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News

IFRS - IASB Image

IASB Vice-Chair speaks at annual AICPA conference

Dec 09, 2019

On December 9, 2019, the International Accounting Standards Board (IASB) released a speech by IASB Vice-Chair Sue Llyod given at the 2019 AICPA Conference on Current SEC and PCAOB Developments, held in Washington. In her speech, Ms. Llyod spoke about the IASB's primary financial statements project, the linkage between financial and non-financial reporting in the IASB's management commentary project, and consistent application of IFRS Standards.

On primary financial statements, Ms. Lloyd noted that the IASB's work reflects the fact that while the traditional financial statements continue to remain the core of investment analysis, the way in which that information is consumed has evolved. In this environment proper structure and comparability of the financial information provided by companies is especially important.  She explained the Board's thinking on new subtotals that are to be introduced and  on non-GAAP measures, where the IASB's proposals will reflect the growth in the use of these measures in the market and their relevance for investors. The IASB plans to publish its proposals in an exposure draft around the end of this year.

On management commentary, Ms. Lloyd pointed out that wider corporate reporting information can be classified broadly into two types: (i) information about how the company affects the world and (ii) information about how the world affects the company. It is the second area where the IASB has decided it can and should play a larger role. The corresponding project is therefore aimed at updating the IASB's practice statement on management commentary so that investors have visibility of factors that may affect a company’s future cash flows but may not yet be reflected in the financial statements. As a next step in this project the IASB intends to publish an exposure draft proposing changes to the practice statement in 2020.

Finally, on supporting consistent application, Ms. Lloyd explained the work of the IASB's IFRS Interpretations Committee, which she chairs.

Review the full speech on the IASB's website.

IFRS - IASB Image

Chairman of the IFRS Foundation Trustees speaks about Big Techs and financial stability

Dec 06, 2019

On December 6, 2019, the International Accounting Standards Board (IASB) released a keynote speech given on December 3 in Paris, by Erkki Liikanen, Chairman of the IFRS Foundation Trustees, where he spoke on the question of whether big tech is a threat to financial stability.

Mr. Liikanen explained that today, a major push for innovation in global finance is coming from ‘big techs’, companies that are dominant platform providers that offer ubiquitous digital services. He summarized the impact of these big techs neutrally:

  1. The entry of big techs into financial services holds the promise of efficiency gains and can enhance financial inclusion.
  2. Regulators need to ensure a level playing field between big techs and banks, taking into account big techs’ wide customer base, access to information and business models.
  3. Big techs' entry presents new and complex trade-offs between financial stability, competition and data protection.

Based on this, Mr. Liikanen offered three observations. Firstly, policymakers need to decide how much to encourage big tech to enter finance — should policies promote big techs’ entry or restrict it? Secondly, big tech tests the regulatory perimeters of data protection, competition policy and now financial regulation. As such, regulation that is fit-for-purpose will require enhanced cooperation among multiple regulatory bodies. And thirdly, we need to recognize the cross-border nature of the big techs and fintechs challenge and respond appropriately. Mr. Liikanen also noted that among the initiatives in the field is the work by the IFRS Foundation to consider the accounting for crypto assets under IFRS standards.

Mr Liikanen closed his speech by noting: "Innovation is here to stay, and it will bring benefits and it will bring challenges. We need a balanced approach, where we reap the benefits of financial inclusion and efficiency and ensure a level playing field between big techs and banks."

Review the full speech on the IASB's website.

AASB Image

Update – New Standard on Compilation Engagements: Coming February 2020

Dec 06, 2019

On December 6, 2019, the Auditing and Assurance Standards Board (AASB) released a summary of the key features of this new standard.

The AASB approved a new standard on compilation engagements for release in February 2020. The impact could be significant to practitioners and users.

Review the summary on the AASB's website.

CAQ Image

CAQ issues publication on company-prepared information

Dec 03, 2019

On December 3, 2019, the Center for Audit Quality (CAQ) of the American Institute of Certified Public Accountants (AICPA) released a publication "The Role of Auditors in Company-Prepared Information: Present and Future".

The report provides a foundational understanding of the current role of auditors in various types of company-prepared and publicly disclosed information and is intended to help investors and audit committees understand how auditors are positioned to help fill existing gaps in enhancing the reliability of decision-useful information. It argues that while today the role of auditors is largely limited to the audit of financial statements, changing business models and investor demand lead to companies increasingly providing information outside the financial statements. The report argues that auditors are poised to meet stakeholders’ needs in enhancing confidence in these other types of company-prepared information, which include non-GAAP financial measures, environmental, social, and governance information, cybersecurity reporting, and other communications about value-creation outside of financial statements.

Review the press release and publication on the CAQ's website.

