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Canada | December 5, 2014
Stay on top of financial reporting

Dear readers,

In this edition, I invited my colleague, Clair Grindley, deputy leader of our Canadian IFRS Centre of Excellence, to reflect on financial reporting developments in IFRS for 2014 and provide tips and reminders for those of our readers approaching the year-end reporting process. Feel free to contact Clair to pursue the discussion with her.

Warm regards,



Chantal Rassart
Partner | Audit Knowledge Management Officer

Reflecting on 2014

A majority of Canadian reporting issuers have a calendar year-end. Given this, December would appear to be the perfect month to reflect on the financial reporting events of 2014 (as well as complete that last minute holiday shopping!). It seems that financial reporting events can be segregated into two categories 1) those matters which will impact the 2014 financial statements and; 2) those that may not significantly impact 2014 but will require consideration for 2015 and beyond. In my comments here, I’ll focus on the first of these categories. As for the “2015 onwards” category, I’ll share my observations in our next issue.

So, what do we need to make sure we covered off from a financial reporting perspective for 2014? In terms of new requirements, IFRIC 21 Levies is the core piece of new guidance with broad application. The main impact of this guidance is timing of expense recognition and your analysis should, for the most part, have been completed when preparing interim financials. The other core changes effective for 2014 include a series of amendments emanating from the IASB’s annual improvements project (“AIP”) as well as stand-alone amendments related to IAS 36 Impairment of Assets and IAS 19 Employee Benefits. Note that the AIP changes include two changes which are effective for transactions occurring on or after July 1, 2014 (business combinations and share-based payment transactions). The balance of the AIP changes are effective for annual periods beginning on or after July 1, 2014. All of these changes have been previously discussed in our Deloitte newsletters, the links to which are provided later for your convenience.

Disclosure is, of course, a significant part of the year-end financial reporting process and there continues to be room for improvement based on the observations of the Canadian Securities Administrators (CSA). In CSA Staff Notice 51-341, areas identified for improvement included IFRS 12 Disclosure of Interests in Other Entities (which incorporates disclosures relating to subsidiaries and joint arrangements accounted for under IFRS 10 Consolidated Financial Statements and IFRS 11 Joint Arrangements respectively) and IAS 36. In order to assess the adequacy of your disclosures, you may find it helpful to make reference to the varying disclosure and presentation aids that are available. We recommend our comprehensive IFRS checklist as well as our model financial statements. For a more personal approach, consider asking your local Deloitte contact to do an “early warning” type of review of a financial statement shell this month. Such an approach will mean some of the disclosure work can be tackled early perhaps easing a little bit some of the inevitable stresses that accompany the year-end reporting deadline.

To ensure you remain in good shape on this item for your annual financials, we’ve included some links later in this newsletter to our year-end reporting aids which you might find helpful. For any other needs don’t hesitate to reach out to Chantal, myself or your local Deloitte contact.

Clair Grindley, CPA, CA, ACA
Partner | Deputy Leader, Canadian IFRS Centre of Excellence
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Standard-setting activities & insights

International Financial Reporting Standards
Accounting Standards for Private Enterprises
Public Sector Accounting Standards
US GAAP
Assurance
Standard–setting governance activities

Webcasts & learning resources

Upcoming events
Past events

Publications & tools

Helpful practice aids for your year-end financial reporting process
IFRS in Focus — IASB proposes amendments to IFRS 2 related to the classification and measurement of share-based payment transactions
ASPE Briefing: Section 3462: Defined benefit plans: A focus on defined benefit plans
CFO Insights: The Strategist CFO – Four orientations for engaging in the strategy process
Standard-setting Activities Digest

Business news highlights

Canadian news
U.S. news
International news
 

Standard-setting activities & insights

International Financial Reporting Standards

Proposed amendments to IFRS 2 Share-based Payment
On November 25, 2014, the IASB published an Exposure Draft (ED) of proposed amendments to IFRS 2 Share-based Payment, which would clarify the classification and measurement of share-based payment transactions. The ED addresses several requests the IASB and the IFRS Interpretations Committee received and the IASB decided to deal with in one combined narrow-scope project. Comments are requested by March 25, 2015.

