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AcSB Exposure Draft – Financial Instruments with Characteristics of Equity

Feb 22, 2024

On February 22, 2024, the Accounting Standards Board (AcSB) proposed to incorporate into Part I of the CPA Canada Handbook – Accounting, amendments to IAS 32 Financial Instruments: Presentation, IFRS 7 Financial Instruments: Disclosures, and IAS 1 Presentation of Financial Statements.

This AcSB Exposure Draft reflects proposals made by the International Accounting Standards Board (IASB) that the AcSB intends to adopt, subject to deliberating comments received, as Canadian generally accepted accounting principles.

The IASB’s Exposure Draft proposes to address the diversity in practice and respond to investor feedback by:

  • clarifying the underlying classification principles of IAS 32 to help companies distinguish between financial liabilities and equity;
  • requiring companies to disclose information to further explain the complexities of instruments that have both debt and equity features; and
  • introducing new presentation requirements for amounts—including profit and total comprehensive income—attributable to ordinary shareholders separately from amounts attributable to other holders of equity instruments.

AcSB urges stakeholders in Canada to provide feedback to the IASB regarding its Exposure Draft. The IASB has outlined specific questions for input in its Invitation to Comment within the Exposure Draft. The AcSB advises that comment letters should be sent directly to the IASB, with a copy also sent to the AcSB. Comments to the IASB are due by March 29, 2024.

Access the press release on FRAS Canada’s website.

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CSA Provides Updated Guidance on Virtual Shareholder Meetings

Feb 22, 2024

On February 22, 2024, the Canadian Securities Administrators (CSA) provided reporting issuers updated guidance on virtual shareholder meetings following initial guidance provided in February 2022.

This follows concerns raised by shareholders about limitations in exercising their rights and participating effectively in such meetings. The guidance aims to help companies comply with regulations and ensure better engagement and access to information for shareholders during virtual meetings.

In order for reporting issuers to fulfill their obligations under securities legislation, it is important that reporting issuers provide clear and comprehensive disclosure in management information circulars and associated proxy-related materials with respect to the logistics for accessing, participating and voting at a virtual meeting.

Reporting issuers can facilitate shareholder participation at virtual shareholder meetings by:

  • simplifying registration and authentication procedures
  • providing shareholders with opportunities to make motions or raise points of order
  • ensuring shareholders have the ability to raise questions and provide direct feedback to management in any question-and-answer segment of the meeting
  • indicating where shareholder proposals will be presented and voted on at the meeting, coordinating with proponents of those proposals in advance of the meeting, and ensuring proponents are given a reasonable opportunity to speak to the proposal and respond to any questions that arise from the proposal
  • ensuring any virtual platform used by an issuer has functionality permitting shareholder participation to the fullest extent possible; and
  • ensuring the Chair is experienced and knowledgeable in the technological platform being used for the virtual meeting.

CSA Staff will continue to monitor the practice of virtual shareholder meetings, including reviewing disclosure in proxy-related materials during the upcoming proxy season. Further guidance and updates may be issued, as required.

Access the updated guidance on the CSA’s website.

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ISSB releases a preview version of a guide for the adoption of its standards

Feb 22, 2024

On February 22, 2024, the International Sustainability Standards Board (ISSB) released a preview version of a guide that is intended to support jurisdictions on their journey to adopt the ISSB standards.

The objective of the publication titled “The jurisdictional journey towards globally comparable information for capital markets — Preview of the Inaugural Jurisdictional Guide for the adoption or other use of ISSB Standards” is to support jurisdictions by providing information as they design and plan their journey to the adoption of ISSB standards. It also aims at supporting transparency on the progress towards the provision of comparable information by describing and summarising jurisdictional approaches towards the adoption of ISSB standards.

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Updated IPSAS-IFRS alignment dashboard (March 2024)

Feb 21, 2024

On February 21, 2024, the International Public Sector Accounting Standards Board (IPSASB), which develops the International Public Sector Accounting Standards (IPSAS) for financial reporting by governments and other public sector entities, released an updated IPSAS-IFRS alignment dashboard showing how far individual IPSAS are aligned with corresponding IFRSs.

Access the updated alignment dashboard prepared for the March 2024 IPSASB meeting on the IPSASB website.

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IFRS Foundation webcast highlights importance of industry-specific disclosures to investors

Feb 19, 2024

On February 19, 2024, the International Financial Reporting Standards Foundation (IFRS Foundation) published a webcast highlighting the importance of industry-specific disclosures to investors, as well as educational material designed to help companies using the SASB Standards to meet the requirements in IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.

The webcast explores the primary motives behind investors utilizing industry-specific data in their analysis and decision-making processes, as well as emphasizing the significance of industry-specific criteria within the ISSB Standards.

The educational material explains how entities can meet the requirement in IFRS S1 to disclose material information about all sustainability-related risks and opportunities that could reasonably be expected to affect an entity's cash flows, its access to finance or cost of capital over the short, medium or long term.

The educational material states that the SASB standards can be a useful source of guidance in applying IFRS S1 because they:

  • are designed to provide investors, creditors and other lenders with information that is decision-useful and comparable with peers;
  • are tailored to specific industries, allowing companies to quickly access guidance that is relevant to their business activities; and
  • provide guidance on sustainability-related topics beyond climate, including human capital and nature.

