The proposal would, among other things, “establish specific requirements for auditors to understand management’s processes regarding compliance with laws and regulations, which can provide insight into the company’s control environment, and to identify, through inquiry and other procedures, laws and regulations applicable to the company with which noncompliance could reasonably have a material effect on the financial statements.” Comments on the proposal are due by August 7, 2023.

Re­view the press release on PCAOB’s website and our project summary.

The main legislative changes contained within the consultation paper concern amendments to the transfer pricing adjustment rule set out in section 247 of the Income Tax Act. These proposed amendments aim to align the transfer pricing adjustment rule in section 247 of the act with the guidance provided by the OECD in the latest version of its report on the general application of the arm’s length principle: Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.

Re­view the consultation paper on the Canada’s Department of Finance Website.

The CSA assured that the SEDAR+ system itself is functioning well. However, the process of assuring quality migration of large volumes of data from multiple legacy systems is taking longer than planned. The SEDAR+ project leadership team has added an additional six weeks to the project timeline to ensure that the data migration meets the CSA’s strict quality control standards.

If work on the data migration is not complete in time for the July launch, the CSA has also set September 12, 2023, as a contingency date. To assist filing organizations with planning for SEDAR+, the CSA will confirm the SEDAR+ go-live date by the end of June.

Until SEDAR+ goes live, all capital market participants are required to continue using SEDAR and the other systems in current use.

Re­view news release on CSA's website.

Below is an analysis of all changes made to the work plan since our last analysis on May 2, 2023.

Standard-setting projects

• Amendments to climate-related SASB standards — A newly added project regarding consequential amendments to the climate-related SASB standards to align them with IFRS S2; the consequential amendments are expected to be published together with IFRS S2 in June 2023.
• Business Combinations — Disclosures, Goodwill and Impairment — An exposure draft is expected in H1 2024 (previously no date given).
• Dynamic Risk Management — An exposure draft is expected in 2025 (previously no date given).
• Equity Method — An exposure draft is expected in 2024 (previously no date given).
• Financial Instruments with Characteristics of Equity — An exposure draft is expected in H2 2023 (previously no date given).
• International applicability of the SASB standards — Feedback on the exposure draft published in May 2023 is expected to be discussed in Q3 2023.
• Management Commentary — A decision on the direction of the project is expected in H2 2023 (previously no date given).
• Primary Financial Statements — The IFRS Accounting Standard is now expected in 2024 (previously no date given).
• Rate-regulated Activities — The IFRS Accounting Standard is now expected in 2025 (previously no date given).

Maintenance projects

• Annual Improvements to IFRS Accounting Standards — These projects have been added to the work plan with an exposure draft expected in Q3 2023:
• Disclosure of Deferred Difference between Fair Value and Transaction Price (Amendments to Illustrative Guidance accompanying IFRS 7)
• Lessee Derecognition of Lease Liabilities (Amendments to IFRS 9)
• Climate-related Risks in the Financial Statements — Review of the research is now expected in Q3 2023 (previously H2 2023).
• International Tax Reform — Pillar Two Model Rules — Project removed from work plan with the issuance of the IFRS Accounting Standard.
• Lack of Exchangeability (Amendments to IAS 21) — An IFRS Accounting Standard amendment is now expected in Q3 2023 (previously July 2023).
• Provisions — Targeted Improvements — A decision on the direction of the project is expected in H2 2023 (previously no date given).
• Supplier Finance Arrangements — Project removed from work plan with the issuance of the IFRS Accounting Standard amendment.

Research projects

• Business Combinations under Common Control — The decision on the direction of this project is expected in Q3 2023 (previously no date given).
• Extractive Activities — The decision on the direction on this project is expected in Q3 2023 (previously July 2023).
• Post-implementation Review of IFRS 9: Impairment — Feedback on the request for information published in May 2023 is expected to be discussed in H2 2023.

Strategy and Governance projects

• ISSB Consultation on Agenda Priorities — Feedback on the request for information published in May 2023 is expected to be discussed in H2 2023.

Other projects

• IFRS Accounting Taxonomy Update — Amendments to IAS 12, IAS 21, IAS 7 and IFRS 7 — A proposed IFRS Taxonomy update is now expected in Q3 2023 (previously H2 2023).
• IFRS Accounting Taxonomy Update — Primary Financial Statements — This project has been added to the work plan with a proposed IFRS Taxonomy update expected in 2024.
• IFRS Sustainability Disclosure Taxonomy — A proposed IFRS Sustainability Disclosure Taxonomy is now expected in Q3 2023 (previously H2 2023).

The above is a faithful comparison of the IASB and ISSB work plan on May 2, 2023, and June 1, 2023.

For access to the current work plan at any time, please click here.

This MoU provides a framework for expanding the cooperation between the IBA and IFAC, with a particular focus on anti-corruption and how the professions can work more closely together in the fight against money-laundering and economic crime., with key stakeholders such as the United Nations and Financial Action Task Force. Other areas of cooperation include maintaining the reputations and integrity of the accountancy and legal professions; ensuring that initiatives to regulate both professions are proportionate and fit-for-purpose; and enhancing the strength of the IBA and IFAC’s collective voice on global policy issues so that the legal and accountancy professions are in the best position to serve the public interest.

Access the news release on the IFAC website.

Reporting obligations will apply to any private-sector entity (defined below) that is: (i) producing, selling or distributing goods in Canada or elsewhere; (ii) importing into Canada goods produced outside Canada, or (iii) controlling an entity engaged in either of the above activities.

