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Climate risk panel remarks by OSFI Assistant Superintendent, Mr. Ben Gully, at the C.D. Howe Institute

Jan 28, 2021

On January 28, 2021, OSFI Assistant Superintendent, Mr. Ben Gully, made relevant climate risk remarks as a Canadian financial services regulator during the recent C.D. Howe Institute panel discussion.

Mr. Gully noted that, for OSFI, there is a wide range of possible scenarios to consider when assessing the impact of climate change on financial institutions’ safety and soundness and in setting the appropriate prudential response. When confronted by change on the horizon, OSFI looks to the severe but plausible outcomes, collects information to inform its analysis and risk assessment, and then uses regulation and supervision to preserve financial institution resilience.

He noted that, by definition, the sound management of climate-related risks fits clearly within OSFI’s objectives. As a result, OSFI is taking a number of actions to look more deeply at the prudential impact of climate change in terms of physical, liability and transition risks. In this regard, he noted that transition risks are particularly significant for Canada given its endowment of carbon-intensive commodities and their importance to the Canadian economy.

In recognizing that OSFI does not have all of the answers, he noted that OSFI plans to advance its work through cooperating with domestic and international organizations. By working with others, OSFI will gain a better understanding of what may be appropriate in the Canadian context.

To that end, OSFI has released a Discussion Paper regarding climate-related risks on January 11, 2021. The Paper focuses on risks arising from climate change that can affect the safety and soundness of federally regulated financial institutions (FRFIs) and federally regulated pension plans (FRPPs). Comments are requested by April 12, 2021.

See a com­plete copy of Mr. Gully’s remarks at the C.D. Howe Institute panel discussion which are posted on OSFI's web­site.

Corporations Canada consulting on proposed corporate governance and disclosure regulations

Jan 29, 2021

On January 29, 2021, Corporations Canada published a consultation on regulatory proposals to implement the corporate governance amendments included in the Canada Business Corporations Act (CBCA) through Bill C-97 (CBCA).

The consultation includes proposals with respect to the regulations necessary to implement an annual say on pay advisory vote for shareholders, the disclosure required for reporting on both clawback policies and on worker, retiree and pensioner “well-being”. CCGG was a strong advocate for the inclusion of an annual non-binding say on pay vote in the CBCA and Corporations Canada cites CCGG’s advocacy in favour of clawbacks as one of its rationales for the increased prominence of such policies in corporate governance best practice. CCGG is reviewing the consultation and intends to submit a response by the March 31, 2021 deadline.

Review the consultation on the Government of Canada's website.

ESG Impact Is Hard to Measure — But It’s Not Impossible

Jan 22, 2021

Around the globe, a third of all professionally managed assets, or roughly $30 trillion, are now subject to ESG criteria. That’s a remarkable sum, one that represents an increase of more than 30% since 2016. Between April and June of 2020 alone, investors poured more than $70 billion into ESG equity funds, vastly exceeding recent annual flows.

Federal government releases diversity disclosure guidelines

Feb 03, 2021

On February 3, 2021, the Director General of Corporations Canada published guidelines with the goal of driving consistency in the diversity disclosure requirements for distributing corporations under the Canada Business Corporations Act.

These guidelines address how to effectively disclose:

  • the timeframe for diversity information disclosure
  • targets for representation on the board and among senior management and
  • the number and percentage of directors from each of the designated groups on the board and among senior management.

The guidelines are provided to encourage corporations to disclose their diversity information yearly in a more consistent manner. 

Review the guidelines on the Government of Canada'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.

How blockchain impacts financial reporting controls

Jan 06, 2021

The internal control environment will be different in a blockchain-enabled world, making it critical for finance stakeholders to understand the technology’s unique capabilities, risks, and benefits.

As blockchain becomes more mainstream, it’s important to focus on how this technology intersects with an organization’s system of controls over financial reporting. With careful implementation and integration of blockchain-enhanced tools, companies can leverage the technology’s distinctive capabilities to create more robust, reliable, effective, and efficient controls. At the same time, however, blockchain creates unique risks and the need for new or modified controls.

Review the full article.

How CFOs can lay the groundwork for AI

Jan 25, 2021

As they integrate AI into their processes, CFOs need to help employees see it as a collaborator, not a threat.

A growing number of CFOs are exploring AI technologies in an effort to yield greater business insights, enhance financial accuracy and predictability, and reduce labor-intensive processes in the finance function.

In fact, “AI’s ‘early adopter’ phase is ending,” according to the recently published third edition of Deloitte’s State of AI in the Enterprise report.

Review the full article.

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.

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 Meeting Highlights: November/December 2020 Meetings

Feb 04, 2021

In February 2021, the In­ter­na­tional Ethics Stan­dards Board for Ac­coun­tants (IESBA) released the high­light summary of its vir­tual meet­ings held on November 30 – December 4, 8 and 9, 2020. 

Agenda items included:

  • Non-as­sur­ance Ser­vices (NAS)
  • Fee-re­lated Pro­vi­sions of the Code (Fees)
  • De­f­i­n­i­tions of Listed En­tity and Pub­lic In­ter­est En­tity (PIE)
  • Tech­nol­ogy
  • En­gage­ment Team – Group Au­dits Independence Issues

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

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