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CPAB - Assurance Image

Continuing the conversation on audit quality

May 08, 2019

In May 2019, the Canadian Public Accountability Board (CPAB) released three new publications on audit quality.

In 2018 CPAB explored comprehensive reviews, effective audit committee communications and the use of data analytics in the audit. Here are their findings in these areas.



Consultation Paper 2, Reviewing PSAB’s Approach to International Public Sector Accounting Standards

May 08, 2019

On May 8, 2019, the Public Sector Accounting Board (PSAB) released its second International Strategy consultation paper. This paper summarizes feedback they heard on their first paper in 2018. The options are clarified to better support stakeholders’ feedback on the important question PSAB will be answering by March 2020 – what is the future of Canada’s public sector accounting international strategy? Comments are requested by September 30, 2019.

The purpose of this second Consultation Paper on International Strategy is to:

  • summarize respondents’ feedback to Consultation Paper 1, notably the decision-making criteria and options outlined therein;
  • clarify the options;
  • describe the updated decision-making criteria that reflects the feedback; and
  • apply the updated criteria to each of the options.

With this second Consultation Paper, PSAB anticipates being in a position to decide on its approach to IPSAS by March 2020 at its regular Board Meeting.

Review the press release and Consultation Paper 2 on the PSAB's website.


AICPA issues SAS 134 and SAS 135

May 08, 2019

On May 8, 2019, The American Institute of CPAs (AICPA) Auditing Standards Board published two Statements on Auditing Standards (SASs): No. 134, “Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements,” and No. 135, “Omnibus Statement on Auditing Standards — 2019.”

SAS 134 “addresses the auditor’s responsibility to form an opinion on the financial statements and the form and content of the auditor’s report issued as a result of an audit of financial statements.” This SAS also discusses “the auditor’s responsibilities, and the form and content of the auditor’s report, when the auditor concludes that a modification to the auditor’s opinion on the financial statements is necessary, and when additional communications are necessary in the auditor’s report.”

SAS 135 “is intended to more closely align [AICPA] guidance with the PCAOB's standards by primarily amending AU-C section 260, Communications With Those Charged With Governance, AU-C section 550, Related Parties, and AU-C section 240, Consideration of Fraud in a Financial Statement Audit, in AICPA Professional Standards.”

Review the press release on the AICPA’s website.


Government Not-for-Profit Consultation Paper Released

May 08, 2019

On May 8, 2019, the Public Sector Accounting Board (PSAB) issued its Government Not-for Profit (GNFP) Consultation Paper to inform the readers of the results of the 2017-2018 consultations and seek feedback on matters that would assist them in determining next steps relating to the government not-for-profit strategy. Comments are requested by September 30, 2019.

The purpose of the consultation paper is to:

  • inform GNFP stakeholders of the Canadian and international not-for-profit financial reporting landscape;
  • communicate results of the 2017-2018 GNFP consultations; and
  • request stakeholder input on key issues that will guide PSAB in determining its next steps for the GNFP Strategy.

Review the following information of the PSAB's website:

Reviewing PSAB’s approach to International Public Sector Accounting Standards podcasts:

Reviewing PSAB’s approach to International Public Sector Accounting Standards podcast scripts:

PCAOB (US Public Company Accounting Oversight Board) (dark gray) Image

PCAOB Posts Staff Preview of 2018 Inspection Observations

May 06, 2019

On May 6, 2019, the Public Company Accounting Oversight Board (PCAOB) issued the Staff Preview of 2018 Inspections Observations. This staff preview includes, for the first time, good practices regarding efforts to improve audit quality. It also addresses areas of common deficiencies, observations on technology, and implementation of new accounting and auditing standards and rules.

The preview includes observations of U.S. and non-U.S. audit firms, inspected both annually and triennially.

Highlights of good practices observed include:

  • Expanding accountability and revising training programs
  • Establishing a network of specialized professionals to address emerging risks

Areas of deficiencies observed in 2018 include:

  • Internal Controls of Financial Reporting and Revenue Risk Assessment
  • Accounting estimates such as Allowance for Loan and Lease Losses (ALLL)

Review the Staff Preview on the PCAOB's website.


