Regulations

Climate Disclosure: Canada Mandates TCFD for Banks

Apr 11, 2022

The Canadian government unveiled its federal budget last week, with an entire chapter devoted to climate. As US companies assess the SEC’s climate disclosure proposal and shareholder demands, this requirement is another sign that regulators and investors are losing patience with voluntary disclosures about emissions and climate risks to companies, and moving towards mandates for comparable info.

Among other things, Section 3.4 of the budget calls on the investment industry and federally regulated financial institutions to support the “transition economy” on the path to net-zero emissions. Here’s an excerpt:

Climate Disclosures for Federally Regulated Institutions

  • The federal government is committed to moving towards mandatory reporting of climate-related financial risks across a broad spectrum of the Canadian economy, based on the international Task Force on Climate-related Financial Disclosures (TCFD) framework.
  • The Office of the Superintendent of Financial Institutions (OSFI) will consult federally regulated financial institutions on climate disclosure guidelines in 2022 and will require financial institutions to publish climate disclosures—aligned with the TCFD framework — using a phased approach, starting in 2024.
  • OSFI will also expect financial institutions to collect and assess information on climate risks and emissions from their clients.
  • As federally regulated banks and insurers play a prominent role in shaping Canada’s economy, OSFI guidance will have a significant impact on how Canadian businesses manage and report on climate-related risks and exposures.
  • Separately, the government will move forward with requirements for disclosure of environmental, social, and governance (ESG) considerations, including climate-related risks, for federally regulated pension plans.

This move follows a proposal last fall by the Canadian Securities Administrators to require TCFD-aligned reporting by issuers. That particular proposal is still under consideration.

Review the federal budget and climate chapter on the Government of Canada's website and summary on the Corporate Counsel's website.

IESBA Meeting Highlights: December 2021 Meetings

Apr 07, 2022

In April 2022, the International Ethics Standards Board for Accountants (IESBA) released the highlights summary of its hybrid meetings held on March 14-16, 2022.

The Agenda items in­cluded:

  • Emerging Issues and Outreach Committee (EIOC)
  • Rollout of Revised Public Interest Entity (PIE) Definition
  • IESBA-IFAC Collaboration in Relation to Adoption and Implementation of the Code
  • Benchmarking International Independence Standards
  • IESBA Strategy and Work Plan Survey
  • Tax Planning & Related Services
  • Technology Fact Finding and Thought Leadership
  • Next Meeting

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

Making sense of it all – Sustainability reporting standards

Mar 17, 2022

On March 17, 2022, the Accounting Standards Board's (AcSB) released a video on the global and local initiatives happening in sustainability reporting standards – including the Independent Review Committee on Standard Setting in Canada’s initiative and recommendation to establish a Canadian sustainability standards board – and what this means for Canada.

Watch the video on the AcSB's website.

IESBA Plans Global Roundtables on Enhancing Ethics Considerations Relating to Tax Planning and Related Services

Mar 02, 2022

The International Ethics Standards Board for Accountants (IESBA) will hold a series of three global virtual roundtables to obtain stakeholder feedback on matters it is considering relating to the development of an ethics standard addressing the provision of tax planning and related services by professional accountants in business (PAIBs) and professional accountants in public practice (PAPPs).

In recent years, much public attention has focused on the topic of tax planning and related services, notwithstanding the legality of the tax mitigation schemes, structures or transactions to achieve desired tax outcomes. Questions have been raised regarding the ethical implications for integrity and professional behavior, among other fundamental ethics principles, when PAIBs are involved in developing or implementing tax strategies that are perceived as “aggressive,” or when PAPPs provide advice to their clients on such strategies. The issue is of such major public interest significance that it has been discussed on the G20 agenda.

In light of the public concerns, the IESBA committed in its Strategy and Work Plan 2019-2023 to understand and address the ethical implications of “aggressive tax planning” as it relates to the role of PAIBs and PAPPs. Following fact finding, the IESBA initiated a project aimed at developing a principles-based framework to guide PAIBs’ and PAPPs’ ethical conduct when providing tax planning services to their employing organizations and clients, respectively.

Review the press release on the IESBA's website.

IESBA Addresses Independence Expectations in Group Audits

Feb 28, 2022

On February 28, 2022, the International Ethics Standards Board for Accountants (IESBA) released for public comment the Exposure Draft "Proposed Revisions to the Code Relating to the Definition of Engagement Team and Group Audits".

The proposed revisions establish provisions that comprehensively address independence considerations for firms and individuals involved in an engagement to perform an audit of group financial statements. The proposals also address the independence implications of the change in the definition of an engagement team―a concept central to an audit of financial statements―in the International Auditing and Assurance Standards Board’s (IAASB) International Standard on Auditing (ISA) 220, Quality Management for an Audit of Financial Statements.

