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IFRS Foundation Trustees propose tenure increases for Chair and Vice-Chair

Jun 19, 2018

On June 19, 2018, the Trustees of the IFRS Foundation issued narrow-scope amendments to the IFRS Foundation Constitution that will increase the maximum tenure of the Trustees’ Chair and Vice-Chair. Comments on the proposal are due by September 17, 2018.

Specifically, the proposed amendments would:

  • Increase the maximum tenure of the Trustee Chair and Vice-Chair to nine years.
  • Allow the option to appoint a Chair from either internally within the Trustees or externally.
  • Clarify the requirements for Trustee reappointments.

Review the press release on the International Accounting Standards Board’s website.

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CAM discussions may drive new corporate disclosures

Jun 18, 2018

On June 18, 2018, Compliance Week released an article on how audit committees may soon face pressure to increase certain areas of corporate disclosure to get ahead of “critical audit matter” disclosures that will begin appearing in audit reports in 2019.

The article describes how the CAM dialogue is inspiring audit committees to think hard even about their own disclosures. Audit committees do not want to see auditors disclosing information about the company that the company itself has not already disclosed. That concern emerged among auditors during the public dialogue and debate as the PCAOB developed the new auditor’s reporting model.

Review the full article on Compliance Week's website.

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Draft Framework for Reporting Performance Measures – Enhancing the relevance of financial reporting

Jun 14, 2018

On June 14, 2018, the Accounting Standards Board (AcSB) issued a Draft Framework for Reporting Performance Measures to enhance the relevance of financial information for all entities – from public and private companies, to not-for-profit organizations and pensions plans. Comments are requested by September 17, 2018.

The AcSB wants to discuss and improve financial and non-financial performance measures reported outside of financial statements.

In introducing the framework, the AcSB notes concerns that are often mentioned in connection with performance measures:

  • the quality of performance measures being reported;
  • the lack of consistency, transparency and comparability of performance measures reported period to period;
  • the “expectation gap” about the governance practices of entities over how performance are developed and reported, and whether those measures are subject to assurance, and
  • the limited guidance available on how to develop and report performance measures not usually subject to assurance.

Consequently, the framework is intended to be a tool to guide:

  • management in developing and assessing how effectively they report financial and non-financial performance measures;
  • directors and others charged with governance in fulfilling their responsibilities when assessing management’s processes and reporting of performance measures; and
  • investors, contributors, lenders and other resource providers in setting expectations and seeking compliance with the framework as part of obtaining the information they need.

This Framework applies to a performance measure that is reported separately from and is not part of a set of financial statements (including note disclosures) prepared in accordance with an accounting framework, such as Canadian GAAP, IFRS® Standards or US GAAP; and is:

  • a non-GAAP financial measure that is an adjustment to a GAAP financial measure*, such as funds from operations and adjusted earnings;
  • another financial measure that is a financial measure and is not a GAAP or non-GAAP financial measure, such as dollars of order backlog and cost per dollar raised; or
  • a non-financial measure or operational measure that reports physical or non-financial data, such as number of volunteers, employees, members, active users or new stores, and performance ratings on client service, safety and reliability.

Review the press release and Draft Framework on the AcSB's website.

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Digital Asset Transactions: When Howey Met Gary (Plastic)

Jun 14, 2018

On June 14, 2018, the Securities and Exchange Commission (SEC) posted a speech by William Hinman, Director of the Division of Corporation Finance, on whether a digital asset offered as a security can, over time, become something other than a security.

In his speech, Mr. Hinman states that:

To start, we should frame the question differently and focus not on the digital asset itself, but on the circumstances surrounding the digital asset and the manner in which it is sold. To that end, a better line of inquiry is: “Can a digital asset that was originally offered in a securities offering ever be later sold in a manner that does not constitute an offering of a security?” In cases where the digital asset represents a set of rights that gives the holder a financial interest in an enterprise, the answer is likely “no.” In these cases, calling the transaction an initial coin offering, or “ICO,” or a sale of a “token,” will not take it out of the purview of the U.S. securities laws.

But what about cases where there is no longer any central enterprise being invested in or where the digital asset is sold only to be used to purchase a good or service available through the network on which it was created? I believe in these cases the answer is a qualified “yes.” I would like to share my thinking with you today about the circumstances under which that could occur.

Review the full speech on the SEC's website.

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The Public Needs a Better Understanding of Public Sector Debt

Jun 14, 2018

On June 14, 2018, the International Federation of Accountants (IFAC) posted an article by Ross Campbell, Public Sector Director of the Institute of Chartered Accountants in England and Wales (ICAEW), on how it has become increasingly standard for governments in well-developed economies to borrow to pay day-to-day operating costs—that is, deficit spending.

There is some evidence to suggest that due to structural changes in well-developed economies, the correlation between economic and tax revenue growth is not as strong as it was.

There is also a demographic impact—almost well-developed nations’ populations are aging, which presents a double impact on public finances. This means that there is a decrease in the percentage of the population actively in the workforce at the same time as an increase in the demand on public services, such as pensions, social care for the elderly, and healthcare.

Without some form of change in policy or a substantial increase in the tax revenue, social provisions on the current scale is not likely to be sustainable over the long term.

Review the full article on the IFAC's website.

