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IFRS - FSB (Financial Stability Board) Image

TCFD launches consultation on climate-related financial disclosures

Dec 14, 2016

On December 14, 2016, the Task Force on Climate-related Financial Disclosures (TCFD) published a consultation paper with recommendations for effective disclosure of climate-related financial risks. The TCFD was set up by the Financial Stability Board (FSB) to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders.

The consultation document notes that one of the essential functions of financial markets is to price risk to support informed, efficient capital-allocation decisions and maintains that:

One of the most significant, and perhaps most misunderstood, risks that organizations face today relates to climate change. [...] Many organizations incorrectly perceive the implications of climate change to be long term and, therefore, not necessarily relevant to decisions made today.

The TCFD has developed four widely adoptable recommendations on climate-related financial disclosures that are applicable to organizations across sectors and jurisdictions:

  • Governance: Disclosure of the organisation’s governance around climate-related risks and opportunities
  • Strategy: Disclosure of the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning
  • Risk management: Disclosure of how the organisation identifies, assesses, and manages climate-related risks
  • Metrics and targets: Disclosure of the metrics and targets used to assess and manage relevant climate-related risks and opportunities

The TCFD recommends that preparers of climate-related financial disclosures provide such disclosures in their mainstream reports. The TCFD also recommends the disclosure of potential impacts of climate-related risks and opportunities under different potential scenarios, including a 2° Celsius scenario.

Review the draft recommendations on the TCFD's website. The recommendations are open for public consultation over the next 60 days.

United States Image

XBRL US & ConsenSys form a Working Group to develop Blockchain Tokenization Standards

Dec 14, 2016

On December 14, 2016, XBRL US, the nonprofit consortium for the business reporting standard, together with ConsenSys, a blockchain technology company, announced the formation of a working group dedicated to developing standards for tokenization of assets on the blockchain.

“Blockchain is the future for financial products and financial transactions”, said Campbell Pryde, President and CEO of XBRL US, “Creating a standard method to tokenize transacted assets is necessary to communicate ownership and value. Without standardization, the speed, accuracy and automation promised by smart contracts on the blockchain, simply will not happen.”

The goal of the working group is to establish a standardized method to represent a token across all blockchain networks in order to eliminate transactional friction and reduce processing costs; enable automation and provenance tracking; and allow interoperability of transactions on a global scale.

The working group will establish goals and action steps by early 2017, and is requesting participation from individuals representing technology, finance, and accounting to provide their expertise in developing tokenization standards that can be used worldwide, for all asset classes.

Review the press re­lease on the XBRL website.

Canada Image

CBCA Reforms: Shareholder Meetings and Diversity Disclosure

Dec 14, 2016

On December 14, 2016, the federal government made progress towards modernizing the Canada Business Corporations Act by publishing proposed regulations under the framework bill that was tabled on September 28. The reforms are aimed, in part, at reducing regulatory discrepancies between the CBCA and Canadian securities laws, TSX rules and certain international best practices.

Part 1 amends the Canada Business Corporations Act, the Canada Cooperatives Act and the Canada Not-for-profit Corporations Act to, among other things,
  • reform some aspects of the process for electing directors of certain corporations and cooperatives;
  • modernize communications between corporations or cooperatives and their shareholders or members;
  • clarify that corporations and cooperatives are prohibited from issuing share certificates and warrants, in bearer form; and
  • require certain corporations to place before the shareholders, at every annual meeting, information respecting diversity among directors and the members of senior management.

Part 2 amends the Competition Act to expand the concept of affiliation to a broader range of business organizations.

Review the proposed regulations on the Canadian Parliament's website.

IAASB - Assurance Image

Engagement and Outreach in Support of the New Auditor’s Report

Dec 14, 2016

On December 14, 2016, the International Auditing and Assurance Standards Board (IAASB) released a summary of the work of the IAASB's Auditor Reporting Implementation Working Group. The Working Group representatives have spent 2016 attending various outreach events and engaging stakeholders around the world to support implementation.

As more countries begin to adopt the standards and early adopters emerge, discussions with stakeholders have evolved to focus on actual experiences. These conversations have assisted the Working Group in understanding implementation experiences, including any practical challenges and how such challenges are being addressed.

The Working Group is also exploring possible approaches to a post-implementation review. The post-implementation review’s purpose would be to determine whether the new and revised auditor reporting standards need further refinement.

Review the summary on the IAASB's website.

CPA Canada - Regulations Image

Winners of the 2016 Awards of Excellence in Corporate Reporting

Dec 13, 2016

2016 marks the 65th anniversary of the Awards of Excellence in Corporate Reporting.

Here are the winners:

Awards of Excellence in Financial Reporting: Crown corporations

  • Federal (Large) — Canada Deposit Insurance Corporation
  • Federal (Small) — Telefilm Canada
  • Provincial — SaskPower

Awards of Excellence in Corporate Reporting: Industry winners

  • Overall Award of Excellence in Corporate Reporting — TELUS
  • Communications and Media — TELUS
  • Consumer Products and Services — Canadian Tire Corporation
  • Financial Services — BMO Financial Group
  • Industrial Products and Services — WSP Global Inc.
  • Mining — Goldcorp
  • Oil and Gas/Forestry Products — Suncor Energy Inc.
  • Real Estate — Boardwalk REIT
  • Utilities/Pipelines — Enbridge Inc.

Awards of Excellence in Corporate Reporting: Category winners

  • Award of Excellence in Financial Reporting — Potash Corp
  • Honourable Mention in Financial Reporting — Intact Financial Corporation
  • Award of Excellence in Sustainability Reporting — Goldcorp
  • Honourable Mention in Sustainability Reporting — Suncor Energy Inc
  • Award of Excellence in Electronic Disclosure — Intact Financial Corporation
  • Honourable Mention in Electronic Disclosure — WSP Global Inc.
  • Award of Excellence in Corporate Governance Disclosure — TELUS
  • Honourable Mention in Corporate Governance Disclosure — Enbridge Inc.

