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What are companies saying in risk factors about their use of AI in their business?

May 24, 2023

On May 24, 2023, the law firm, Bryan Cave Leighton Paisner (BCLP) released an analysis of recent public disclosures by companies about their use of artificial intelligence in business. While new forms of artificial intelligence and machine-learning systems, or AI, have garnered headlines in the mainstream press, many companies are evaluating its use in their businesses. Perhaps to a greater extent than with previous technological developments, companies need to consider the materiality of risks and uncertainties presented by AI.

Several companies have begun to address the implications of AI in recent 10-K and 10-Q filings, although still less than 10% of companies in the major indices (S&P 500 and Russell 3000). Some companies have included standalone risk factors, while other companies variously address AI as one of a number of factors contained in broader risk disclosures. BCLP remind companies that, as with any other risks, they should include AI in their enterprise risk management systems, to the extent material, as well as their disclosure controls and procedures.

Re­view the analysis on the BCLP website.


IASB publishes amendments to IAS 12 to provide a temporary exception to the requirements regarding deferred tax assets and liabilities related to pillar two income taxes

May 23, 2023

On May 23, 2023, the International Accounting Standards Board (IASB) has published 'International Tax Reform — Pillar Two Model Rules (Amendments to IAS 12)' to respond to stakeholders’ concerns about the potential implications of the imminent implementation of the OECD pillar two model rules on the accounting for income taxes.


In March 2022, the OECD released technical guidance on its 15% global minimum tax agreed as the second ‘pillar’ of a project to address the tax challenges arising from digitalization of the economy. This guidance elaborates on the application and operation of the Global Anti-Base Erosion (GloBE) Rules agreed and released in December 2021 which lay out a coordinated system to ensure that multinational enterprises with revenues above €750 million pay tax of at least 15% on the income arising in each of the jurisdictions in which they operate.

The IASB decided to respond to stakeholders’ concerns about the potential implications of the imminent implementation of these rules on the accounting for income taxes by jurisdictions. In particular, the IASB noted that the situation is very complicated as:

  • jurisdictions may change statutory tax rates to avoid being considered a low-tax environment;
  • companies might decide to move their business to jurisdictions with higher statutory tax rates; and
  • companies might engage in business that comes with tax incentives that might bring down their statutory tax rate to below 15% although the jurisdiction they are doing business in is not generally considered a low-tax environment.

All of these and further considerations would entail most complicated calculations of deferred tax in a situation that is highly volatile due to the fact that jurisdictions implement the OECD rules at different speed and different points of time. Due to the many unknown variables involved, the IASB has decided to develop a mandatory exemption until the global tax system has settled and reestablished itself and the IASB can thoroughly assess the situation and provide a reliable solution.


The amendments in International Tax Reform — Pillar Two Model Rules (Amendments to IAS 12) are:

  • An exception to the requirements in IAS 12 that an entity does not recognize and does not disclose information about deferred tax assets and liabilities related to the OECD pillar two income taxes. An entity has to disclose that it has applied the exception.
  • A disclosure requirement that an entity has to disclose separately its current tax expense (income) related to pillar two income taxes.
  • A disclosure requirement that states that in periods in which pillar two legislation is enacted or substantively enacted, but not yet in effect, an entity discloses known or reasonably estimable information that helps users of financial statements understand the entity’s exposure to pillar two income taxes arising from that legislation.
  • The requirement that an entity applies the exception and the requirement to disclose that it has applied the exception immediately upon issuance of the amendments and retrospectively in accordance with IAS 8. The remaining disclosure requirements are required for annual reporting periods beginning on or after January 1, 2023.

The IASB will continue to monitor developments related to the implementation of the pillar two model rules. It plans to undertake further work to determine whether to remove the temporary exception — or to make it permanent — after there is sufficient clarity about how jurisdictions implemented the rules and the related effects on entities.

Review the press release on the IASB website.

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Canada: Accessibility Compliance Milestone Coming June 1

May 22, 2023

Per an article in the Society for Human Resource Management (SHRM), many federally regulated businesses in Canada with at least 100 employees must publish an accessibility plan by June 1, 2023 detailing how they will remove barriers for employees and members of the public with disabilities. The date marks the first compliance milestone for the Accessible Canada Act (ACA), which seeks to make the country barrier-free by January 1, 2040.

The Canadian government is pursuing this goal so that individuals with disabilities can feel more comfortable using public services and working for federally regulated organizations. The Accessible Canada Act and the Accessible Canada Regulations strive to achieve this by identifying, removing and preventing barriers in employment, buildings and other public spaces Non-compliance can lead to steep penalties for employers.

The Act, which took effect in 2019, defines a barrier as anything that "hinders the full and equal participation in society of persons with an impairment”.

Re­view news release on SHRM's website.