Learn more
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November 2014 IASB meeting minutes
On November 24, 2014, the IASB published the minutes of its meeting on November 19 and 20, 2014. The following projects were discussed: (i) IFRS for SMEs: Comprehensive Review 2012–2014; (ii) Insurance Contracts; (iii) Conceptual Framework; (iv) Disclosure Initiative; (v) Leases; and Emission Trading Schemes.

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IASB updated work plan
On November 24, 2014, following its November meeting, the IASB issued its updated work plan. The revised plan adds a target date for amendments to IFRS for SMEs (Q1/ 2015) and a timeframe for the comment letter analysis (Q1/ 2015) on the discussion paper on macro hedging. Further, the IASB now expects to issue an Exposure Draft on the elimination of gains or losses arising from transactions between an entity and its associate or joint venture in Q1/2015 (previously Q4/2014). Lastly, it includes updates to the expected timing of board discussions for the short-term research projects on business combinations under common control (Q1/2015), discount rate (Q1/2015), emissions trading scheme (Q4/2014 through Q1/2015), equity method (Q4/2014 through Q2/2015), and financial instruments with characteristics of equity (Q4/2014), as well as, long-term research project on post-employment benefits (Q1/2015 and Q2/2015).

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October 2014 ITCG Meeting Summary
On November 20, 2014, the IASB posted the minutes of the Taxonomy Consultative Group (ITCG) meeting held on October 28, 2014. Topics discussed were: the IFRS Taxonomy—overview of current and future activities; using the IFRS Taxonomy— a regulator's guide; management of entity-specific disclosures; IFRS Taxonomy content review—new or amended Standards; IFRS Taxonomy content—common practice; use of the Versioning 1.0 Specification; and updates from ITCG members and observers.

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November 2014 IFRIC Update
On November 19, 2014, the IASB posted the IFRIC Update in respect of the IFRIC meeting held on November 11, 2014. The meeting covered (a) Items on the current agenda including issues related to IFRS 5, IAS 2, IAS 12, IAS 16, IAS 21, and IAS 32/IAS 37; (b) Issues considered for Annual Improvements including IAS 19 and IAS 28; (c) Interpretations Committee agenda decisions; and (d) Interpretations Committee tentative agenda decisions.

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November 2014 AcSB Decision Summary
On November 18, 2014, the AcSB posted the Decision Summary in respect of its meeting on November 5 and 6, 2014. Among the items discussed were: AcSB Exposure Drafts of IFRS Proposals; Adoption of IFRSs; OSFI Draft Advisory; and Rate-regulated Activities.

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Accounting Standards for Private Enterprises

November 2014 AcSB Decision Summary
On November 18, 2014, the AcSB posted the Decision Summary in respect of its meeting on November 5 and 6, 2014. Among the items discussed were: 2015 Annual Improvements; and Enterprises Permitted to Apply Accounting Standards for Private Enterprises.

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Public Sector Accounting Standards

Amendments to the Introduction to the PSA Handbook
On November 28, 2014, Filing Instruction No. 41 to the PSA Handbook was issued containing the amendments to the Introduction to the PSA Handbook approved by the PSAB at its meeting on September 15-16, 2014. The Introduction has been amended under date of December 2014 to: (i) introduce the term public sector entity; (ii) define a government component; (iii) amend the definition of a government organization; (iv) include specific definitions of all types of government organizations and partnerships; and (v) provide guidance as to the basis of accounting to be used by government components, organizations and partnerships, where the partnerships have two or more public sector entity partners. Editorial changes have also been made in other standards as a consequence of the amendments to the Introduction.

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PSAB Matters
On November 27, the PSAB issued the November 2014 issue of this e-newsletter includes a message from the Chair, an article on transition to the Financial Instruments standard, and other articles relevant to public sector stakeholders.

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US GAAP

US GAAP Plus Weekly Roundup
Do not miss Weekly Roundup, prepared by Deloitte US’ Accounting Standards & Communications group, is a digest of news, developments, and Deloitte publications related to U.S. and international accounting topics.

