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In this issue, as our editorial team is taking a well-deserved break for the summer, I am proposing some materials you might want to add to your summer reading list. You will find some pieces that were featured in past issues that you may not have had time to review then as well as some suggested additional poolside reading! We will return in September.

Top financial reporting reads for the summer!

Reporting revolution! Significant changes to the auditor’s report are one step closer (CPA Canada, May 2015)
The AASB plans to move forward with international standards for auditor reporting in 2017. The question on every Canadian audit professional’s mind continues to be: What is the AASB’s key message and plan?

How and Why the Audit Has to Evolve – Rapidly, a column from Joe Ucuzoglu, Chairman and CEO of Deloitte U.S. (FEI, March 2015)
New Deloitte research confirms what many investors already believe: the traditional audit must evolve to meet the changing needs of today’s capital markets. Quickly.

Intersecting Roles: Fostering Effective Working Relationships Among External Audit, Internal Audit, and the Audit Committee (Center for Audit Quality, March 2015, 20-page PDF file)
In the fall of 2014, the CAQ and The IIA co-sponsored three roundtable discussions attended by internal auditors, external auditors, and audit committee chairs. The roundtables provided the different parties with an opportunity to talk about their roles and responsibilities, their major challenges, and leading practices. The result is a must-read for anyone trying to improve risk governance in their organization.

Data breach response is "not the time to improvise" (Financial Post, November 2014)
Breaches are inevitable in any large organization. Chantal Bernier, an expert in privacy and security law, discussed what to do when you’re the victim.

Annual letter from Warren Buffett (Berkshire Hathaway, February 2015, 148-page PDF file)
Berkshire Hathaway’s annual report, in which Buffet offers up some of his legendary insights.

Where People Belong on a Company's Balance Sheet (Entrepreneur, December 2014)
Talent isn’t just an expense – it’s an investment. Jim Alampi explains why it’s time to change the way we account for employees.

Living to 100…will the Canada Pension Plan be sustainable? (OSFI, October 2014)
This presentation looks at trends in life expectancy and examines the viability of the CPP long term.

The terrifying idea that the economy might stay stuck forever just got more terrifying (The Washington Post, October 2014)
The U.S. economy has fallen and it can’t get up. Matt O’Brien provides three reasons it might stay that way.

The Future of Data-Driven Innovation (U.S. Chamber of Commerce Foundation, October 2014, 90-page PDF file)
The amount of data generated in two days is as much as all data generated in human history before 2003. This begs the question: what does the future hold?

No Smoke, No Mirrors: The Dutch Pension Plan (The New York Times, October 2014)
Thoughtful long-term planning in the Netherlands may hold the key to viable pension management on this side of the Atlantic.

In addition to the above summer reading list, I’d also like to draw your attention to some observations from Karen Higgins, Managing Partner of National Accounting and Assurance and Leader of the Canadian IFRS Centre of Excellence. Here, Karen provides some comments on significant developments in financial reporting in Canada that you may wish to review over the weeks and months to come.

• Canadian Accounting Standards Board sets the course for standard setting from 2016 to 2021 and requests input on its Draft Strategic Plan

"The Canadian Accounting Standards Board (AcSB) is firmly committed to ensuring that it continues to meet the financial reporting needs of Canadian stakeholders and in doing so, has proposed long-term objectives to guide its standard-setting activities over the next five years. The AcSB has recently issued its Draft Strategic Plan 2016-2021 and included in this plan are proposals to continue to work with the IASB, international standard setters and securities regulators to minimize the challenges faced by Canadian publicly accountable enterprises in being among the first to adopt complex new IFRS standards. The AcSB also has reconfirmed its strategy of maintaining separate sets of standards for private enterprises, pension plans and not-for-profit organizations. The AcSB has asked for additional input from stakeholders on certain matters for each of the accounting frameworks in the CPA Canada Handbook. I encourage you to review this draft plan, as the AcSB welcomes comments on all aspects of the plan."

