News

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Are we putting too much trust in blockchain?

Apr 23, 2018

On April 23, 2018, the National Magazine of the Canadian Bar Association published an article on blockchain. Some compare this to the advent of the internet. It’s unclear, however, if some of blockchain’s more stubborn obstacles, like scalability and governance, will be cleared any time soon.

According to Hanna Halaburda, a senior economist at the Bank of Canada and visiting professor at New York University: “It’s not proven either way. It may never work. Right now, we don’t have the technology that cuts out the middleman. Getting rid of trusted third parties is actually very difficult.” The big hope is that this technology will eventually allow for the removal of all gatekeepers.

But even after several years, developers haven’t yet managed to work out some vexing problems that are putting the breaks on mass adoption of blockchain. Apart from scalability, the limits on possible transactions, another systemic challenge is the massive energy drain of the most popular consensus and verification system. The fact that no one entity is supposed to be in charge makes problems much trickier to solve, particularly when taking into account the various cultures of participants.

Review the full article on National Magazine's website.

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IESBA Consults on 2019-2023 Strategy and Work Plan

Apr 16, 2018

On April 16, 2018, the International Ethics Standards Board for Accountants (IESBA), leveraging the completely rewritten and significantly strengthened "International Code of Ethics for Professional Accountants (including International Independence Standards)", released a consultation paper on its proposed Strategy and Work Plan, which projects the IESBA’s vision for the Code in the global economy. Comments are requested by July 16, 2018.

The IESBA’s future priorities and actions will be guided by three strategic themes:

  • Advancing the Code’s relevance by keeping it fit-for-purpose for a rapidly changing world, and further strengthening ethical conduct and independence standards;
  • Deepening and expanding the Code’s impact and influence through increased global adoption and implementation; and
  • Enriching the IESBA’s perspectives and capacities through proactive stakeholder dialogue and co-operation.

Review the press release and the Consultation Paper on the IESBA's website.

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Make Digital Literacy a Strategic Workforce Priority

Apr 13, 2018

On April 13, 2018, the National Association of Corporate Directors (NACD) posted a blog by Leslie Chacko on how board members must turn their attention to digital literacy and preparing a company’s workforce to face new challenges.

If there is one word that is capturing the new normal pace of the age we are in, it is acceleration. One critical challenge that can’t be ignored is the company’s role in preparing its workforce for intelligent automation.

Two things are certain: one, in the near-term, we expect much workforce force disruption; and two, as artificial intelligence algorithms increase in sophistication and computational power, the pace of intelligent automation is likely to accelerate and push the workforce to focus on higher value activities. To meet that challenge, the workforce of the future will need to acquire a new set of skills rapidly in order to interact with the future of intelligent systems.

Review the full blog on NACD's website.

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CDSB Framework for reporting environmental information, natural capital and associated business impacts

Apr 12, 2018

In April 2018, the Climate Disclosure Standards Board (CDSB) released an updated version of its framework for reporting environmental information, natural capital and associated business impacts, which is now aligned with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

The newly-released Framework presents clear links between its principles and reporting requirements with the TCFD recommendations and the supporting recommended disclosures.

Review the updated Framework on the CDSB's website.

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CSA outlines disclosure expectations for real estate reporting issuers

Apr 12, 2018

On April 12, 2018, the Canadian Securities Administrators (CSA) published CSA Staff Notice 52-329 "Distribution Disclosures and Non-GAAP Financial Measures in the Real Estate Industry". The notice details findings of a recent review and provides additional guidance on disclosure expectations relating to distributions and non-GAAP financial measures for real estate reporting issuers.

The CSA reviewed distribution disclosures relative to National Policy 41-201 Income Trusts and Other Indirect Offerings and non-GAAP financial measure disclosures relative to CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures. The findings of the review indicate that the quality of disclosure pertaining to distributions and non-GAAP financial measures in the real estate industry needs improvement. 

Key findings from the review included the following items. For distributions, staff found opportunities for better disclosure when distributions exceed operating cash flows. For non-GAAP financial measures, staff identified a lack of transparency about various adjustments made in arriving at non-GAAP financial measures, particularly those relating to maintenance capital expenditures and working capital. Staff also noted instances where non-GAAP financial measures were presented with greater prominence than the most directly comparable measure specified under the issuer’s GAAP.

Non-GAAP financial measures and distribution disclosures continue to remain areas of focus for the CSA, and real estate reporting issuers are encouraged to refer to the guidance published.

Review the press release on the CSA's website and the Staff Notice on the CSA members' website.

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Cybersecurity Risk Management Oversight: A Tool for Board Members

Apr 12, 2018

On April 12, 2018, the Center for Audit Quality released a tool that provides key questions board members can use as they discuss cybersecurity risks and disclosures with management and CPA firms.

The questions are grouped under four key areas:

  • Understanding how the financial statement auditor considers cybersecurity risk
  • Understanding the role of management and responsibilities of the financial statement auditor related to cybersecurity disclosures
  • Understanding management’s approach to cybersecurity risk management
  • Understanding how CPA firms can assist boards of directors in their oversight of cybersecurity risk management

The tool also compiles cybersecurity-related resources from the CAQ, the American Institute of CPAs, the National Association of Corporate Directors, and others.

Review the tool on the CAQ's website.

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Global Ethics Board Releases Revamped Code of Ethics for Professional Accountants

Apr 09, 2018

On April 9, 2018, the International Ethics Standards Board for Accountants (IESBA) released a completely rewritten Code of Ethics for Professional Accountants that is easier to navigate, use and enforce.