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Assurance

Proposed Joint Policy Statement Concerning Communications with Law Firms Regarding Claims and Possible Claims in Connection with the Preparation and Audit of Financial Statements
On November 27, 2014, the AASB and the JPS Review Committee of The Canadian Bar Association have issued an Exposure Draft proposing a revised Joint Policy Statement. Stakeholders are encouraged to submit their comments by April 6, 2015.

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CPAB 2014 Public Report on Canada’s Big Four audit firms
On November 25, 2014, CPAB issued its 2014 Public Report, which is its first annual inspections report focused on Canada’s Big Four audit firms. CPAB’s 2014 inspection findings show a positive trend across the Big Four firms. There were 98 (2013:105) Big Four engagement files inspected and an overall improvement in audit quality was found, including a 36 per cent decline (2013:43 per cent) in files with significant audit deficiencies. Since 2011, when CPAB issued its call to action to improve audit quality, the number of files inspected by CPAB with significant audit deficiencies has declined overall by more than two-thirds.

CPAB notes that, while the firms have responded to its call to action, there is still more to do to achieve sustainable audit quality. Even though each firm is actively pursuing audit quality goals, not all are in the same place when it comes to implementation or results. While no new audit quality themes emerged in 2014 among the Big Four firms, CPAB’s inspections indicate that challenges persist in the areas of: (i) auditing complex accounting estimates; (ii) auditing in foreign jurisdictions; (iii) understanding and evaluating internal controls; (iv) applying professional judgment; and (v) executing professional skepticism.

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Audit Committee Oversight of Foreign Operations
On November 21, 2014, in this bulletin, CPAB notes that independent auditor oversight can be a challenge for audit committees of reporting issuers with operations in foreign jurisdictions. Operational, financial and reputational risks stemming from foreign jurisdictions can impact the quality of the audit and expose directors to greater liability.

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Audit Quality Indicators
On November 21, 2014, in this bulletin, CPAB discusses various international efforts to develop a portfolio of quantitative measures which would provide insight into audit quality that an audit firm could share publicly or with audit committees and which would facilitate dialogue on the drivers of audit quality.

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Assurance on integrated reporting
In this interview, Robert Bruce, Deloitte financial journalist, speaks with Michael Nugent, Technical Director, Framework Development, International Integrated Reporting Council (IIRC). They discuss the possible options for assurance on integrated reporting considering the two papers on assurance that the IIRC issued for comment in July 2014 (comments closed on December 1, 2014) and the comments that have been raised at roundtables that have taken place around the world on this topic.

Watch the interview
 

Standard–setting governance activities

Assessing and reporting the likely effects of proposed IFRS
On November 28, 2014, the Effects Analysis Consultative Group published a series of recommendations on how the IASB could strengthen its assessment of the likely effects of proposed IFRS.

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AcSB Annual Report
On November 27, 2014, the Accounting Standards Board released its 2013-2014 report which includes information on the activities of the AcSB, as well as a message from the Chair, Linda F. Mezon.

Learn more
 

AcSOC Annual Report
On November 25, 2014, the Accounting Standards Oversight Council released its 2013-14 annual report which provides information on the activities and performance of both the AcSB and PSAB.

Learn more
 

Cross-Border Regulation
On November 25, 2014, the International Organization of Securities Commissions published a consultation report which identifies and describes cross-border regulatory tools and challenges.

Learn more
 

2013 IESBA Annual Report
On November 19, 2014, the International Ethics Standards Board for Accountants (IESBA) released its 2013 Annual Report, Reinforcing Trust in the Profession. The report provides a summary of the IESBA’s 2013 achievements and includes developments on key projects and initiatives that have continued to progress throughout 2014. In particular, it highlights the board’s extensive efforts in reaching out to stakeholders, and the developments of the board that centered on building public trust in both the profession and the IESBA’s Code of Ethics for Professional Accountants.