IASB publishes proposed amendments to IAS 39 and IFRS 9 in the context of the IBOR reform

May 03, 2019

On May 3, 2019, the International Accounting Standards Board (the Board) published an exposure draft "Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39)" that constitutes a first reaction to the potential effects the IBOR reform could have on financial reporting. Comments are requested by June 17, 2019.



Interbank offered rates (IBORs) are interest reference rates, such as LIBOR, EURIBOR and TIBOR, that represent the cost of obtaining unsecured funding, in a particular combination of currency and maturity and in a particular interbank term lending market.

Recent market developments have brought into question the long-term viability of those benchmarks. The Board is monitoring further developments in this regard in order to determine whether there are any implications for the existing accounting requirements. The focus of the project is currently on financial instruments although an IBOR reform would later definitely also have impact on any standard dealing with discounting.

The amendments proposed today deal with issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark with an alternative interest rate and consider the implications for specific hedge accounting requirements in IFRS 9, Financial Instruments and IAS 39, Financial Instruments: Recognition and Measurement, which require forward-looking analysis. 


Suggested changes

The changes proposed in ED/2019/1 Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39)

  • modify specific hedge accounting requirements so that entities would apply those hedge accounting requirements assuming that the interest rate benchmark on which the hedged cash flows and cash flows from the hedging instrument are based will not be altered as a result of interest rate benchmark reform;
  • require specific disclosures about the extent to which the entities' hedging relationships are affected by the proposed amendments; and
  • note that the amendments would be mandatory.

The proposed amendments also note that the Boards proposes to amend the hedge accounting requirements only as specified in the exposure draft and that the proposals are not intended to provide relief from any other consequences arising from interest rate benchmark reform. Moreover, the exposure draft notes that if a hedging relationship no longer meets the requirements for hedge accounting for reasons other than those specified in the exposure draft, then discontinuation of hedge accounting is still required.

Comments on the proposed changes are requested by June 17, 2019.


Effective date

The exposure draft proposes that the amendments would be effective for annual periods beginning on or after January 1, 2020 and would be applied retrospectively. Early application would be permitted.


Additional information


US_SEC Image

SEC proposes improvements to disclosures about acquisitions and dispositions of businesses

May 03, 2019

On May 3, 2019, the Securities and Exchange Commission (SEC) issued a proposed rule, “Amendments to Financial Disclosures About Acquired and Disposed Businesses.”

The proposal would “improve the disclosure requirements for financial statements relating to acquisitions and dispositions of businesses, including real estate operations and investment companies.”

Comments on the proposed rule are due 60 days after the date of its publication in the Federal Register.

Review the press release and proposed rule on the SEC’s website.

FASB (US Financial Accounting Standards Board) (lt blue) Image

FASB Chairman reflects on collaboration with IASB

May 02, 2019

On May 2, 2019, at a financial reporting conference at Baruch College in New York City, Financial Accounting Standards Board (FASB) Chairman Russell Golden discussed the challenges of "bilateral convergence" between IFRS and US GAAP, what the Boards have accomplished together, and how the Boards will work together in the future.

Mr. Golden began his speech by acknowledging that comparable global accounting standards help reduce complexity and costs in financial reporting. He stated, however, that “by 2013, [the FASB had] come to realize that the ideal of single set high-quality global accounting standards was just that—an ideal. Different starting points, different cultures, and different legal systems made bilateral convergence impossible to achieve.”

After he highlighted the success of the joint FASB-IASB projects on business combinations, non-controlling interests, fair value measurements, borrowing costs, segment reporting, stock compensation, and non-monetary exchanges, Mr. Golden reflected on the diverging strategies for the Boards’ projects on revenue recognition, leases, credit losses, and insurance. He closely examined the reasons for divergence, which were usually due to cost and complexity for US stakeholders.