Review the 2016 Judges’ Book on the CPA Canada's website.


IFAC video interview with Hans Hoogervorst on the IASB's priorities to 2021

Dec 13, 2016

On December 13, 2016, the International Federation of Accountants (IFAC) released a short video of IASB Chairman Hans Hoogervorst discussing the 2015 Agenda consultation and the IASB's priorities for the next five years.

Questions discussed are:

  • Why does the IASB do an agenda consultation?
  • What are the IASB's main priorities for the next five years?
  • Why has the IASB chosen "Better communication" as a theme?
  • What will be the biggest challenges for the IASB?
  • What role does the research programme play in standard-setting?
  • How does the IASB support implementation of the standards?

Review the short video (6 minutes) on the IFAC's website.

CAQ Image

CAQ issues publication on revenue for audit committees

Dec 13, 2016

On December 13, 2016, the Center for Audit Quality (CAQ) of the American Institute of Certified Public Accountants (AICPA) released the publication "Preparing for the New Revenue Recognition Standard: A Tool for Audit Committees".

The publication is a tool to help audit committees assess a company’s implementation of the new revenue recognition standard. It is organized into four sections:

  • Understanding the New Revenue Recognition Standard – What Is It?
  • Evaluating the Company’s Impact Assessment – How Will Revenue Recognition Change?
  • Evaluating the Implementation Project Plan – How Do We Need to Prepare?
  • Other Implementation Considerations – What Else Do We Need to Consider?

In addition to key questions for audit committees, the tool offers a list of resources on revenue recognition.

Review the publication on the CAQ's website.

IFRS  - Speech Image

IASB Chairman speaks on fair value accounting and long-term investments

Dec 13, 2016

On December 13, 2016, the International Accounting Standards Board (IASB) released a speech by IASB Chairman, Hans Hoogervorst, given at the ANC Symposium on Accounting Research, where he was invited to participate in a roundtable on performance and the public European good. However, he used his openening statement to address a different topic.

Given the symposium was being held in Paris, Mr. Hoogervorst commented on what he called "French accounting tradition’s problematic relationship with fair value accounting". He explained that the assumption that the IASB was made up of "market fundamentalists" was wrong as the vast majority of the IASB's accounting standards were cost-based. However, Mr. Hoogervorst argued, in some case fair value accounting would be the right choice:

At the same time, I firmly believe that cost-based accounting is inadequate for reflecting the performance of long-term equity investments. Quite the opposite — the longer term an investment, the less relevant its original price becomes. I fail to see how investors would benefit from a balance sheet that shows the original price of an equity investment acquired 20 years ago.

Mr. Hoogervorst admitted that market-based valuations of equity could lead to more short-term volatility in the information reported in financial statements. However, he expressed the belief that this volatility reflected the risks associated with such investments and that presenting these equities at cost would not make the volatility go away. He concluded:

Long-term investment should not be encouraged by artificial accounting stability in the numbers. Long-term investment is best served by transparency that the public can trust.

Review Mr. Hoogervorst's prepared statement on the IASB's website.

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6th ANC Symposium on Accounting Research

Dec 12, 2016

On December 12, 2016, the Autorité des Normes Comptables (ANC), the French standard-setter, hosted its 6th Symposium on Accounting Research in Paris. We have prepared a report from the symposium that explored the general theme of "Accounting and performance".

The mainstay of the symposium were presentations of six research papers each followed by roundtables on the topic presented and key speeches summing up the discussions.

Research papers

  • The first research paper was dedicated to non-GAAP financial indicators and the question of whether they are representative strategic governance. The paper is available in French original and English translation on the ANC's website.
  • The second research paper discussed the theoretical foundations of the accounting representation of performance in a stakeholder and territorial approach. A French version and an English translation can be accessed on the ANC's website.
  • The third research paper on the impact of accounting and prudential standards for financial intermediaries on long-term capital investment is again available in French and English on the ANC's website. The roundtable discussed the question of whether the long-term perspective can or must be integrated. Key speaker Linda Mezon (AcSB, Canada) concluded the session by providing insights from the Canadian perspective. She explained that in Canada it is believed that one can only get so many uses out of financial statements, therefore financial statements in Canada are understood not to be "be all and say all". Rather, financial statements are seen as a starting point on which others can build. She concluded that building too many expectations into financial statements bears the danger of making them not useful for anybody.
  • The presentation of the fourth research paper “Marking to Market versus Taking to Market” (French version and English translation) was followed by a roundtable that discussed alternatives to mark to market and relevance and fairness.
  • The fifth research paper used a study a sample of European companies over ten years to discuss performance measures and components of OCI and their volatility and impact (French version and English translation).
  • The sixth and final research paper was dedicated to recognizing environmental issues in performance measurement. This paper is also available in French and English.
United States Image

SEC moves to identify 'high-quality' non-GAAP measures

Dec 12, 2016

On December 12, 2016, Accounting Today released a summary of the panel discussion at the December 2016 AICPA conference on current SEC and PCAOB developments, which was put together by Christine Davine, deputy managing partner of Deloitte & Touche LLP’s National Office, to get the perspectives of various types of constituents on non-GAAP metrics.

In the article, Devine mentions that one of the key takeaways from the panel, it’s that non-GAAP measures are not prohibited and that you're allowed to use them. Also, investors and analysts and registrants find quite a bit of value in non-GAAP measures, but they need to be high quality.

Review the article on Accounting Today's website.

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