Learn more
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Webcasts & learning resources

Upcoming events

Date Title
December 10, 2014
Deloitte
Bringing clarity to ASPE developments: It’s that time of year again...
During this webcast, our Deloitte presenters will combine their technical knowledge and applied experience to discuss ASPE accounting changes and other key areas for consideration. Staying on top of accounting changes allows you to think strategically and be proactive with implementation.
 
Register
 
Date Title
December 10, 2014
OSC Webcast
 
Continuous Disclosure Obligations
This seminar will include the review of obligations under NI 51-102, including MD&A observations, material change reporting, related party transactions, information on emerging market issues and other relevant topics.
 
Register
 
Date Title
December 18, 2014
Deloitte
Bringing clarity to SEC developments
Highlights of the AICPA National Conference on Current SEC & PCAOB Developments.
 
Register
 
Date Title
22 janvier 2015
Deloitte
Mise à jour des Normes comptables pour le secteur public
During this session, our Deloitte professionals will share their insights on potential challenges arising from some of the following:
Proposals included in the Retirement Obligations Statement of Principles
Comments and implications related to the Re-exposure Draft of Related Party Transactions
Reminders on the application issues related to liabilities for contaminated sites
Updates on various other projects on PSAB’s active project plan
Updates from the Public Sector Accounting Discussion Group
 
Register
 

Past events

Date Title
December 4, 2014
Deloitte webcast
The definitive M&A IT playbook
The M&A transaction process can be fraught with pitfalls and roadblocks. Of all the potential pitfalls, one that frequently poses the biggest challenge is post-merger information technology (IT) systems integration. In this webinar we have compiled a practical M&A IT guide to help CIOs and other IT stakeholders avoid common pitfalls, plan more effectively, and help companies achieve their M&A goals.
December 2, 2014
AcSB Webinar
Improvements to Not-for-Profit Standards: Stay Up-to-Date on the Process!
Tune in to this AcSB and PSAB joint webinar to understand the views of stakeholders relating to the Statement of Principles that was issued in April 2013 that proposed improvements to standards followed by not-for-profit organizations (NFPOs) in both the private and public sectors.
December 2, 2014
CPA Canada Webinar
Improvements to Not-for-Profit Standards: Stay Up-to-Date on the Process!
The AcSB and PSAB jointly issued a Statement of Principles in April 2013 that proposed improvements to standards followed by not-for-profit organizations in both the private and public sectors. Participate in the Boards’ joint webinar to understand the views of stakeholders relating to the SOP.
November 28, 2014
CPA Canada Webinar
Financial Reporting in the Mining Industry – Trends and Practices
During this one hour webinar, the following financial reporting trends and practices in the mining industry are considered:
Impairment of non-financial assets
Investments (IFRS 10 and IFRS 11)
Stripping costs in the production phase of a surface mine (IFRIC 20)
Estimates and judgments
Non-GAAP measures
November 27, 2014
CPA Canada Webinar
Developments in IFRSs: Fall 2014 Update
Keeping up-to-date with IFRS is important for Canadian public companies, their advisors and the users of their financial statements. It is also important for those private enterprises that use IFRS in preparing financial statements. This webinar provides an up-to-date briefing on IFRS from Karen Higgins, National Director of Accounting Services, Deloitte and AcSB Vice-Chair.
November 26, 2014
Deloitte
Q4 IFRS technical update
In this Q4 update, combining technical knowledge with applied experience, our specialists discuss key accounting issues to consider when preparing the fourth quarter financial statements. They  also provide an update on key financial reporting developments and on the IASB's project plan.
November 20, 2014
CPA Canada webinar
Redeemable Preferred Shares Issued in a Tax Planning Arrangement
During this webinar, the AcSB l:
provided an overview of the proposals set out in its recent Exposure Draft;
discussed background information and rational for the Exposure Draft proposals; and
outlined the effects of the proposals.
November 13, 2014
CPA Canada webinar
IFRS 15 Revenue from Contracts with Customers
This one hour webinar provided a general overview of the standard; discuss some key changes from current accounting practices; highlight some industry-specific considerations; and suggest a general plan of action (including operational considerations).
November 12, 2014
OSC Webcast
Mineral Disclosure Best Practices
This seminar is designed to assist mining reporting issuers with improving their public technical disclosure and to provide an opportunity to hear directly from the regulator about common disclosure pitfalls and challenges through the use of case studies and examples of good disclosure practices and guidance. Findings from recent OSC Staff Notices have been discussed as well as an overview of website disclosure, use of social media, and tips on prospectus filings.
October 30, 2014
DBrief webcast
Deloitte U.S.
Implementing COSO: Insights to Help You Reach the Finish Line
Effective December 15, 2014, the COSO 2013 framework will officially supersede the 1992 framework. What common issues and concerns have surfaced as organizations work to adopt the new framework? During this session, we discussed common pitfalls, lessons learned, and leading practices to address the new framework requirements.
October 8, 2014
Deloitte
Emerging trends in financial reporting
In this webcast, our presenters provided an overview of significant developments impacting financial reporting. Hear what they believe will be on investors, activists and standard-setters’ radar as they review your next annual report.
 