• Reporting revolution! Significant changes to the auditor’s report are one step closer

"As you may or may not be aware, the Canadian Auditing and Assurance Standards Board (AASB) has recently issued an Invitation to Comment entitled Implementation Considerations for New Auditor Reporting Standards asking Canadians for input on specific matters before it finalizes the adoption of several new International Standards on Auditing (ISAs), which all impact the auditor’s report. One of the new ISA standards proposes significant changes to the auditor’s report for public companies, including a proposal for the auditor to discuss key audit matters in the body of the report. The Invitation to Comment asks for input on matters including the effective date of the standards in Canada, the scope of certain ISAs and whether staging the implementation dates of certain ISAs is appropriate in Canada. I encourage you all to remain educated and abreast of developments and ongoing discussions in this area, as potential impacts could be significant. The comment period for the Invitation to Comment ends on October 30, 2015."

Wishing you all a wonderful summer and see you in September,



Chantal Rassart
Partner | Audit Knowledge Management Officer

Standard-setting activities & insights

International Financial Reporting Standards

June IASB Update published
On July 2, 2015, the International Accounting Standards Board issued the Update summary of its meeting held from June 22-25, 2015. The following topics were discussed: (i) Insurance Contracts; (ii) Financial Instruments with Characteristics of Equity (FICE); (iii) Pollutant Pricing Mechanisms (formerly Emissions Trading Schemes); (iv) Revenue from Contracts with Customers; (v) Research Programme; (vi) Disclosure Initiative; (vii) IFRS Implementation Issues; and (viii) The Equity Method of Accounting. Read more

FEE supports IFRS 9 deferral for insurance companies
On June 22, 2015, the Federation of European Accountants (FEE) responded to the European Financial Reporting Advisory Group's (EFRAG) draft endorsement advice on IFRS 9, Financial Instruments. The principal comment in the comment letter FEE submitted, however, relates to the potential deferral of IFRS 9 for insurance business activities while the International Accounting Standards Board (IASB) finalizes its forthcoming insurance standard. Read more

IASB and FASB discuss principal-versus-agent considerations
At their June 22, 2015, joint meeting, the IASB and FASB discussed implementation issues resulting from the principal-versus-agent guidance in their new revenue recognition guidance (IFRS 15 and ASC 606). The boards tentatively agreed to amend the standards to clarify the principal-versus-agent considerations. Read more

IASB proposes amendments to IAS 19 and IFRIC 14 on pension accounting
On June 18, 2015, the International Accounting Standards Board (IASB) published an Exposure Draft (ED) of proposed amendments to IAS 19, Employee Benefits and IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. The amendments address two issues submitted to the IFRS Interpretations Committee. Comments are requested by October 19, 2015. Read more | Download Deloitte's Insights

European Commission concludes evaluation of the use of IFRS in E.U. – June 18, 2015
On June 18, 2015, the European Commission published a report on the evaluation of its Regulation on the Application of International Financial Reporting Standards (IFRS). The evaluation aimed at establishing whether the initial objectives are still relevant and at identifying areas for improvement in the functioning of the Regulation, if needed. Read more

IASB completes post-implementation review of IFRS 3
On June 17, 2015, the IASB announced that it had completed its post-implementation review of IFRS 3, Business Combinations. The review concluded that there is general support for IFRS 3 and its related Standards; however, there are several aspects where additional research is needed. Read more

Accounting Standards for Private Enterprises

Private Enterprise Advisory Committee Notes – June 11, 2015
The Committee discussed the following issues raised by stakeholders: (i) AcSB Strategic Plan; (ii) 2015 Annual Improvements; and (iii) Reporting Framework when Raising Capital in Non-Traditional Markets. Read more

Public Sector Accounting Standards

PSAB Decision Summary – June 18-19, 2015
On June 26, 2015, the Public Sector Accounting Board released an executive summary of discussions and decisions with respect to the topics addressed at this meeting. The following topics were discussed: (i) Concepts Underlying Financial Performance; (ii) Financial Instruments; (iii) Government Transfers; (iv) Standards for Not-for-Profit Organizations; and (v) PSAB Governance. Read more

Securities regulatory matters

SEC proposes new clawback requirements
On July 1, 2015, the Securities and Exchange Commission issued a proposed rule that would require companies to adopt “clawback” polices on executive compensation. Specifically, the proposal, which is being released in response to a mandate in Section 954 of the Dodd-Frank Act, “would direct the national securities exchanges and national securities associations to establish listing standards that would require each issuer to develop and implement a policy providing for the recovery, under certain circumstances, of incentive-based compensation based on financial information required to be reported under the securities laws that is received by current or former executive officers, and require the disclosure of the policy.” Read more

