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Dear Reader,

Did you know that the Management’s Discussion and Analysis (MD&A) is considered one of the key communications released by public companies? This is what we heard as part of our research initiative on the new world of corporate reporting.

This finding may not be surprising. When done properly, this document is easy to read; it tells the company's story and contributes to the retention and attraction of investors and other stakeholders. Effectively, the MD&A explains what happened during the year, starting with the business strategy and risks. It discusses what worked well, what went wrong, how financing was obtained, where money was spent, how the company compares to competition, what was done to protect the environment, to retain top talent, to give back to the community, what are the plans for next year, for the next five years, etc.

Whether you are doing this for the first time or have many years of MD&As behind you, I encourage you to consider preparing an initial draft starting from a blank sheet of paper! A daunting task? Perhaps. But it does avoid the pitfalls associated with a process that evolves around just filling in the blanks to update last year's MD&A. Whatever your approach, there should be appropriate involvement of the appropriate people in your company. That is those people who are sufficiently engaged in the operations of your company to enable a meaningful and transparent discussion. If done well, this will go a long way in your MD&A - effectively putting users in your “corporate shoes” and giving them a real understanding of your corporate performance.

If you’re looking to overhaul your MD&A or benchmark it against your peers, our advisors can help. Subject to appropriate independence safeguards and service pre-approval, we can offer a balanced, expert perspective, so that you can drive a culture of transparency and bring your reporting practices to the next level.

Warm regards,



Chantal Rassart
Partner | Audit Knowledge Management Officer

Standard-setting activities & insights

Accounting Standards for Private Enterprises

Post-Implementation Review: Section 3856, Financial Instruments
On October 8, 2014, the AcSB issued a Request for Information seeking feedback on whether Section 3856 is causing unexpected challenges and is meeting user needs. This post-implementation review of Section 3856 is a comprehensive review and is the first post-implementation review undertaken by the AcSB. The AcSB intends to assess the following with respect to Section 3856:

The AcSB will consider the feedback received from this Request for Information along with other evidence and information that it has obtained. The AcSB will consider making amendments to the standard; however, there is no presumption that a post-implementation review will lead to any changes to the standard. Stakeholders are encouraged to submit their comments by February 9, 2015.

Public Sector Accounting Standards

Financial Instruments: Transition
On October 10, 2014, PSAB issued an Exposure Draft clarifying aspects of the scope of application, and adding new guidance and transitional provisions to Section PS 3450, Financial Instruments. As these proposals were prepared to clarify the application of Section PS 3450 and do not alter the principles contained in the Section, PSAB does not expect these proposals will give rise to accounting changes.

In the case of a public sector entity already applying Section PS 3450, while earlier adoption is encouraged, these proposed amendments do not apply until fiscal periods beginning on or after April 1, 2016.

Stakeholders are encouraged to submit their comments by January 15, 2015.

US GAAP

Simplifying the Presentation of Debt Issuance Cost
On October 14, 2014, FASB issued a proposal to change the presentation of debt issuance costs in the financial statements. Under the proposal, an entity would present such costs in the balance sheet as a direct deduction from the debt liability in a manner consistent with the accounting treatment of debt discounts. Amortization of the issuance costs would be reported as interest expense.

Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets
On October 14, 2014, FASB also issued a proposal that would “provide a practical expedient for employers with fiscal year-ends that do not fall on a month-end (e.g., an entity that has a 52- or 53-week fiscal year) by permitting those employers to measure defined benefit plan assets and obligations as of the month-end that is closest to the entity’s fiscal year-end and to follow that measurement date methodology consistently from year to year.

Highlights from the FASB’s October 2014 meeting
At its October 8, 2014 meeting, the FASB discussed its projects related to (1) the definition of a business, (2) various EITF issues, (3) share-based payments, (4) government assistance disclosures, and (5) not-for-profit financial statements.

Securities regulatory matters

Multilateral CSA Notice of Amendments to National Instrument 58-101 Disclosure of Corporate Governance Practices
On October 15, the certain Canadian Securities Regulators announced the final implementation of amendments to National Instrument 58-101 Disclosure of Corporate Governance Practices and Form 58-101F1 Corporate Governance Disclosure. These rule amendments are intended to increase transparency for investors and other stakeholders regarding the representation of women on boards and in senior management of non-venture issuers. The rule amendments will require those issuers to provide disclosure regarding the following matters on an annual basis:

Provided all necessary Ministerial approvals are obtained, these rule amendments will come into effect on December 31, 2014, in time for the 2015 proxy season..

Highlights of Center of Quality International Practices Task Force May 2014 Joint Meeting with the SEC Staff
On May 21, 2014, the Center of Quality International Practices Task Force discussed the following emerging financial reporting issues relating to rules and regulations with the SEC staff:

Financial institution requirements

Early adoption of IFRS 9 Financial Instruments
On October 10, 2014, OSFI published a Draft Advisory on the Early adoption of IFRS 9 Financial Instruments for Federally Regulated Entities with October year-ends outlining its expectations for the effective date for Federally Regulated Entities (FREs) with an October 31 year-end.

