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Canadian securities regulators publish blanket relief for market participants due to COVID-19

Mar 23, 2020

On March 23, 2020, further to its announcement on March 18, the Canadian Securities Administrators (CSA) published temporary blanket relief for market participants from certain regulatory filings, as a result of COVID-19.

The blanket relief provides a 45-day extension for periodic filings normally required to be made by issuers, investment funds, registrants, certain regulated entities and designated rating organizations on or before June 1, 2020 and for certain other requirements outlined in the orders. Market participants need to comply with the conditions in the blanket relief to use the extension.

The CSA is implementing the relief through local blanket orders that are substantially harmonized across the country. Market participants can view these orders on CSA members’ websites and are encouraged to contact their principal regulator with any questions.

The CSA is closely monitoring the situation and will consider whether further relief or extension is necessary.

Review the press release on the CSA's website.


Updated IASB work plan — Analysis (March 2020)

Mar 21, 2020

On March 21, 2020, the International Accounting Standards Board (the Board) updated its work plan following its March 2020 meeting.

Below is an analysis of all changes made to the work plan since our last analysis on February 28, 2020.

Standard-setting projects

  • No changes

Maintenance projects

  • No changes - the work plan still shows final amendments to IAS 16 regarding proceeds before intended use to be expected in "March 2020"

Research projects

Other projects

  • IFRS Taxonomy 2019 — Update 1 Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) was published earlier this week and has therefore been removed from the work plan.

The revised IASB work plan is available on the Board's website.

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NACD launches COVID-19 resource center for directors

Mar 20, 2020

On March 20, 2020, the National Association of Corporate Directors (NACD) launched a resource center for directors. Due to the Coronavirus (COVID-19) pandemic and subsequent market turmoil, directors have been forced to also adapt to a changing governance environment. NACD has assembled, and will continue to update, resources to help guide directors through this unprecedented time.

Appropriately navigating risk is fundamental to effective directorship. Each board member should be prepared to ask tough questions of management about their response and planning process for business operations and stakeholder management. Boards will also need to consider longer-term implications of COVID-19 on the company’s overall operations and strategy.

Key questions directors should ask: 

  • Where are our most significant operational disruptions and what is our plan to overcome them?
  • How is our business strategy shifting in response to COVID-19?
  • Have we discussed operational impacts on executive compensation?
  • What are new risks do we need to report in our upcoming SEC filings?

Review the resource center on the NACD's website.


IASB publishes discussion paper on goodwill and impairment

Mar 19, 2020

On March 19, 2020, the International Accounting Standards Board (IASB) has published a comprehensive discussion paper DP/2020/1 "Business Combinations — Disclosures, Goodwill and Impairment". The IASB's related project aims at improving the information companies provide to investors, at a reasonable cost, about the businesses those companies buy and would help to hold management to account for its decisions to acquire those businesses. In this context, the IASB is investigating possible improvements to IFRS 3, "Business Combinations" and IAS 36, "Impairment of Assets". The comment period on the discussion paper ends on September 15, 2020.



The IASB's project on goodwill and impairment results from the post-implementation review of IFRS 3 Business Combinations.

The feedback on the post-implementation review had revealed that impairment of goodwill is not always recognized in a timely fashion and that disclosures required by IFRS Standards do not provide enough information to understand whether the acquired business is performing as was expected at the time of the acquisition. There were also comments that the impairment test required for goodwill under IAS 36, Impairment of Assets is costly and complex. Some respondents also suggested reintroducing amortization of good will.

In February 2015, to address the concerns mentioned and investigate possible improvements to IFRS 3, Business Combinations and IAS 36, the IASB added to its research agenda the following areas of focus, which later evolved into the goodwill and impairment project:

  • improving the impairment test in IAS 36;
  • subsequent accounting for goodwill (including the relative merits of an impairment-only approach and an amortization and impairment approach); and
  • identification and measurement of intangible assets acquired in a business combination.

The discussions leading to the discussion paper published today were taken up in September 2015.


