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Leaf - sustainability (green) Image

IFAC encourages a building blocks approach for reporting sustainability-related information

May 06, 2021

On May 6, 2021, the International Federation of Accountants (IFAC) published a revised building blocks approach to reporting sustainability information — enhancing its previously issued roadmap "Enhancing Corporate Reporting: The Way Forward" released in September 2020 and calling for the creation of a new sustainability standards board that would exist alongside the IASB under the IFRS Foundation.

As in the predecessor publication, IFAC continues to support a new standard-setting board under the IFRS Foundation that can lead to the coordination and harmonization of reporting and provide a baseline of requirements addressing sustainability information that is material to enterprise value. With the new publication, IFAC hopes to foster discussion on how the building blocks approach can deliver a global system for consistent, comparable, and assurable sustainability-related information that best meets the needs of investors and other stakeholders.

Review the press release and Enhancing Corporate Reporting: Sustainability Building Blocks on the IFAC's website.

Leaf - sustainability (green) Image

IOSCO Vice Chair explains why and how IOSCO supports the sustainability initiative of the IFRS Foundation Trustees

May 06, 2021

On May 6, 2021, at the high-level conference "Proposal for a Corporate Sustainability Reporting Directive - The Way Forward" hosted by the European Commission, Jean-Paul Servais, Vice Chair of the International Organization of Securities Commissions (IOSCO) and Chair of the IFRS Foundation Monitoring Board explained why IOSCO believes in the IFRS Foundation Trustees’ sustainability initiative and what IOSCO will do to support it.

Mr. Servais began his speech by explaining how financial markets and their regulators are a part of the solution to ensure the financial system is resilient in the face of climate-related risks and to support the transition to a sustainable economy. For the financial markets to play their role, the disclosure of comprehensive and comparable sustainability-related disclosure would be of paramount importance and since there are currently wide gaps in the disclosure requirements, the public authorities would need to step in.

He then discussed why and how IOSCO is involved:

  1. IOSCO is involved because enterprise value reporting is part of its mandate to promote investor protection and IOSCO’s members can enforce sustainability reporting and help prevent greenwashing by market participants.
  2. IOSCO is also involved because of its role in the oversight of the governance of the IFRS Foundation and will monitor the governance implications of the IFRS Trustees’ proposals on sustainability.
  3. And IOSCO can play a critical role in adding momentum to the IFRS initiative and in fostering endorsement of the new standards around the world.

Mr. Servais stressed that IOSCO encourages a “building blocks” approach to establishing a global sustainability reporting system and limiting undue fragmentation as much as possible. By working with standard-setters from key jurisdictions, the new IFRS sustainability board’s standards would provide a globally consistent and comparable sustainability-reporting baseline. The building blocks approach would then allow jurisdictions to go further and faster if they wish, while retaining cross-border comparability. He added:

In this respect, I believe there is consistency between the IFRS/IOSCO approach and the EU’s thinking on international cooperation. The EU cannot achieve the green transition alone. It needs other countries to share its ambition and work in the same direction. Greater international alignment on ESG-related disclosures will increase global transparency. It will also reduce the due-diligence costs for global investors and the administrative costs of companies operating globally.

Mr. Servais then turned to the European Commission initiative and the proposal for a Corporate Sustainability Reporting Directive (CSRD). He welcomed that the Commission has clarified that-the EU standards should aim to incorporate the essential elements of globally accepted standards currently being developed and would build on and contribute to standardization initiatives at global level. He noted that he expected the first IFRS standard in mid-2022 and welcomed that the draft Directive clarified that EU standards "should take account of any sustainability reporting standards developed under the auspices of International Financial Reporting Standards Foundation”.

Review the full speech.

IAASB - Assurance Image

IAASB issues updated framework for activities to guide selection and prioritization of actions

May 04, 2021

On May 4, 2021, the International Auditing and Assurance Standards Board (IAASB) published its new Framework for Activities. The Framework describes the IAASB’s operating processes and procedures for advancing standard setting and other related activities.

The IAASB developed the Framework to support a more agile standard-setting process. The Framework also provides additional public transparency around the IAASB’s prioritization activities, beyond the formally approved due process. The Framework sets out the different components within the IAASB’s due process for advancing topics onto and through the IAASB’s work plan.

Review the press release and Framework on the IAASB's website.

IFRS - AcSB Image

AcSB Exposure Draft – Disclosure Requirements in IFRS Standards — A Pilot Approach

May 03, 2021

On May 3, 2021, the Accounting Standards Board (AcSB) issued its Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. Comments are requested by October 21, 2021.

The AcSB would like input from Canadian respondents on the following additional question regarding the proposed amendment:

The IASB has developed the proposed amendment in accordance with its due process for application around the world. Assuming the Exposure Draft proposal is finalized and approved by the IASB in accordance with its due process, do you think that the proposal is appropriate for application in Canada? If not, please specify which aspects of the proposal, and what circumstances, make the accounting requirement proposed in the Exposure Draft inappropriate.

Review the press release and exposure draft on the AcSB's website.

IESBA (International Ethics Standards Board for Accountants) (lt gray) Image

IESBA Meeting Highlights: March 2021 Meetings

Apr 30, 2021

In April 2021, the In­ter­na­tional Ethics Stan­dards Board for Ac­coun­tants (IESBA) re­leased the high­lights sum­mary of its vir­tual meet­ings held on March 15-17, 23 & 31, 2021  

The Agenda items in­cluded:

  • Non-Assurance Services & Fees Rollout
  • Benchmarking
  • Tech­nol­ogy
  • En­gage­ment Team – Group Au­dits In­de­pen­dence
  • Emerging Issues and Outreach Committee
  • Long Association Post-Implementation Review – Phase 1
  • IAASB-IESBA Coordination
  • Tax Planning & Related Services

Re­view the high­lights summary and pod­cast on the IESBA's web­site.