The IASB issued the final version of IFRS 9 in July 2014. The standard will be mandatorily effective for annual periods beginning on or after January 1, 2018. Although earlier application is permitted, it can only be adopted in Canada following its incorporation into the CPA Canada Handbook. OSFI has considered the costs and benefits and has determined that all FREs using an October 31 year-end should early adopt IFRS 9 for their annual period beginning on November 1, 2017, two months earlier than mandatorily required by the IASB for entities with fiscal periods beginning on January 1. The expectation for October year-end FREs to early adopt IFRS 9 applies to the standard as a whole and does not preclude the FREs from any choices or options that are available in the standard.

OSFI is seeking comments on the Draft Advisory by November 7, 2014.

Assurance

International Ethics Standards Board for Accountants October 2014 Meeting Highlights
At its October 13-15, 2014 meeting, the IESBA addressed the following topics:

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Webcasts & learning resources

Upcoming events

Past events

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Publications & tools

Standard-setting Activities Digest

Publication date: October 2014
Our Deloitte Digest summarizes current financial reporting rules and standards; it also provides an overview of recent regulatory and professional developments for each of thel financial reporting frameworks used in Canada.

2014 IFRS compliance checklists

Publication date: October 2014
Deloitte's IFRS Centre of Excellence has issued updated versions of its IFRS compliance, presentation, and disclosure checklist and the IAS 34 compliance checklist for 2014.

The IFRS compliance, presentation and disclosure checklist 2014 summarizes the requirements set out in IFRS issued as of April 30, 2014. It may be used as a guide to assist in considering compliance with the requirements of the IFRSs.

The IAS 34 compliance checklist 2014 may be used to document the review of interim financial statements.

IFRS Project Insights — Insurance contracts

Publication date: October 2014
The IASB undertook a comprehensive project on the accounting for insurance contracts with the objective of developing a standard that will address recognition, measurement, presentation and disclosure requirements.

This edition of IFRS Project Insights provides a summary of the IASB's project on insurance contracts and discusses recent tentative decisions reached by the Board.

CFO Insights: Talent – Building the team you need now

Publication date: October 2014

Whether you are a new or veteran CFO, having the right team in place is essential to your success. In this issue, we discuss ways to review your current staff and strategies for shaping the team you need to achieve the priorities you’ve set.

VIE-ing for Consolidation: FASB Considers Final Amendments to Its Consolidation Model

Publication date: October 2014
This issue discusses the FASB’s key tentative decisions to date regarding amendments to its consolidation guidance. While the Board’s deliberations have largely focused on the investment management industry, its decisions could have a significant impact on the consolidation conclusions of reporting entities in other industries. Specifically, the amended guidance could affect a reporting entity’s evaluation of whether (1) limited partnerships and similar entities should be consolidated, (2) variable interests held by the reporting entity’s related parties or de facto agents affect its consolidation conclusion, and (3) fees paid to a decision maker or service provider result in the consolidation of a variable interest entity (VIE). In addition, it is expected that under the amended guidance, many limited partnerships will be VIEs and may be subject to the VIE disclosure requirements regardless of whether they are consolidated.

Accordingly, all reporting entities will need to reevaluate their previous consolidation conclusions in light of their involvement with current VIEs, limited partnerships not previously considered VIEs, and entities previously subject to the deferral in ASU 2010-10.

Food for Thought – SEC Staff Suggests Ingredients for Effective Disclosures

Publication date: October 2014
This issue discusses the SEC staff’s views and recommendations regarding steps registrants can take to improve the effectiveness of their disclosures. Over the past 18 months, the SEC and accounting standard setters have frequently questioned whether registrants are using the “right recipe” for effective disclosures — that is, whether their compliance with disclosure requirements and their disclosures of material and relevant information are optimally balanced. Instead of waiting for the SEC’s comprehensive list of ingredients for effective disclosures, registrants are encouraged to start testing their own recipes.

Let’s Net Debt – Simplifying the Presentation of Debt Issuance Costs

Publication date: October 2014
This issue discusses the FASB’s proposed Accounting Standards Update on simplifying the presentation of debt issuance costs. Under the proposal, an entity would present such costs in the balance sheet as a direct deduction from the debt liability in a manner consistent with its accounting treatment of debt discounts. Amortization of the issuance costs would be reported as interest expense. Comments on the proposal are due by December 15, 2014.

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Business news highlights

We continuously review relevant business e-publications and publish below a selection of newsworthy items that we believe you will find interesting and relevant.

Canadian news

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U.S. news

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International news

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Chief Editor

Chantal Rassart, CPA, CA
Partner, Audit Knowledge Management Officer