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Publications & tools

Helpful practice aids for your year-end financial reporting process

As mentioned in the earlier comments from Clair, several practice aids and resources are available as you prepare for the 2014 year-end financial reporting process. For your ease of reference, we have included some of these resources in the table below. Remember also to contact Deloitte if you’d like to review specific areas of disclosure over the next few weeks to get a head start on your financial statements.

Topic Resource
IFRIC 21, Levies
Deloitte summary
IFRS Discussion Group report on Property Taxes
Annual Improvements Deloitte summary
IAS 36 Impairment of Assets Deloitte summary
IAS 19 Employee Benefits  Deloitte summary
Regulatory disclosure review CSA Staff Notice 51-341
Reference guide IFRS in your Pocket
Presentation and Disclosure
Model financial statements
IFRS Compliance, Presentation and Disclosure Checklist
Annual Financial Reporting Review Guide (to be released in December)
 
Read more
 

IFRS in Focus — IASB proposes amendments to IFRS 2 related to the classification and measurement of share-based payment transactions

Publication date: November 2014
On November 25, 2014, Deloitte issued an IFRS in Focus newsletter which outlines the proposed amendments to IFRS 2, Share-based Payment, that are set out in the IASB’s recent Exposure Draft ED/2014/5, Classification and Measurement of Share-based Payment Transactions.

Read more
 

ASPE Briefing: Section 3462: Defined benefit plans: A focus on defined benefit plans

Publication date: November 2014
This CPA Canada publication, prepared under the supervision of the AcSB's Employee Future Benefits ASPE Briefing Task Force, on which Clair sits, will assist you in the application of Section 3462, Employee Future Benefits, for private Canadian companies applying ASPE. It includes the following topics:

identifying situations where the standard applies
understanding the issues related to the application of Section 3462 specifically for defined benefit plans
frequently asked questions and illustrative examples

 
Read more
 

CFO Insights: The Strategist CFO – Four orientations for engaging in the strategy process

Publication date: November 2014
CEOs and boards increasingly want CFOs to not only deliver a finance organization that gets the numbers right, but also partner with them in shaping the company’s strategy. But when asked what they want from a strategic CFO, their answers vary widely. Beyond the well-established four faces of the CFO as operator, steward, catalyst, and strategist, the orientations bring greater clarity to the strategist role and the capacity of an organization to reorient and execute a new strategy.

In this issue, we outline the orientations and examine how each is a choice regarding the scope of a CFO’s role and means of involvement in the strategy process.

Read more
 

Standard-setting Activities Digest

Publication date: November 2014
Our Deloitte Digest summarizes current financial reporting rules and standards as at October 31, 2014; it also provides an overview of recent regulatory and professional developments for each of thel financial reporting frameworks used in Canada.