Among other matters, the proposals:

  • Establish new defined terms and revise a number of existing terms, including for application with respect to independence in a group audit context.
  • Clarify and enhance the independence principles that apply to:
    • Individuals involved in a group audit.
    • Firms engaged in the group audit, including firms within and outside the group auditor firm’s network.
  • More explicitly set out the process to address a breach of an independence provision at a component auditor firm, including reinforcing the need for appropriate communication between the relevant parties and with those charged with governance of the group.
  • Align a number of provisions in the Code to conform to changes in the IAASB’s Quality Management standards.

Review the press release and proposed revisions on the IESBA's website.

Corporate sustainability push a $35 trillion dollar conundrum for auditors

Feb 22, 2022

Reliable checks on companies' sustainability credentials will take years to develop, auditors say, meaning investors pouring trillions of dollars into green funds remain at greater risk of being hoodwinked.

Given the demand for investments that support environmental, social and governance (ESG) goals, the pressure is on to ensure companies aren't exaggerating or misrepresenting the benefits of their activities, a phenomenon known as "greenwashing".

Review the full article on the Reuters website.

IESBA takes firm action to respond to transformative effects of technology

Feb 18, 2022

On February 18, 2022, the International Ethics Standards Board for Accountants (IESBA) released for public comment proposed revisions to the "International Code of Ethics for Professional Accountants (including International Independence Standards)".

The Exposure Draft Proposed Technology-related Revisions to the Code seeks to enhance the Code’s robustness and expand its relevance in an environment being reshaped by rapid technological advancements. The proposed amendments will guide the ethical mindset and behavior of professional accountants in business and in public practice as they deal with changes brought by technology in their work processes and the content of the services they provide.

Among other matters, the proposals:

  • Draw special attention to the professional competence and confidentiality imperatives of the digital age. 
  • Address the ethical dimension of professional accountants’ reliance on, or use of, the output of technology in carrying out their work. 
  • Further enhance considerations relating to threats from the use of technology as well as considerations relating to complex circumstances in applying the Code’s conceptual framework. 
  • Strengthen and clarify the International Independence Standards (IIS) with respect to technology-related non-assurance services (NAS) firms may provide to their audit clients or technology-related business relationships they may enter into with their audit clients.
  • Explicitly acknowledge that the IIS that apply to assurance engagements are applicable to assurance engagements on non-financial information, for example, environmental, social, and governance (ESG) disclosures.

The proposed revisions build on the role and mindset changes that became effective last December, and the revised NAS provisions that will become effective in December 2022.

Review the press release and proposed revisions on the IESBA's website.

IESBA Staff Releases FAQs on Revised Fee-related Provisions of IESBA Code

Jan 31, 2022

On January 31, 2022, the Staff of the International Ethics Standards Board for Accountants (IESBA) released a set of frequently asked questions (FAQs) on the recently revised fee-related provisions of The International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code). The FAQs have been informed by the extensive discussions and consultations with a wide range of stakeholder groups and the IESBA’s own deliberations during the development and finalization of the standard.

The publication is designed to highlight, illustrate or explain aspects of the revised fee-related provisions in the Code and thereby assist in their proper application. It is intended to complement the Basis for Conclusions for the final standard and assist national standards setters, professional accountancy organizations, and professional accountants in public practice (including firms) as they adopt and/or implement the revised provisions. The publication is also intended to assist regulators and audit oversight bodies, the corporate governance community, investors, preparers, educational bodies or institutions, and other stakeholders in understanding the revised standard and its application.

Review the press release and FAQ on the IESBA's website.

IESBA Meeting Highlights: December 2021 Meetings

Dec 23, 2021

In December 2021, the In­ter­na­tional Ethics Stan­dards Board for Ac­coun­tants (IESBA) re-leased the high­lights sum­mary of its vir­tual meet­ings held on November 30 – December 16, 2021.

The Agenda items in­cluded:

  • Definitions of Listed Entity & PIE
  • Quality Management (QM)-related Conforming Amendments
  • En­gage­ment Team – Group Au­dits In­de­pen­dence
  • Technology Project
  • Technology Fact Finding and Thought Leadership
  • Tax Plan­ning & Re­lated Ser­vices
  • Benchmarking
  • Long Association Post-Implementation Review (LAPIR) (Phase 1)
  • Strategy & Work Plan (Update and Preliminary Considerations)
  • Next Meeting

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

Follow-up paper to IVSC paper on challenges to market value

Dec 01, 2021

The International Valuation Standards Council (IVSC) published a perspectives paper "Challenges to Market Value" in February 2021 that looked at the challenges in relation to the availability of market information in a pandemic world. A broad range of feedback was received in relation to the paper that has prompted the IVSC to publish a second paper in the series.

This second paper, Market Value: An Established Basis of Value, includes discussions on:

  • Price, cost, value and worth
  • How do we define what the ‘market’ is and how does this impact on market value?
  • What is the market value conceptual framework?
  • Is market value backward looking?
  • Are the ‘peaks’ and ‘troughs’ truly captured when using a market value premise?
  • How does the valuer utilize assumptions and special assumptions with market value?

Review the press release and perspectives paper on the IVSC's website.

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