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SEC to release letters to companies with serious deficiencies

Jun 12, 2018

On June 12, 2018, the Securities and Exchange Commission’s (SEC) Division of Corporation Finance announced that letters sent to issuers that have “serious deficiencies” in their registration statement or offering document will be made available on EDGAR.

Filings with significant deficiencies can be defined as those that are “not minimally compliant with statutory or regulatory requirements.” Letters issued on June 15, 2018, or later will be published first; these letters will appear on EDGAR within 10 calendar days of issuance.

Review the announcement on the SEC’s website.


Article on IFRS 17 preparations published

Jun 11, 2018

On June 11, 2018, the International Accounting Standards Board (the Board) posted to its website an article "Preparing the market for IFRS 17," in which financial journalist Liz Fisher discusses how the new Standard affects the investor community.

The article noted the "seismic change" IFRS 17 is expected to have on insurance companies as well as the user community. Though implementing the Standard may be turbulent, Ms. Fisher emphasized it's impact: "it will make a huge difference to the consistency and comparability of insurance companies."

The article explains:

  • The "trouble" with IFRS 4, the interim insurance contracts Standard;
  • comparability and transparency; and
  • impact around the world.

Review the article is available on the Boards's website.

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CSA provide additional guidance on securities law implications for offerings of tokens

Jun 11, 2018

On June 11, 2018, the Canadian Securities Administrators (CSA) published CSA Staff Notice 46-308 “Securities Law Implications for Offerings of Tokens,” which provides additional guidance on the applicability of securities laws to offerings of coins or tokens, including ones that are commonly referred to as “utility tokens.”

CSA Staff Notice 46-308 outlines specific situations that may have an implication on the presence of one or more of the elements of an investment contract in the context of an offering of coins or tokens.

This notice supplements the CSA’s August 2017 publication of CSA Staff Notice 46-307 Cryptocurrency Offerings, which outlines how securities law requirements may apply to initial coin offerings, initial token offerings, cryptocurrency investment funds and the cryptocurrency platforms trading these products.

Any business planning to raise capital through an offering of coins or tokens should consider whether it involves the distribution of a security.

Review the press release on the CSA's website and the Staff Notice on the member's website.

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Webcast: IESBA Receives Update from IAASB

Jun 11, 2018

On June 11, 2018, the International Ethics Standards Board for Accountants (IESBA) posted a webcast to present highlights of certain projects of interest to the IESBA Members. Speakers included the International Auditing and Assurance Standards Board (IAASB) Member and Deputy Chair of the IAASB, Ms. Megan Zietsman, along with IAASB Members Ms. Karin French (Quality Control Task Force Chair) and Mr. Ron Salole (Agreed-Upon Procedures Task Force Chair).

The updated projects, include, proposed Quality Control at a Firm Level (ISQC 1), Quality Control at the Engagement Level (ISA 220), the proposed new Engagement Quality Control Standard (ISQC 2) and the proposed revisions to the Agreed-Upon Procedures International Standard on Related Services (ISRS 4400).

View the webcast on the IESBA's website.


Summary of the April 2018 ASAF meeting now available

Jun 08, 2018

On June 8, 2018, the staff of the International Accounting Standards Board (the Board) have made available a summary of the discussions of the Accounting Standards Advisory Forum (ASAF) meeting held in London on April 16 and 17, 2018.

The topics covered during the meeting were the following (numbers in brackets are ref­er­ences to the cor­re­spond­ing para­graphs of the summary):

  • Rate-regulated activities (1–9): ASAF members discussed (1) unit of account and asset/liability definitions and (2) scope of the model. In addition, the ASAF members discussed the development of communication materials.
  • Disclosure initiative — Principles of disclosure (10–24): ASAF members discussed (1) location of information that includes IFRS information outside of financial statements and non-IFRS information within financial statements and (2) accounting policy disclosures.
  • Commodity loans and related transactions (25–43): ASAF members discussed several topics related to items described in the Board’s January 2018 meeting. These include: (1) the extent that entities in their jurisdictions enter into transactions, (2) diversity in accounting, (3) standard-setting activities, and (4) potential standard-setting activities.
  • Accounting policies and accounting estimates (44–48): ASAF members were provided feedback on Exposure Draft, Accounting Policies and Accounting Estimates, and provided views on next steps for the project.
  • Is financial reporting still an effective tool for equity investor in Australia? (49–51): ASAF members viewed a presentation from by the AASB on financial reporting’s effectiveness for equity investors in Australia.
  • Goodwill and impairment (52–71): The ASAF members discussed (1) a staff proposal that amends the impairment testing of goodwill by considering movements in headroom and (2) the IFRS 3 requirement to recognize all identifiable intangible assets acquired in a business combination separately from goodwill.
  • Primary financial statements (72–88): ASAF members provided views the Board’s tentative decisions to date on the application to financial entities and aggregation and disaggregation.
  • IFRS Foundation Due Process Handbook review (89–99): ASAF member were updated on the Trustees’ review of the Due Process Handbook and provided views on its scope.
  • Project updates and agenda planning (100–104): ASAF members were updated on the IASB research pipeline and provided advice on how to proceed with the post-implementation reviews of IFRS 10, IFRS 11, and IFRS 12.

A full summary of the meeting is available on the Board's website.

Correction list for hyphenation

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