Mr. Golden discussed how the FASB is working to “[forge] a new model for how we support the goal of more comparable, high-quality accounting standards worldwide,” which includes:

  • Development of high-quality GAAP — Mr. Golden noted that considering opportunities to align with IFRS when possible is "embedded" in the FASB’s process. He said the FASB is in "constant contact" with the IASB about the IASB’s projects and that the Boards share research activities to “continue progress toward improved, aligned solutions.”
  • Active participation in the Accounting Standards Advisory Forum (ASAF) — Mr. Golden described the FASB’s commitment to the ASAF, which advises the IASB as it develops IFRS. He called the FASB’s involvement “an important opportunity to represent U.S. interests in the IASB’s standard-setting process” and noted that the ASAF provides a “valuable opportunity to work together with other standard setters on issues of common interest.”
  • Enhancing relationships with other national standard setters — Mr. Golden mentioned that the FASB meets individually with standard setters from many countries to “exchange ideas on improving our respective standards. This process also helped promote the broader flow of information and ideas that mutually inform our thinking. And to contribute to an environment that will foster greater alignment of standards across the globe.”

He made clear in his speech that the FASB will continue to work closely with the IASB to improve accounting standards worldwide. He also briefly provided his own opinion on sustainability reporting:

I think we should follow the IASB’s lead and remain focused on improving the financial statement. And leave sustainability reporting and other performance metrics—however important they may be—to other experts.

Review the full speech on the FASB's website.

PCAOB (US Public Company Accounting Oversight Board) (dark gray) Image

Cybersecurity: A call for auditors to lean in

May 02, 2019

On May 2, 2019, Kathleen M. Hamm, Public Company Accounting Oversight Board (PCAOB) Member, gave the speech "Cybersecurity: Where We Are; What More Can be Done?", at the Baruch College 18th Annual Financial Reporting Conference.

In her speech, Ms. Hamm discusses an emerging area for PCAOB oversight: cybersecurity. Specifically, she explores the dangers posed by cyber and how cybersecurity presents a threat to the financial reporting system and capital markets. she also shares her thoughts on what more audit professionals can do to strengthen the cybersecurity and resiliency of the financial reporting system.

Review the full speech on the PCAOB's website.

Securities - CSA Image

Canadian securities regulators outline next steps on the development of an integrated information system

May 02, 2019

On May 2, 2019, the Canadian Securities Administrators (CSA) set out next steps for a new integrated national information and filing system (the Renewed System) for Canada’s capital markets. The Renewed System will replace the System for Electronic Document Analysis and Retrieval (SEDAR), the System for Electronic Disclosure by Insiders (SEDI), the National Registration Database (NRD), and various local records filing systems.

To lay the groundwork for the Renewed System, the CSA has published two notices for comment that propose a new system fee structure and filing requirements. The CSA is proposing to revise Multilateral Instrument 13-102 System Fees for SEDAR and NRD to implement a flat-fee model, rather than the current model where system fees are based on the number of jurisdictions where documents are filed. The model has been designed to reflect the costs of using the new system, allow for future enhancements, and reduce the administrative burden for market participants.

The CSA is also proposing a new rule, National Instrument 13-103 [System Replacement Rule], which would require filers to electronically transmit all documents to securities regulators through the new system, subject to certain exceptions. Those exceptions include documents delivered in connection with a hearing, compliance review or investigation, or certain documents that are filed infrequently. In addition, the proposed rule would not apply to certain documents that would be required to be filed or delivered in the Renewed System in future phases of the project, as outlined in the Appendix.

The Renewed System will be rolled out in phases. The first phase, with an expected launch in early 2021, will replace issuer-related systems and filings: SEDAR, the National Cease Trade Order Database, the Disciplined List, and certain filings made in paper format or in local electronic filing systems. Later phases will replace SEDI, NRD, the National Registration Search, and the remaining filings in local systems.

The CSA expects to propose further changes to National Instrument 13-103 [System Replacement Rule] in future phases of the Renewed System.

The notices can be found on the websites of participating jurisdictions, and comments for both must be submitted by July 31, 2019.

Review the press release on the OSC's website.

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