An "entity" is defined as a corporation or a trust, partnership or other unincorporated organization that: (i) Is listed on a stock exchange in Canada; (ii) has a place of business in Canada, does business in Canada or has assets in Canada and, based on its consolidated financial statements, has met at least two of the following three conditions in at least one of its last two financial years: (a) had at least C$20-million in assets; (b) generated at least C$40-million in revenue; (c) employed an average of at least 250 employees, or (iv) Is prescribed by regulations (although no such regulations have yet been promulgated)

Reporting obligations will also apply to all federal government institutions, ministries and departments, including Crown corporations and wholly owned subsidiaries, that are producing, purchasing or distributing goods in Canada or elsewhere.

The first report will be required to be filed on or before May 31, 2024.

Re­view the article on Blake, Cassels & Graydon LLP's website and the Act on the Parliament of Canada website.

The IASB has decided that while reviewing IFRS 9 in its entirety, it will do so in three parts:

• In 2022, the IASB completed its review of the classification and measurement requirements, concluding that these requirements are working as intended.
• With the request for information published today, the IASB is seeking feedback on the impairment requirements.
• The IASB will seek feedback separately on the hedge accounting requirements.

After discussing feedback from outreach, the Board decided in February 2023 to examine further:

• the general approach to recognition of expected credit losses (ECL),
• significant increases in credit risk,
• the measurement of ECL,
• the prevalence of particular questions from entities on how to apply the ECL requirements to purchased or originated credit-impaired financial assets,
• the simplified approach to recognition of ECL for trade receivables, contract assets and lease receivables,
• the accounting for loan commitments, collateral and other credit enhancements held, and issued financial guarantee contracts that are in scope of IFRS 9,
• the application of the ECL requirements alongside other requirements in IFRS 9 or in other IFRS Accounting Standards,
• the effects of transition reliefs provided by the IASB and the balance between reducing costs for preparers of financial statements and providing useful information to users of financial statements,
• and the disclosure requirements for credit risk in IFRS 7.

Comments on the RFI are requested by September 27, 2023.

Review the press release and the Request for Information on the IASB website.

Highlights of the podcast include discussions on:

• Supplementary meeting on proposed amendments to the IFRS for SMEs Accounting Standard on international tax reform.
• Decisions and developments related to the projects on primary financial statements, disclosure initiative — subsidiaries without public accountability: disclosures, dynamic risk management, business combinations — disclosures, goodwill and impairment, and management commentary.

Access the podcast on the IASB website.

Background

The IFRS Interpretations Committee received a submission about supply chain finance arrangements asking:

• How an entity presents liabilities to pay for goods or services received when the related invoices are part of a supply chain finance (or reverse factoring) arrangement; and
• what information about reverse factoring arrangements an entity is required to disclose in its financial statements.

In response to that submission, the Committee published an agenda decision in December 2020. However, feedback and input received — in particular from investors and analysts — suggested the information entities provide about supplier finance arrangements applying existing IFRS requirements does not meet all investor information needs.

In response to that feedback, the Board decided to amend IAS 7, Statement of Cash Flows, and IFRS 7, Financial Instruments: Disclosures to add disclosure requirements, and ‘signposts’ within existing disclosure requirements, that ask entities to provide qualitative and quantitative information about supplier finance arrangements.

Key changes

The amendments in Supplier Finance Arrangements (Proposed amendments to IAS 7 and IFRS 7): 

• Do not define supplier finance arrangements. Instead, the amendments describe the characteristics of an arrangement for which an entity is required to provide the information. The amendments note that arrangements that are solely credit enhancements for the entity or instruments used by the entity to settle directly with a supplier the amounts owed are not supplier finance arrangements.
• Add two disclosure objectives. Entities will have to disclose in the notes information that enables users of financial statements
• to assess how supplier finance arrangements affect an entity’s liabilities and cash flows and

• to understand the effect of supplier finance arrangements on an entity’s exposure to liquidity risk and how the entity might be affected if the arrangements were no longer available to it.
• Complement current requirements in IFRSs by adding to IAS 7 additional disclosure requirements about:
• the terms and conditions of the supplier finance arrangements;

• for the arrangements, as at the beginning and end of the reporting period:
• a) the carrying amounts of financial liabilities that are part of the arrangement and the associated line item presented;

• b) the carrying amount of financial liabilities disclosed under a) for which suppliers have already received payment from the finance providers;

• c) the range of payment due dates (for example, 30 to 40 days after the invoice date) of financial liabilities disclosed under a) and comparable trade payables that are not part of a supplier finance arrangement; and
• the type and effect of non-cash changes in the carrying amounts of the financial liabilities that are part of the arrangement.

The IASB decided that, in most cases, aggregated information about an entity’s supplier finance arrangements will satisfy the information needs of users of financial statements.

• Add supplier finance arrangements as an example within the liquidity risk disclosure requirements in IFRS 7.

Effective date and transition

An entity applies the amendments to IAS 7 for annual reporting periods beginning on or after 1 January 2024 (with earlier application permitted) and the amendments to IFRS 7 when it applies the amendments to IAS 7. There is a certain amount of transition relief provided, including relief regarding comparative information and interim period information.

Review the press release on the IASB website.

Topics covered include:

• What is the Internet of Things? Why is it important?
• The latest developments
• What this might mean for the IAASB

Access the market scan on the IAASB website.