Summary of preliminary views

The discussion paper DP/2020/1 Business Combinations — Disclosures, Goodwill and Impairment presents preliminary views on the following topics:

Improving disclosures about acquisitions. The IASB believes that companies should be required to disclose the strategic rationale for an acquisition, the objectives for the acquisition, and the metrics for monitoring achievement of objectives. This should be disclosed at the acquisition date. After the acquisition date the performance against the objectives should be disclosed. Companies would disclose information management uses internally to monitor acquisitions, therefore, they would not need to create information solely for external reporting purposes. Disclosure would be required for as long as the performance is monitored by management. If the company ceases to monitor the performance or if the metrics for monitoring the performance are changed, the reason for doing so would be disclosed. The Board also believes that it should develop additional proposals that would require companies to disclose the amount, or range, of synergies expected from the acquisition, to disclose the amount of defined benefit pension liabilities and debt of the acquiree, and to disclose both actual and pro-forma revenue, operating profit and cash flows from operating activities.

Improving accounting for goodwill — Can the impairment test be made more effective? The Board believes that significantly improving the effectiveness of the test at a reasonable cost is not feasible. It also points out that shielding cannot be eliminated because goodwill has to be tested for impairment with other assets. The discussion paper also notes that an impairments test cannot always signal how an acquisition is performing, but that does not mean that the test has failed. When performed well, the test can be expected to achieve its objective of ensuring that the carrying amount of the cash-generating unit as a whole is not higher than its combined recoverable amount. The disclosure ideas discussed above could help provide investors with the information about the performance of acquisition they need. Finally, the discussion paper notes that if estimates of cash flows are too optimistic, this is best addressed by auditors and regulators, not by changing IFRS Standards.

Improving accounting for goodwill — Should amortization of goodwill be reintroduced? Having concluded that the impairment test cannot be significantly improved at a reasonable cost, the Board considered whether to reintroduce amortization of goodwill (an impairment test would still be required). The discussion paper notes that Board members have different views on this topic, but by (narrow) majority came to the preliminary view that the Board should retain the impairment only approach because there is no compelling evidence that amortization would significantly improve financial reporting. The impairment test is believed to provide more useful information than an arbitrary amortization charge and is more effective at holding management to account for acquisition decisions. The Board believes that it would not be appropriate to reintroduce amortization solely because of concerns that the impairment test is not being applied rigorously or simply to reduce goodwill carrying amounts. In this context, the Board also came to the preliminary conclusion that it should develop a proposal to require companies to present on their balance sheets total equity before goodwill.

Improving accounting for goodwill — Simplifying the impairment test. The Board is of the preliminary view that it should provide relief from the mandatory annual quantitative impairment test. A quantitative impairment test would be required only if there is an indication of impairment. The Board believes that the reduction in robustness of the test would be marginal because it is unlikely that material impairment losses occur with no indicator. Similarly, the Board is of the opinion that the benefit of performing the test when there is no indicator is marginal. The Board also intends to improve the calculation of value in use. This would be achieved by removing the restriction in IAS 36 that prohibits companies from including uncommitted restructuring and asset enhancement cash flows and by allowing companies to use post-tax inputs and post-tax discount rates in calculating value in use.

Other topics. The discussion paper also sets out the Board's preliminary view that it should continue to require identifiable intangible assets to be recognized separately from goodwill. The Board believes that there is no compelling evidence that the requirements in IAS 38 should be amended. Considering whether to align the accounting treatments for acquired and internally generated intangible assets would be beyond the scope of the project.

Comments on the discussion paper are requested by September 15, 2020.


Additional information on the IASB's website


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Canadian securities regulators to provide blanket relief for market participants due to COVID-19

Mar 18, 2020

On March 18, 2020, in light of recent COVID-19 developments and their impact on market participants, the Canadian Securities Administrators (CSA) will provide temporary relief from some regulatory filings required to be made on or before June 1, 2020.

The blanket relief will provide a 45-day extension for periodic filings normally required to be made by issuers, investment funds, registrants, certain regulated entities and designated rating organizations on or before June 1, 2020. This will include financial statements, management’s discussion and analysis, management reports of fund performance, annual information forms, technical reports, and certain other filings.

Issuers choosing to rely on this exemption and that are complying with the conditions of the relief will not need to file applications for management cease trade orders as they will not be noted in default.

The CSA expects to publish further details about the relief shortly.

Review the press release on the CSA's website.


IASB votes on IFRS 17 effective date

Mar 17, 2020

On March 17, 2020, the International Accounting Standards Board (IASB) held a meeting and discussed and voted on the remaining issues resulting from the feedback received on the exposure draft ED/2019/4 "Amendments to IFRS 17" which were the effective date of IFRS 17 and the expiry date of the IFRS 9 temporary exemption in IFRS 4.

