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2019

2019 Best practices for proxy circular disclosure

Dec 20, 2019

In December 2019, the Canadian Coalition for Good Governance (CCGG) released its best practices documents for reporting issuers to provide them with guidance on effective communications with shareholders emphasizing the substance of disclosure that investors expect of regulatory filings.

Review the publication on the CCGG's website.

Accounting for value creation and encouraging the rise of the chief value officer

Nov 07, 2019

On November 7, 2019, the International Federation of Accountants (IFAC) released an article on how accounting for value creation needs rethinking.

Value is created through knowledge and creativity. Digital disruption is threatening entire industries. Financial markets are fraught with geopolitical and economic volatility. The deepening climate emergency, and other environmental issues such as water and land use, mean that business as usual is not an option.

In this world, achieving a resilient and sustainable business model has never been more challenging. Viewing value creation only through the lens of shareholders means undermining trust in the organization, compromising its reputation, and even threatening its license to operate. A broader set of data, information and insights is needed to provide a bigger picture of how value is created.

Review the full article on IFAC's website.

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.

Alignment on risk management is dangerously askew

Nov 15, 2019

On November 15, 2019, the National Association of Corporate Directors (NACD) released a blog on how boards are under increasing pressure from investors, regulators, and the general public to adapt to and better manage the factors that influence how organizations are created, grow, and succeed—and to do so with transparency and accountability. This requires unparalleled collaboration and harmony of purpose among those charged with risk management.

But findings from a new Institute of Internal Auditors (IIA) report paint a troubling picture that is anything but harmonious. Worse yet, the report’s key findings suggest that boards generally have an overly optimistic—and potentially dangerously skewed—view of how risks are managed.

Review the full blog on the NACD'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.

Boomer’s blueprint: Entrepreneurial leadership

Nov 27, 2019

On November 27, 2019, Accounting Today published an article on how leadership has always been important, but is critical during the transformation of a profession.

Entrepreneurial leadership has its own characteristics, both good and bad depending upon your perspective. Entrepreneurs are also associated with innovation, and every accountant should realize that all innovation starts as a bad idea — at least to those it disrupts. Therefore, innovation management is becoming a required skill where a person has the unique ability to make things happen “from idea to making it real,” and then it requires an innovation team to make it scale.

Review the full article on Accounting Today's website.

Calculating the value of impact investing

Nov 25, 2019

In 2019, the Harvard Business Review (HBR) released an article on how as concerns about scarcity and inequality become increasingly urgent, many investors are eager to generate both business and social returns—to “do well by doing good.” One avenue is impact investing: directing capital to ventures that are expected to yield social and environmental benefits as well as profits.

But there’s a problem: Although the business world has several universally accepted tools, such as the internal rate of return, for estimating a potential investment’s financial yields, no analogue exists for evaluating hoped-for social and environmental rewards in dollar terms. Forecasting gains is too often a matter of guesswork.

Investors hoping to use a company’s track record on social and environmental impact to assess future opportunities will similarly find little useful data to evaluate. The reporting of environmental, social, and governance issues is now standard practice at nearly three-quarters of the world’s large and mid-cap companies, but it is usually confined to information about commitments and process and rarely scores actual impact on customers or society.

Review the full article on the HBR's website.

 

Caremark duties include duty not only to establish oversight processes but also to monitor them

Oct 07, 2019

On October 7, 2019, the D&O diary published an article on the October 1, 2019 decision in the Clovis Oncology Derivative Litigation. In the decision, the Delaware Chancery Court provided further perspective on directors’ potential liability for breaches of the duty of oversight.

Boards not only must be able to show that they have made good faith efforts to implement an oversight system, but that also that they monitor the system – particularly when a company operates in a highly regulated industry.

Review the full article on the D&O diary'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.

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