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Do Cash Payments Promote Whistleblowing? Quebec and Ontario as Test Cases

Nov 17, 2017

On November 17, 2017, Stikeman Elliott LLP released an article where they discuss whether or not offering monetary incentives promotes whistleblowing.

While the program adopted by the OSC incentivizes reports of misconduct by offering monetary awards to whistleblowers meeting certain eligibility criteria, the AMF refused to offer financial awards, arguing that the protection of confidentiality – and not the prospect of financial rewards – is what primarily motivates whistleblowers to report incidents. The discrepancy between the two models raised the question of whether payment is the key to a successful whistleblower program.

Review the full article on Stikeman Elliott LLP's website.

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IFRS 17 Transition Resource Group meeting summary and podcast - November 2017

Nov 17, 2017

On November 17, 2017, the International Accounting Standards Board (IASB) released a summary of its meeting held on November 13, 2017.

The TRG is intended to support implementation by providing a public forum to discuss questions raised on implementation of the new Standard IFRS 17, Insurance Contracts.

The TRG discussed Agenda Paper 1, which included an overview and operating procedures.

Review the meeting summary and podcast on the IASB's website.

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Updated IASB work plan — Analysis

Nov 16, 2017

On November 16, 2017, the International Accounting Standards Board (IASB) updated its work plan following its November 2017 meeting. Changes mostly relate to a new project on management commentary and the fact that the direction of the Board project addressing issues identified during the PIR of IFRS 8 needs to be decided.

Below is an analysis of all changes made to the work plan since our last analysis on October 27, 2017.

Major projects

  • A new project Management commentary (Wider corporate reporting) has been added to the IASB's agenda. The aim of the project is to review and update the Management Commentary Practice Statement issued in 2010 to help address the lack of alignment and integration between wider corporate reporting and financial reporting. The next project step will be an exposure draft, however, the Board is still considering the timetable for the publication of the ED.
  • Definition of material - feedback on the ED is now expected in February 2018.

Main­te­nance projects

  • Improvements arising from the post-implementation review of IFRS 8 — The feedback received on the ED revealed that respondents had mixed views on the proposals, and Board member views were also mixed. It was suggested during the Board's discussions at the November meeting that if the proposals ended up creating more problems, then the Board should consider not finalizing them. If it was decided to reject only some of the proposals, the staff should then assess the costs and benefits of proceeding with finalizing the remaining proposals. A decision on the project direction is expected in January 2018.

Other projects

  • IFRS Taxonomy update for the annual improvements 2017 — new entry added to work plan. A proposed update is expected in November 2017.

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

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Audit technology evolving quickly at Big Four

Nov 14, 2017

On November 14, 2017, Accounting Today released an article on how the major audit firms are leveraging the latest tools to make the auditing process more efficient.

As technology gets more advanced, it gives auditors a way to visualize financial data and analyze it better. Emerging technologies include the use of drones.

Review the full article on Accounting Today's website.

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Financial Reporting’s Logical Next Step: Blockchain

Nov 12, 2017

On November 12, 2017, Financial Executives International (FEI) released an article on how the Financial Executives Research Foundation (FERF) is collaborating with Deloitte to explore how blockchain is currently being adopted in the financial reporting community, the potential for industry disruption and the realistic next steps for the technology to be embraced.

In a video discussion, FEI Managing Editor Olivia Berkman discusses the evolution of blockchain on financial reporting with Will Bible, Audit & Assurance Partner, Deloitte & Touche LLP and Jake Benson, CEO, of Libra, a New York-based blockchain financial reporting start-up.

They discuss how blockchain is being implemented incrementally in financial reporting and right now it's being used in specific applications for business processes, such trading, consortiam, or supply chain management. But blockchain could really have an impact on every single line item on the balance sheet or income statement, because it is a recordkeeping technology. 

View the video on FEI's website.

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Summary of the September 2017 ASAF meeting now available

Nov 09, 2017

On November 9, 2017, the staff of the International Accounting Standards Board (IASB) made available a summary of the discussions of the Accounting Standards Advisory Forum (ASAF) meeting held in London on September 28, 2017.

The topics covered during the meeting included:

  • Primary financial state­ments 
  • Rate-regulated activities
  • Definition of a business
  • Goodwill and impairment
  • Project updates and agenda planning

Review the press release and the summary of the meeting on the IASB's website.

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IASB Chairman comments on the IASB's role in wider corporate reporting

Nov 09, 2017

On November 9, 2017, the International Accounting Standards Board (IASB) released a speech by IASB Chairman, Hans Hoogervorst, given at a Brazilian international accounting seminar held on November 9. In his speech, Mr. Hoogervorst discussed the IASB's present initiative on better communication in financial reporting, support of implementation and application of IFRSs, and the IASB’s role in reporting that goes beyond the financial statements.