Beyond the new structure, the Code brings together key ethics advances over the past four years, and is clearer about how accountants should deal with ethics and independence issues.

While the fundamental principles of ethics have not changed, major revisions have been made to the unifying conceptual framework—the approach used by all professional accountants to identify, evaluate and address threats to compliance with the fundamental principles and, where applicable, independence. New Code highlights include:

  • Revised “safeguards” provisions better aligned to threats to compliance with the fundamental principles;
  • Stronger independence provisions regarding long association of personnel with audit clients;
  • New and revised sections dedicated to professional accountants in business (PAIBs) relating to:
    • preparing and presenting information; and
    • pressure to breach the fundamental principles.
  • Clear guidance for accountants in public practice that relevant PAIB provisions are applicable to them;
  • New guidance to emphasize the importance of understanding facts and circumstances when exercising professional judgment; and
  • New guidance to explain how compliance with the fundamental principles supports the exercise of professional skepticism in an audit or other assurance engagements.

Renamed the International Code of Ethics for Professional AccountantsTM (including International Independence StandardsTM), the new Code becomes effective in June 2019.

Review the press release, the new Code and a resource page on the IESBA's website.

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CSA reports on climate change-related disclosure project

Apr 05, 2018

On April 5, 2018, the Canadian Securities Administrators (CSA) published CSA Staff Notice 51-354 "Report on Climate change-related Disclosure Project". The report summarizes the findings of the CSA’s previously announced project to review the disclosure by reporting issuers of risks and financial impacts associated with climate change, and outlines its plans for future work.

The CSA intends to develop new guidance and initiatives to educate issuers about the disclosure of climate change-related risks, opportunities and financial impacts. The CSA also intends to consider new disclosure requirements regarding non-venture issuers’ corporate governance practices in relation to material business risks including, for example, emerging or evolving risks and opportunities arising from climate change, potential barriers to free trade, cybersecurity and disruptive technologies. As a general rule, materiality is the determining factor in considering whether information must be disclosed to investors. 

In addition to these initiatives, the CSA will continue to monitor the quality of issuers’ climate change-related disclosures, best practices in this area and developments in reporting frameworks. The CSA will also continue to assess whether investors require additional types of information, such as disclosure of certain categories of greenhouse gas emissions, to make investment and voting decisions.

The report reflects the CSA’s consideration of key research findings, a review of the disclosure of large TSX-listed issuers, a survey of TSX-listed issuers and extensive consultation with investors, issuers and other stakeholders. The CSA also reviewed how current Canadian securities disclosure requirements differ from or are consistent with international climate change-related disclosure requirements and voluntary frameworks.

Review the press release and a backgrounder with additional details on the CSA's website and the Notice on the CSA members’ websites.

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Enforcement Activity in the SEC’s Newly-Created Cyber Unit: The First Six Months and What’s Next

Mar 30, 2018

On March 30, 2018, Clearly Gottlieb, a law firm, released a memo that reviews the Cyber Unit’s first six months of work and previews coming attractions.

The memo notes that, so far, the unit’s attention has focused on allegedly improper trading involving hacking and cryptocurrency and ICO fraud claims. And it speculates that the next target may be cybersecurity lapses.

The memo says that the speech pointed to SEC Regulations S-P, SCI and S-ID – which require that covered entities “understand the risks they face & take reasonable steps to address those risks” – including putting “reasonable safeguards in place to address cybersecurity threats.” While noting that no cases involving failure to maintain proper cybersecurity safeguards have been brought as yet, other enforcement proceedings under those rules may provide a roadmap for future actions.

Review the full memo on Clearly Gottlieb's website and the announcement on the SEC's website.

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IASB publishes revised Conceptual Framework

Mar 29, 2018

On March 29, 2018, the International Accounting Standards Board (the Board) published its revised "Conceptual Framework for Financial Reporting". Included are revised definitions of an asset and a liability, as well as new guidance on measurement and derecognition, presentation and disclosure. The new Conceptual Framework does not constitute a substantial revision of the document as was originally intended when the project was first taken up in 2004. Instead the Board focused on topics that were not yet covered or that showed obvious shortcomings that needed to be dealt with.

 

Summary of main aspects of the Conceptual Framework

The 2018 Conceptual Framework is structured into an introductory explanation on the status and purpose of the Conceptual Framework, eight chapters, and a glossary:

Chapter Topic
Status and purpose of the Conceptual Framework
1 The objective of general purpose financial reporting
2 Qualitative characteristics of useful financial information
3 Financial statements and the reporting entity
4 The elements of financial statements
5 Recognition and derecognition
6 Measurement
7 Presentation and disclosure
8 Concepts of capital and capital maintenance
Appendix A Glossary

Review our Global IAS Plus page for a summary of the key content of each chapter.

The Conceptual Framework does not have a stated effective date and the Board will start using it immediately.

 

References to the Conceptual Framework

Together with the revised Conceptual Framework, the Board has also issued Amendments to References to the Conceptual Framework in IFRS Standards. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32. Not all amendments, however update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only updated to indicate which version of the framework they are referencing to (the IASC framework adopted by the Board in 2001, the IASB framework of 2010, or the new revised framework of 2018) or to indicate that definitions in the standard have not been updated with the new definitions developed in the revised Conceptual Framework.

The amendments, where they actually are updates, are effective for annual periods beginning on or after January 1, 2020.

 

Additional information

The Board also announced that on April 18, 2018, there will be two live web presentations to introduce the revised Conceptual Framework. Please click for more information and registration on the Board's website.

 

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