Read more
 
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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

Date Publication Article
2014/11/28 Osler Planning for 2015 – A 2014 Canadian Proxy Season Retrospective (36-page PDF file)
2014/11/27 CPA Canada Redeemable preferred shares: Accounting proposal could complicate estate tax plans
2014/11/26 The Canadian Club of Toronto Build Better. Invest Smarter., by Michael Sabia, President and CEO of the Caisse de dépôt et placement du Québec (Listen to the podcast, Watch the webcast)
2014/11/20 Norton Rose Fulbright Supreme Court recognizes good-faith contractual performance as an organizing principle of common law
2014/11/20 Financial Post National Regulator Series, by Jeffrey MacIntosh, TSX Chair in Capital Markets Law at the Faculty of Law at the University of Toronto and a director at CNSX Markets Inc.:
The Grand Market Regulator: Be afraid, very afraid
A Category 5 blizzard of red tape is headed for Canada’s market players
Where are the efficiencies?
The regulatory Leviathan
2014/11/19 Shores Jardin Knowing Where The Liabilities Are Buried: Issues For The Public Sector Implementing Accounting Standard PS 3260
2014/11/29 Financial Post Data breach response is "not the time to improvise"
2014/11/18 CPA Quebec Deficiencies identified during professional inspections
2014/11/15 Bottom Line New scrutiny coming for mutual fund fees (PDF)
2014/11/07 Audit Analytics Foreign Filers and XBRL Reporting Requirements
2014/11/05 FAIR Canada Does Disclosure Work?
Review the keynote address
Watch the full four-hour conference (unedited)
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U.S. news

Date Publication Article
2014/11/26 Journal of Accountancy PCAOB may soon require naming of engagement partner
2014/11/26 FEI Daily Speeding Up While Slowing Down Trying to Catch IFRS and Rev Rec
2014/11/25 CFO.com Is Private Company GAAP a Threat?
2014/11/25 CFO.com GOP Leaders Urge SEC to Ditch Pay-Ratio Rule
2014/11/20 Deloitte U.S. SEC Comment Letters — Including Industry Insights: A Recap of Recent Trends
2014/11/20 The Washington Post Companies, Congress grow anxious as the wait for crowdfunding continues
2014/11/19 Center for Audit Quality and the American Institute of CPAs SEC/PCAOB Independence Rules for Non-Issuer Audit and Attestation Engagements (5-page PDF file)
2014/11/18 Compliance Week Court Gives SEC Another Chance to Defend Conflict Minerals Rule
2014/11/18 Accounting Today
FASB
SEC
FASB and SEC Release Guidance on Pushdown Accounting
Download Accounting Standards Update No. 2014-17, Business Combinations (Topic 805): Pushdown Accounting
2014/11/18 Accounting Today SEC Mulls Next Move on IFRS
2014/11/18 Deloitte U.S. Investment management — Accounting and financial reporting update
2014/11/17 SEC 2014 Annual Report on the Dodd-Frank Whistleblower Program (36-page PDF file)
2014/11/17 Accounting Today FASB Reassesses Costs of New Standards
2014/11/17 Journal of Accountancy
Anti-Fraud Collaboration
Defining roles in prevention of financial reporting fraud
Download the report: The Fraud-Resistant Organization (56-page PDF file)
2014/11 The Center for Audit Quality Initiative on Rethinking Financial Disclosure (18-page PDF file)
2014/11 The Center for Audit Quality The Fraud-Resistant Organization: Tools, Traits, and Techniques to Deter and Detect Financial Reporting Fraud (56-page PDF file)
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International news

Date Publication Article
2014/11/25 IFAC Board and CFO Leadership Key to Integrated Reporting Success, by Alta Prinsloo, Executive Director, Strategy, and Chief Operating Officer
2014/11/21 Journal of Accountancy Pope Francis on the role of accountants in society
2014/11/17 Brookings Can the G-20 Plan Really Boost Global Growth?
2014/11/15 International Monetary Fund G20 Global Prospects and Policy Challenges (13-page PDF file)
2014/11/13 CGMA Magazine Evolving role of finance among top issues at World Congress of Accountants
2014/11/11 IFAC Fairness in Taxation, by Friedrich Roedler, Chair – FEE Tax Policy Group
2014/10/06 CGMA The next step in integrated reporting (12-page PDF file)
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Chief Editor

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

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