under consideration by the members of the inclusive framework as they work towards reaching a new consensus-based long-term solution in 2020. Options under consideration are:

  • Three proposals to revise existing profit allocation and nexus rules based on the concepts of (i) "user participation," (ii) "marketing intangibles" and (iii) "significant economic presence;" and
  • A global anti-base erosion proposal comprising income inclusion and denial of deduction rules to permit countries to tax profits where income is subject to no or very low taxation.

The consultation document makes clear that countries have agreed to look at a range of proposals on a "without prejudice" basis to allow for necessary further work without commitment at this stage to a particular course of action.

Review a summary and the consultation paper consultation paper on the OECD's website.

How to get first-time audit committee members up to speed

Apr 16, 2019

On April 16, 2019, the National Association of Corporate Directors (NACD) released a blog for first-time directors appointed to boards and how realizing the full extent of what the audit committee is responsible for can be an eye opener.

Which of the following areas does the audit committee typically oversee? 

  • Fraud
  • Financial statements
  • Data privacy
  • Whistleblower policies
  • Third-party risk
  • All of the above
  • None of the above

The correct answer, all of the above, won’t surprise anyone who’s served on an audit committee. They know they meet more often than other committees (an average of nine times a year) and their meetings are typically longer than those of other committees.

In the past 10 years, the number of first-time directors appointed to S&P 500 boards has risen from 24 percent of the incoming class to 33 percent, according to Spencer Stuart. Fewer of today’s newly appointed directors are current or former CEOs, and more are women and minorities with other executive experience, such as line or functional leadership.

Along with this shift to selecting directors with more varied backgrounds, we’ve noticed another growing trend: More companies are putting new board members without financial expertise on their audit committees.

Review the full blog on the NACD'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.

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 Meeting Highlights March 11-13, 2019

Mar 27, 2019

On March 27, 2019, the International Ethics Standards Board for Accountants (IESBA) released the highlights of its March 11-13, 2019 meeting.

Discussion points included:

  • Rollout of the Revised Restructured Code
  • Alignment of Part 4B with ISAE 3000
  • Technology
  • Role and Mindset
  • Fees
  • Non-assurance Services (NAS)
  • IESBA Working Processes Report-Back
  • e-Code
  • Long Association

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

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