IAASB - Assurance Image

IAASB video addresses quality management consideration for firms

Apr 30, 2021

On April 30, 2021, the International Auditing and Assurance Standards Board (IAASB) released a video on the suite of quality management standards now available.

The video addresses considerations for firms when preparing to implement the standards, such as what may be retained from current systems, the time and resources needed, the impact on the firm as a whole, and various ways to approach implementation. It emphasizes the need for firms to start early and prepare for implementation.

Review the press release and video on the IAASB's website.


IFRS Foundation Trustees propose amendments to the Constitution

Apr 30, 2021

On April 30, 2021, the Trustees of the IFRS Foundation have proposed amendments to the IFRS Foundation Constitution that would enable the creation of a new sustainability standards board under the governance of the Foundation. They have also released a feedback statement summarizing the main messages they received in response to their sustainability consultation paper.

Proposed amendments to the Constitution

The Trustees are proposing amendments that are a prerequisite for creating a potential International Sustainability Standards Board (ISSB) within the governance structure of the IFRS Foundation. They regard:

  • The objective of the IFRS Foundation. The objective of the IFRS Foundation would be amended to state that the IFRS Foundation has two standard setters: The International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB). Through the ISSB, the IFRS Foundation would "develop, in the public interest, a single set of high quality, understandable, enforceable and globally accepted sustainability standards based upon clearly articulated principles".
  • The governance of the ISSB and the IASB. The Trustees propose that the Constitution is amended to stipulate that the Executive Director of the Foundation is appointed by the Trustees, in consultation with the chairs of the IASB and the ISSB. This proposed amendment would clarify reporting lines in an organisation with two standard-setting boards.
  • The name of the new board and its standards. The Trustees propose to name the new board the 'International Sustainability Standards Board (ISSB)'. The new board’s standards would be known as ‘IFRS sustainability standards’.
  • The composition of the ISSB. The new board would normally comprise 14 members. The members of the ISSB would appointed by the Trustees. A minority of ISSB members could be part-time members. The main qualifications for membership of the ISSB would be professional competence and relevant professional experience. The board would comprise three members from the Asia-Oceania region, three members from Europe, three members from the Americas, one member from Africa, and four members appointed from any area. The Chair would be chosen by the Trustees from among the full-time members as would a potential Vice-Chair be.

Please click to access the proposed amendments on the IASB website. Comments are requested by July 29, 2021.

Feedback statement

In September 2020, the Trustees published a consultation paper to assess demand for global sustainability standards and what role the Foundation might play in the development of such standards. They received 577 comment letters indicating great international demand for global sustainability standards and broad support for establishing a standard setter for these standards under the governance of the IFRS Foundation. The feedback statement summarizes the responses and states how the Trustees have responded to the feedback.

Access the feedback statement on the IASB's website.

Review the press release announcing the publication of the proposed amendments to the Constitution and the feedback statement on the IASB's website.

IESBA (International Ethics Standards Board for Accountants) (lt gray) Image

Global Ethics Board Takes Major Step Forward in Strengthening Auditor Independence

Apr 28, 2021

On April 28, 2021, the International Ethics Standards Board for Accountants (IESBA) released revisions to the Non-Assurance Services (NAS) and fee-related provisions of the "International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code)".

The revised NAS and fee-related provisions significantly strengthen the guardrails around auditor independence in two important areas that have the potential to create incentives influencing auditor behavior—non-assurance services provided to audit clients and fees.

The package of new measures includes:

  • A far-reaching prohibition on audit firms from providing a NAS that might create a self-review threat to an audit client that is a public interest entity.
  • New provisions to enable and promote more robust engagement between auditors and those charged with governance of public interest entities about independence matters relating to NAS and fees.
  • Strengthened provisions to address undue fee dependency on audit clients.
  • Provisions to stimulate greater public transparency about fees paid by audit clients that are public interest entities to assist stakeholder judgments about auditor independence.
  • Comprehensive guidance to steer auditors’ threat assessments and actions in relation to NAS and fees.

The revised NAS and fee-related provisions become effective for audits of financial statements for periods beginning on or after December 15, 2022. Early adoption is permitted and encouraged.

Review the press release and the Code on the IESBA's website.

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Communicating Key Audit Matters in the Auditor’s Report

Apr 28, 2021

On April 28, 2021, the Auditing and Assurance Standards Board (AASB) released new resources to support the communication of Key Audit Matters (KAM) in the auditor’s report and help auditors work with their clients.

Communicating key audit matters (KAMs) is the biggest change in the auditor’s report we have seen in the last decade. Canada is now in the last phase of its enhanced auditor reporting project.

The AASB released three new pieces of non-authoritative guidance: Lessons Learned, Roadmap, and FAQ.

These resources are particularly important for small and medium-sized firms communicating KAMs for audits of financial statements for periods ending on or after December 15, 2022.

Review the press release and resources on the AASB's website.


IASB proposes update to IFRS Taxonomy 2021

Apr 21, 2021

On April 21, 2021, the International Accounting Standards Board (IASB) issued a proposed IFRS Taxonomy Update, "IFRS Taxonomy 2021 Proposed Update 1 — Disclosure of Accounting Policies and Definition of Accounting Estimates". Comments are request by by June 21, 2021.

The proposed taxonomy update includes changes to elements to reflect new and amended disclosure requirements in Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) and Definition of Accounting Estimates (Amendments to IAS 8).

Review the press release and proposed taxonomy update on the IASB’s website.

Correction list for hyphenation

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