Access the webcast  and educational material on the IFRS Foundation website.

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SEC Chair warns about “AI Washing” again

Feb 13, 2024

On February 13, 2024, the Securities and Exchange Commission’s (SEC) Chair Gary Gensler delivered a speech at Yale Law School addressing various aspects of artificial intelligence (AI). He focused mainly on the issue of "AI washing” wherein companies mislead investors about their utilization of AI and associated risks.

Similar to his speech delivered in December 2023, Gensler once again highlighted the SEC's role in ensuring transparency and preventing fraud in AI-related disclosures, emphasizing the need for companies to provide accurate information about their AI usage and associated risks to investors.

Moreover, Gensler discussed the broader implications of AI in finance, highlighting its potential benefits in efficiency and user experience, as well as its challenges such as unexplainable decisions, biases, and inaccuracies. He warned against the systemic risks posed by the widespread adoption of AI models in financial institutions, citing concerns about herding behavior and network interconnectedness. He also stressed about the importance of accountability and responsible governance in deploying AI models, urging companies to implement appropriate safeguards and disclose material risks to investors.

Access Gary Gensler’s speech on the SEC’s website

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IAASB Announces Revision of ISA 240: Strengthening Auditor Duties Regarding Fraud in Financial Statement Audits

Feb 06, 2024

On February 6, 2024, the International Auditing and Assurance Standards Board (IAASB) announced the revision of the International Standard on Auditing (ISA) 240, the Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements.

This move comes in response to the critical role high-quality audits play in ensuring the smooth functioning of capital markets. Recent international corporate failures and significant accounting restatements have heightened scrutiny on all participants in the financial reporting system, emphasizing the importance of confidence in audits. As fraud remains a focal point, the IAASB seeks to strengthen auditor duties concerning fraud detection and prevention to better serve the public interest and bolster trust in financial reporting.

The changes will:

  • clarify the auditor’s responsibilities about fraud in financial statement audits;
  • strengthen the auditor’s procedures; and 
  • include more detail about fraud in the auditor’s report. 

The proposed revisions are expected to significantly strengthen the IAASB’s standard on auditors’ responsibilities related to fraud by defining the expectations in relation to fraud, delineating more robust procedures, and increasing transparency about the auditors’ responsibilities and fraud-related procedures in the auditor’s report.

Access the explanatory memo on the IASSB’s website.

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IAASB proposes strengthening of audit standard related to fraud

Feb 06, 2024

On February 6, 2024, the International Auditing and Assurance Standards Board (IAASB) proposed a significant strengthening of its standard on auditors’ responsibilities relating to fraud.

The proposed revisions define the expectations in relation to fraud, delineate more robust procedures, and increase transparency about the auditors’ responsibilities and fraud-related procedures in the auditor’s report.

Key Changes in the Proposed Revisions include:

  • Clarified auditor responsibilities relating to fraud in an audit.
  • Emphasized professional skepticism to ensure auditors remain alert to possible fraud and exercise professional skepticism throughout an audit.
  • Strengthened identification and assessment of risks of material misstatement due to fraud.
  • Clarified response to fraud or suspected fraud identified during the audit.
  • Increased ongoing communication with management and those charged with governance about fraud.
  • Increased transparency about auditors’ responsibilities and fraud-related procedures in the auditor’s report.
  • Enhanced audit documentation requirements about fraud-related procedures.

Respondents are encouraged to share their insights using the response template by June 5, 2024.

Access the exposure draft and response template on IAASB’s website.

IAASB - Assurance Image

IAASB proposes strengthening of audit standard related to fraud

Feb 06, 2024

On February 6, 2024, the International Auditing and Assurance Standards Board (IAASB) proposed a significant strengthening of its standard on auditors’ responsibilities relating to fraud.

The proposed revisions define the expectations in relation to fraud, delineate more robust procedures, and increase transparency about the auditors’ responsibilities and fraud-related procedures in the auditor’s report.

Key Changes in the Proposed Revisions include:

  • Clarified auditor responsibilities relating to fraud in an audit.
  • Emphasized professional skepticism to ensure auditors remain alert to possible fraud and exercise professional skepticism throughout an audit.
  • Strengthened identification and assessment of risks of material misstatement due to fraud.
  • Clarified response to fraud or suspected fraud identified during the audit.
  • Increased ongoing communication with management and those charged with governance about fraud.
  • Increased transparency about auditors’ responsibilities and fraud-related procedures in the auditor’s report.
  • Enhanced audit documentation requirements about fraud-related procedures.

Respondents are encouraged to share their insights using the response template by June 5, 2024.

Access the exposure draft and response template on IAASB’s website.

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IASB releases webcast introducing the forthcoming IFRS 18

Feb 05, 2024

On February 5, 2024, the International Accounting Standards Board (IASB) released a ten-minute webcast unveiling the new IFRS 18 Presentation and Disclosure in the Financial Statements. This standard, expected in April 2024, will take effect for reporting periods starting January 1st, 2027, onwards.

The new standard responds to investors' demand for better information about companies’ financial performance and will improve how company information is communicated in the financial statements. It will provide investors with enhanced clarity and depth for analyzing company performance, leading to well-informed investment decisions.

Access the webcast on the IFRS Foundation website.

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