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FRC publishes minimum standard for FTSE350 audit committees

May 22, 2023

On May 22, 2023, the UK’s Financial Reporting Council (FRC) issued a publication, “The Audit Committees and the External Audit: Minimum Standard”, which comes after careful consideration of the consultation responses received from stakeholders. The consultation on the draft proposal for the Minimum Standard was launched by the FRC as a direct response to the Government's consultation on Restoring Trust in Audit and Corporate Governance, which expressed the intention to grant statutory powers to ARGA (Audit, Reporting and Governance Authority) for mandating minimum standards for audit committees in their role on external audits.

The standard will apply to FTSE350 companies Its primary objective is to enhance performance and ensure a consistent approach across audit committees within the FTSE350. By setting out clear expectations and guidelines, the FRC aims to support the delivery of high-quality audits and reinforce public trust in the financial reporting process..

Re­view the news release and the standard on the Financial Reporting Council website.

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G7 underlines its commitment to global sustainability disclosures

May 22, 2023

Following the G7 Leaders' Summit 2023 on May 19- 21, 2023, a joint declaration was published by the G7 that stresses the need for globally interoperable sustainability disclosure frameworks.

The declaration mentions the work and progress of the International Sustainability Standards Board (ISSB) and highlights the need of sustainability disclosures for mobilizing private sector finance to support the transition to a sustainable economy.

It notes: “We (the G7)  underline our commitment to consistent, comparable and reliable disclosure of information on sustainability including climate. We support the International Sustainability Standards Board (ISSB) finalizing the standards for general reporting on sustainability and for climate-related disclosures and working toward achieving globally interoperable sustainability disclosure frameworks. We also look forward to the ISSB’s future work on disclosure on biodiversity and human capital, in line with its work plan consultation.

Re­view the full statement on Ministry of Foreign Affairs of Japan website.

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ISSB issues podcast on latest Board developments (May 2023)

May 19, 2023

On May 19, 2023, the IFRS Foundation has released a podcast discussing highlights from the May 2023 ISSB meeting. The podcast is hosted by ISSB Chair Emmanuel Faber and Vice-Chair Sue Lloyd.

Highlights of the podcast include discussions on:

  • Ratification of consequential amendments to the SASB Standards;
  • Consultation on the ISSB’s agenda priorities and international applicability of the SASB Standards;
  • Stakeholder engagements;
  • Upcoming publication of S1 and S2 in June 2023.

Access the podcast on the IFRS website.


Updated IPSAS-IFRS alignment dashboard

May 17, 2023

On May 17, 2023, The International Public Sector Accounting Standards Board (IPSASB), which develops the International Public Sector Accounting Standards (IPSAS) for financial reporting by governments and other public sector entities, released an updated IPSAS-IFRS alignment dashboard showing how far individual IPSAS are aligned with corresponding IFRSs.

Access the updated alignment dashboard, which was prepared for the June 2023 IPSASB meeting, on the IPSASB website.

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The AASB establishes a Sustainability Assurance Committee

May 16, 2023

On May 16, 2023, in response to the IAASB’s approval of the project proposal for the development of an overarching sustainability assurance standard, ISSA 5000, the AASB has established the Sustainability Assurance Committee to enhance its technical expertise in this area and support the Board’s sustainability assurance projects.

The roles and responsibilities of the Sustainability Assurance Committee are to:

  • understand current and explore future Canadian trends, practices, and challenges related to sustainability assurance;
  • review the IAASB agenda materials to determine the impact and issues relevant to Canada, and provide input to the AASB for its consideration;
  • assist the AASB in its future Canadian sustainability assurance activities and standard setting; and
  • assist the AASB with external outreach and collaboration activities with other Canadian Standard-setting Boards (AcSB, PSAB, and CSSB).

Access the details of this Committee on the FRAS Canada website.


Webcast on the equity method project

May 16, 2023

On May 16, 2023, following its recent decision to move the equity method of accounting project from the research agenda to the standard-setting agenda, the IASB has released a webcast offering some background on the project.

The webcast offers insights into the project’s objective and approach, the IASB’s tentative decisions, and the project’s next steps.

Access the 12 minute webcast on the IFRS website.

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PCAOB Revises Standard-Setting Agenda and Adds Rulemaking Projects to Enhance Investor Protection

May 16, 2023

On May 16, 2023, the staff of the Public Company Accounting Oversight Board (PCAOB) posted a revised standard-setting agenda that includes the addition of two projects slated for short-term action (relating to firm and engagement performance metrics and substantive analytical procedures). The PCAOB also announced four new projects aimed at improving PCAOB rules to protect investors. The rulemaking projects focus on enhancing investor transparency and enforcement of PCAOB rules and standards.

In commenting on these developments, PCAOB Chair Erica Y. Williams stated that “The PCAOB is pursuing one of the most ambitious standard-setting agendas in its history, and the updates reflect the solid progress that we are making to carry out that agenda. Our new rulemakings also show our commitment to making enhancements that will allow the PCAOB to execute our mission to protect investors more effectively and efficiently.”

Re­view the press release on PCAOB’s website.

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