Canadian securities regulators streamline disclosure requirements for private foreign securities offerings to certain Canadian investors
On June 26, 2015, final amendments providing limited exemptions from certain disclosure requirements for offerings of foreign securities made in Canada on a private placement basis to permitted clients were released. Permitted clients are institutional and other sophisticated investors. Read more

SEC staff issues guidance on amendments to Regulation A
On June 18, 2015, the SEC staff issued guidance (Amendments to Regulation A: A Small Entity Compliance Guide) on its March 2015 amendments to Regulation A. The amendments, which were issued to implement Section 401 of the Jumpstart Our Business Startups Act, exempt certain offerings from registration under the Securities Act of 1933. The staff also issued and revised a number of compliance and disclosure interpretations to provide additional guidance on Regulation A. Read more

Regulation Only as Necessary for Digital Currencies
On June 19, 2015, the Standing Senate Committee on Banking, Trade and Commerce released its report, “Digital Currency: You Can’t Flip This Coin!,” where it recommends that the government requires digital currency exchanges to meet the same requirements as other money services businesses in relation to Canada’s anti-money laundering and anti-terrorist financing regimes. Read more

OSC Publishes 2015-2017 Strategic Outlook and Final 2015-2016 Statement of Priorities
On June 18, 2015, the Ontario Securities Commission (OSC) published its 2015-2017 OSC Strategic Outlook. Also being published in final form is the 2015-2016 OSC Statement of Priorities. The Strategic Outlook builds on the OSC’s 2012-2015 Strategic Plan and reflects changes in the capital markets and in the domestic and global regulatory environment that have occurred since 2012. The document sets out how the OSC intends to achieve its organizational goals over the next two years, including providing strong investor protection, delivering responsive regulation and effective compliance and enforcement, promoting financial stability through effective oversight and being an innovative, accountable and efficient organization. The Statement of Priorities sets out priority areas where the OSC intends to focus key resources and actions for the coming fiscal year, as well as the expected outcomes. Read more

European Commission consults on corporate tax transparency
On June 17, 2015, the European Commission launched a public consultation on corporate tax transparency in the E.U. This consultation aims to find out whether requiring companies to disclose more information about the taxes they pay could help tackle tax avoidance and aggressive tax practices in the E.U. Read more

Assurance

AASB Decision Summary – June 8-9, 2015
On June 18, 2015, the Auditing and Assurance Standards Board (AASB) released an executive summary of discussions and decisions with respect to the topics addressed at this meeting. The following topics were discussed:(i) Auditor Reporting • Auditor Reporting – Special Considerations; (ii) Auditor Reporting – Summary Financial Statements; (iii) Non-compliance with Laws or Regulations; (iv) Responsibilities Relating to Other Information; (v) Agreed-upon Procedures; (vi) Communications with Law Firms; (vii) Public Sector Standards; (viii) Special Reports – Assurance on Compliance with Agreements, Statutes and Regulations; and (ix) ASB Strategic Plan 2016-2021. Read more

Invitation to Comment – Implementation Considerations for New Auditor Reporting Standards
On June 15, 2015, the Auditing and Assurance Standards Board (AASB) issued an Invitation to Comment that seeks input on proposed effective dates and other considerations. The AASB has tentatively decided that these standards should have a later effective date than that of the corresponding International Standards on Auditing. The AASB expects that the final standards will be issued in the first half of 2016 to permit their use for 2017 calendar year-end audits. Early adoption will be permitted.

Stakeholders are encouraged to submit their comments by October 30, 2015. Read more

Canadian standard-setting governance activities

AcSB Reappointed – Accounting Standards Advisory Forum
On June 24, 2015, the IFRS Foundation Trustees announced that it has reappointed the AcSB as a member of the Accounting Standards Advisory Forum (ASAF) for the next three years. This reappointment highlights the importance of the work of national standard setters, including the AcSB. ASAF serves as a technical advisory body to the IASB. Read more

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IFRS in Focus — IASB proposes amendments to IAS 19 and IFRIC 14 to clarify two issues

Publication date: June 2015
This newsletter outlines the proposed amendments to IAS 19 and IFRIC 14 set out in the recent Exposure Draft ED/2015/5 "Remeasurement on a Plan Amendment, Curtailment or Settlement/Availability of a Refund from a Defined Benefit Plan" that was issued in June 2015 for public comment.

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

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Chief Editor

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