PSAS - PSAB Image

Exposure Draft, Narrow Scope Amendment – Purchased Intangibles

Nov 29, 2019

On November 29, 2019, the Public Sector Accounting Board (PSAB) released an exposure draft that proposes to remove the prohibition against recognizing intangibles purchased in an exchange transaction in public sector financial statements. The change is proposed to respond to input from Indigenous governments and other PSAB stakeholders.

The Exposure Draft proposes to remove the exclusion in the conceptual framework prohibiting recognition of purchased intangibles in financial statements. The proposal is limited to intangibles purchased through an exchange transaction. Removing the recognition prohibition on purchased intangibles would address a material imbalance in the statements of financial position of many Indigenous governments. These governments may finance the purchase of commercial fishing (and other) licenses with debt but cannot currently recognize the licenses as assets. The proposal may also have implications for other public sector entities that purchase intangibles.

Like the current situation for purchased Crown lands and purchased natural resources, no guidance on how to account for purchased intangibles is proposed in this Exposure Draft. For now, reference to the asset definition, the general recognition criteria and the GAAP hierarchy is expected. Accounting for these items may be the subject of future PSAB projects.

Read the press release and Exposure Draft on the AcSB's website.

PSAS - PSAB Image

Update – Revisiting PSAB’s Employment Benefits Project

Nov 28, 2019

On November 28, 2019, the Public Sector Accounting Board (PSAB) decided to revisit their Employment Benefits project by reviewing the project plan and scope.

Review the article to find out why on the PSAB's website.

IFRS - IASB Image

Article on IFRS Standards and climate-related disclosures

Nov 28, 2019

On November 28, 2019, the International Accounting Standards Board (the Board) released an article by IASB member Nick Anderson discussing how existing requirements within IFRS Standards relate to climate change risks and other emerging risks.

In the article In Brief: IFRS Standards and climate-related disclosures, Mr Anderson provides an overview intended to help investors understand what already exists in the current requirements and guidance on the application of materiality, and how it relates to climate and other emerging risks.

Aspects he considers are:

  • Board guidance on how to make materiality judgements
  • Applying IFRS Practice Statement 2 Making Materiality Judgements to climate-related and emerging risks
  • Financial reporting considerations when applying IFRS Standards
  • Disclosing climate-related and other emerging risks in the financial statements
  • Management commentary: providing context to the financial statements
  • Summary: materiality judgements should serve investors’ information needs

The article notes that Mr Anderson's thoughts have been inspired by work from the Australian Accounting Standards Board (AASB) and Audit and Assurance Board (AUASB).

Review the press release and article on the Board's website.

United States Image

Boomer’s blueprint: Entrepreneurial leadership

Nov 27, 2019

On November 27, 2019, Accounting Today published an article on how leadership has always been important, but is critical during the transformation of a profession.

Entrepreneurial leadership has its own characteristics, both good and bad depending upon your perspective. Entrepreneurs are also associated with innovation, and every accountant should realize that all innovation starts as a bad idea — at least to those it disrupts. Therefore, innovation management is becoming a required skill where a person has the unique ability to make things happen “from idea to making it real,” and then it requires an innovation team to make it scale.

Review the full article on Accounting Today's website.

IFAC - Regulations Image

IFAC Launches "Exploring the IESBA Code"

Nov 26, 2019

On November 26, 2019, the International Federation of Accountants (IFAC) released the first installment in a new informational series to promote the Code of Ethics.

Professional accountants and other business professionals are often faced with complicated, real world situations that are not black and white and demand pragmatic and ethical solutions. To help address these challenging situations, IFAC released a new series titled: Exploring the IESBA Code.

Through twelve monthly installments, Exploring the IESBA Code will take an in-depth look at the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code).  Each installment of the series will highlight different aspects of the Code in real-world situations, in a manner that is relatable and practical. A special focus will be placed on recent revisions to the Code.

The first installment of the Exploring the IESBA Code deals with the five Fundamental Principles of ethics, which establish the standard of behavior expected of all professional accountants - a standard which enable accountants to uphold their responsibility to act in the public interest.

Review the press release and new series on the IFAC's website.

IAASB - Assurance Image

IAASB Tech Talk November 2019

Nov 26, 2019

On November 26, 2019, the International Auditing and Assurance Standards Board’s (IAASB) Technology Working Group recently published its second Technology Communiqué, which provides an update on the IAASB’s efforts to incorporate the use of technology by auditors in an ever changing audit environment. This communique also includes other relevant news and information relevant to technology.

This Communiqué does not constitute an authoritative pronouncement of the IAASB, nor does it amend, extend or override the ISAs or other of the IAASB’s International Standards.

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

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