On better communication Mr. Hoogervorst offered no new insights, but confirmed that the IASB feels that it now has a good set of standards that covers the vast majority of transactions and would therefore prioritize better presentation and formatting of the information in the financial statements in the coming years, rather than developing new, big standards with focus on recognition and measurement. Similarly, on support of implementation and application, he mainly stressed the importance of the work of the IFRS Interpretations Committee, but offered no detailed insights.

Turning then to wider corporate reporting, Mr. Hoogervorst stated that the IASB is often asked questions about its role in this space and that some constituents would like the IASB to play a more central role in trying to create more uniformity in the multitude of sustainability standards. He admitted:

[T]he IASB knows that financial reporting in the narrow sense has its limitations. There are many elements of value creation which are important to the investor but which are not adequately captured in the financial statements. Investors need to understand a company’s business model and its strategy for long-term value creation. They need to understand the intangibles that are vital to their business model. And, yes, sustainability issues can also be important for long-term value creation in certain industries, just think of mining and car manufacturing.

And yet he also stated:

Let me be clear; we do not plan to get into environmental and sustainability reporting. That is not our area of expertise. There are many other players. Our remit is, and will remain, financial reporting—with focus on the participants in the capital markets. That is investors and potential creditors.

In conclusion, Mr. Hoogervorst offered that there has been a lot of development in this area since 2010 when the IASB published its Management Commentary Practice Statement and therefore, the IASB "is considering" whether to update the practice statement to capture the developments. This topic has been included on the IASB's agenda for its next meeting.

Review the full speech on the IASB's website.

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Lessons learned from SEC comment letters on the new revenue standard

Nov 09, 2017

On November 9, 2017, Financial Executives International (FEI) released an update where it identified 21 companies that received comment letters from the SEC related to the new revenue standard and summarized the key observations and potential pitfalls to avoid during the adoption of ASC 606 and other new accounting standards.

The new revenue standard is effective for all public entities for annual periods beginning January 1, 2018 for calendar year-end public entities. The SEC’s Division of Corporation Finance selectively reviewed filings to monitor and enhance compliance with applicable disclosure and accounting requirements of the new standard. FEI reviewed revenue-related comment letter correspondence between the SEC and filers, and found the following trends:

  • Early adopters have been asked to clarify considerations made for operationalizing different aspects of the standard
  • The SEC began requesting more robust SAB 74 disclosures for periods ending December 31, 2016
  • Several companies have disclosed incorrect effective dates for ASC 606 in their SAB 74 disclosures

Review the press release and the update on FEI's website.

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SEC Proposed 2018 Reporting Taxonomy

Nov 08, 2017

On November 8, 2017, the Securities and Exchange Commission (SEC) announced its preliminary 2018 reporting taxonomy following a formal public review of the proposal.

The 2018 SEC Reporting Taxonomy (SRT) moves a range of elements from the GAAP Financial Reporting Taxonomy into a new taxonomy that can be used for companies reporting under both IFRS and US GAAP. 

The broad categories addressed in the SRT include:

  • The oil and gas industry
  • Financial schedules
  • Condensed consolidating financial information for guarantors
  • Country code elements
  • Common axis/domain used while reporting financials in US-GAAP.

The introduction of the SRT taxonomy eliminates the need for foreign private issuers (FPIs) using the IFRS taxonomy to import the US-GAAP Financial Reporting Taxonomy. This simplifies what would otherwise be a complex process.

Review the announcement on the SEC's website and the taxonomy on the FASB's website.

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OECD: Transfer pricing country profiles updated

Nov 06, 2017

On November 6, 2017, the Organisation for Economic Co-operation and Development (OECD) published updated versions of transfer pricing country profiles (TPCP), reflecting the current transfer pricing legislation and practices of 31 participating countries. The country profiles contain up-to-date and harmonized information on key aspects of transfer pricing legislation, provided by countries themselves.

Following the outcome of the OECD/G20 Project on Base Erosion and Profit Shifting (the BEPS Project), many countries and jurisdictions have implemented measures to reflect the revisions to the Transfer Pricing Guidelines resulting from the 2015 Reports on Action 8-10 Aligning Transfer Pricing Outcomes with Value Creation and on Action 13 Transfer Pricing Documentation and Country-by-Country Reporting, in addition to changes incorporating the revised guidance on safe harbours approved in 2013 as well as consistency changes made to the rest of the OECD Transfer Pricing Guidelines.

The newly updated profiles focus on countries' domestic legislation regarding key transfer pricing principles, including the arm's length principle, transfer pricing methods, comparability analysis, intangible property, intra-group services, cost contribution agreements, transfer pricing documentation, administrative approaches to avoiding and resolving disputes, safe harbours and other implementation measures. The information contained in the TPCP is intended to clearly reflect the current state of countries' legislation and to indicate to what extent their rules follow the OECD Transfer Pricing Guidelines. The information was provided by countries themselves in response to a questionnaire so as to achieve the highest degree of accuracy.

Review the country profiles on the OECD's webiste.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.