On the effective date, which originally was set at January 1, 2021 and which ED/2019/4 proposed to move to January 1, 2022, the Board now decided to:

  1. defer the effective date of IFRS 17 (incorporating the amendments) to annual reporting periods beginning on or after January 1, 2023; and
  2. extend the fixed expiry date of the temporary exemption from applying IFRS 9 in IFRS 4 to annual reporting periods beginning on or after January 1, 2023.

Although, several Board members expressed doubt or concerns, the final vote on a) was 12 in favour, 1 against, 1 absent (the one absent Board member had lost connection but later stated that he would also have voted in favour). On question b) the final vote was 12 in favour, 2 against.

The Board then proceeded to discuss questions around the balloting process. All Board members agreed that there is no need to re-expose the amendments to IFRS 17, no Board member intends to dissent from the issuance of the final amendments, and all Board members gave permission to start the balloting process. 

The staff will therefore begin to draft the amendments to IFRS 17 and bring any sweep issues identified during the balloting of the amendments for discussion at a future meeting. The staff expect that the amendments will be issued in the second quarter of 2020, in line with the Board’s plan as stated in the exposure draft.

Review the press release announcing the deferral on the IASB's website.


2020 IFRS XBRL taxonomy issued

Mar 17, 2020

On March 17, 2020, the IFRS Foundation issued its 2020 IFRS Taxonomy. The IFRS Taxonomy is a translation of IFRS Standards into XBRL (eXtensible Business Reporting Language).

The IFRS Taxonomy 2020 is consistent with IFRS Standards as issued by the IASB at January 1, 2020, including those issued but not yet effective.

The IFRS Foundation has also published IFRS Taxonomy 2019 — Update 1 Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7). The IFRS Taxonomy 2020 incorporates the changes resulting from this update.

Review the press release and IFRS Taxonomy 2020 page on the IASB's website.

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Recent sustainability and integrated reporting developments

Mar 17, 2020

A summary of recent developments from the Climate Disclosure Standards Board (CDSB), the Carbon Disclosure Project (CDP) and the Sustainability Accounting Standards Board (SASB).

The CDSB and the CDP have jointly released an environmental reporting handbook to help companies improve their disclosure in line with the EU Non-Financial Reporting Directive. The EU Environmental Reporting Handbook helps companies learn from their peers to better understand how to report in line with the Directive. Review the handbook on the CDSB's website.

The SASB launched the SASB Implementation Primer, an online resource for companies seeking to incorporate SASB standards into their core communications with investors. Review the press release and implementation primer on the SASB's website.

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IAASB consults on Extended External Reporting (EER) assurance

Mar 13, 2020

On March 13, 2020, the International Auditing and Assurance Standards Board (IAASB) released for feedback it’s non-authoritative EER Guidance. This is in response to organizations that are increasingly reporting about their broader performance or impact (“Extended External Reporting” or “EER”) either voluntarily or as required by law or regulation, and the growing demand for assurance engagements on such reporting. Comments are requested by July 13, 2020.

EER encapsulates many different forms of reporting including, but not limited to, integrated reporting, sustainability reporting and other reporting by entities about financial and non-financial matters, including environmental, social and governance matters, related to an entity’s activities.

The purpose of the IAASB’s Public Consultation on Proposed Guidance, Extended External Reporting Assurance is to promote consistent high-quality application of ISAE 3000 (Revised) Assurance Engagements Other than Audits or Reviews of Historical Financial Information so as to:

  • Strengthen the influence of EER assurance engagements on the quality of EER reports;
  • Enhance user trust in the resulting assurance reports; and
  • Engender greater confidence in the credibility of, trust in and reliance upon EER reports by their intended users.

The draft non-authoritative guidance addresses Special Considerations in Performing Assurance Engagements on Extended External Reporting.

Review the press release and guidance on the IAASB's webiste.

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SEC amends definitions of accelerated filer and large accelerated filer

Mar 12, 2020

On March 12, 2020, the Securities and Exchange Commission (SEC) issued a final rule, Amendments to the Accelerated Filer and Large Accelerated Filer Definitions. The final rule allows “smaller issuers that have been public for more than five years, but have not yet reached $100 million in revenues, to continue to benefit from the JOBS Act exemption as they build their businesses, while maintaining important investor protections.”

Review the press release on the SEC’s website.

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