Accounting Standards Oversight Council
Terms of Reference
(Adopted by the Accounting Standards Oversight Council on June 4, 2010 and amended by the Council on June 21, 2013)
- The mission of the Accounting Standards Oversight Council (AcSOC) shall be to serve the public interest by overseeing and providing input to the activities of the Accounting Standards Board (AcSB) and the Public Sector Accounting Board (PSAB).
- The AcSB serves the public interest by establishing standards and guidance for financial reporting by all Canadian entities outside the public sector and by contributing to the development of internationally accepted financial reporting standards. The mission of the AcSB is to support informed economic decision-making by maintaining a framework that provides a basis for high quality information about financial performance reported by Canadian private sector entities.
- The PSAB serves the public interest by establishing standards and other guidance for financial reporting by Canadian entities in the public sector and by contributing to the development of internationally accepted public sector financial reporting standards. The mission of the PSAB is to support informed decision-making and accountability by maintaining a framework that provides a basis for high quality information about organizational performance reported by public sector entities.
- As a body that has a broad perspective on the complex issues facing standard setters from the point of view of users, preparers and the public, the AcSOC shall support the AcSB and the PSAB in their missions as independent standard setting bodies. The AcSOC shall also encourage and support the adoption and use of the financial reporting standards that the AcSB and the PSAB establish, while recognizing that individual members and the bodies that are invited to nominate candidates for membership in accordance with paragraph 13 may be restricted in their ability to provide such encouragement and support. The AcSOC shall recognize that the authority to set technical agendas and the resulting financial reporting standards rests with the AcSB and the PSAB.
- The AcSOC shall have the following authority and responsibilities:
a. To oversee the activities of the AcSB and the PSAB by: i) approving the Terms of Reference for both bodies and any amendments to them, ii) monitoring and evaluating the performance of both bodies, the fulfillment of their responsibilities, the accomplishment of their work programs and the adequacy and use of available volunteer and staff resources, and iii) determining whether the AcSB and the PSAB have each developed and approved statements of operating procedures that are appropriate and responsive to the public interest. b. To appoint members to the AcSOC in accordance with paragraphs 11 to 15, including the Chair and Vice-Chair of the AcSOC. c. To appoint members to the AcSB and the PSAB, including Chairs and, where applicable, Vice-Chairs. d. To provide input to the AcSB and the PSAB primarily in terms of the strategic direction and priorities of those bodies, by providing its views on the preliminary agenda planning decisions of the AcSB and the PSAB, as presented to the AcSOC by those bodies. The AcSOC shall actively assist the AcSB and the PSAB to determine their priorities and strategies in their work programs with due regard for domestic needs and international developments. The AcSOC shall determine whether the AcSB and the PSAB have considered the needs of all categories of stakeholders appropriately in determining their priorities and strategies. e. To inform the AcSB and the PSAB of the diversity of views represented on the AcSOC, as well as the views of other individuals or groups with an interest in accounting standards. This input shall include views as to the priorities of the AcSB and the PSAB and the technical matters before those bodies. f. To protect the independence of the AcSB and the PSAB and to be satisfied that the AcSB and the PSAB have maintained their independence in carrying out their respective missions. g. To be satisfied that the standard-setting activities of the AcSB and the PSAB are appropriate and responsive to the public interest and conducted in accordance with acceptable due process procedures. In this regard, the AcSOC shall undertake an annual review of the performance of the AcSB and the PSAB relative to the long-term strategic plan and annual operating plan of each board. h. To report to the public on the discharge of its responsibilities and disseminate to the public information about its activities and those of the AcSB and the PSAB. In this regard, the AcSOC shall report annually to the public on its own activities and shall ensure that the AcSB and the PSAB each report annually to the public on their respective activities. i. To determine whether the AcSOC, the AcSB and the PSAB have the financial and human resources necessary to support their work. j. To advise the AcSB and the PSAB on any matters as requested by their respective Chairs.
- The AcSOC shall, except for temporary vacancies, comprise not fewer than twenty and not more than twenty-five volunteer voting members as follows:
a. A Chair; b. A Vice-Chair; and c. Eighteen to twenty-three other members. A voting member who chooses to waive voting rights is still a “voting member” for the purposes of these Terms of Reference.
- The terms of each of the AcSOC voting members shall be determined by the AcSOC on a basis that ensures an orderly changeover of membership over time while maintaining the experience and balance of backgrounds necessary to meeting the AcSOC’s objectives.
- The AcSOC shall also include the following non-voting members:
a. The Chairs of the AcSB and the PSAB; b. The Vice-President, Standards of CPA Canada; c. The Director, Accounting Standards; d. The Director, Public Sector Accounting; and e. The International Accounting Standards Board's representative with responsibilities for liaison with the AcSOC.
- If a voting member of the AcSOC fails to attend more than two meetings of the AcSOC in succession, the Nominating Committee shall consider whether there were extenuating circumstances that occasioned the non-attendance. In the absence of circumstances that, in the opinion of the Nominating Committee, are extenuating, that voting member shall cease to be a member of the AcSOC as of the end of the meeting at which he or she was in default. A member shall be deemed to be absent from a meeting of the AcSOC unless he or she is in attendance for substantially all of it.
- AcSOC members shall vote according to their own beliefs, experience and judgment based on the information they have and the discussions they have taken part in, and not according to the views of any firm, organization or constituency with which they are associated.
- Members of the AcSOC shall be selected on the basis of individual merit. Members shall be selected also on a basis that ensures that the AcSOC reflects a broad cross-section of backgrounds and points of view so that it is able to discharge its responsibilities relative to both the AcSB and the PSAB. A diverse membership enables the AcSOC to have a broad perspective on the issues and potential issues facing the AcSB and the PSAB.
- The AcSOC shall establish a Nominating Committee to recommend nominees to fill vacancies in the membership and in the positions of Chair and Vice Chair of the AcSOC, the AcSB and the PSAB. The voting members of the Nominating Committee shall comprise five voting members of the AcSOC who shall be appointed from time to time by the Chair and the Vice-Chair of the AcSOC and the Chair of the Nominating Committee. The Chair of the AcSB, the Chair of the PSAB and the Vice-President, Standards of CPA Canada shall be non-voting members of the Nominating Committee.
- The following organizations shall be specifically invited to provide nominees to the AcSOC Nominating Committee. The Nominating Committee may accept any such nominee, or ask for alternative nominees until one is accepted for membership on the AcSOC, so that each organization may have one representative on the AcSOC:
a. Canadian Academic Accounting Association; b. Certified General Accountants Association of Canada; c. Chartered Professional Accountants of Canada; d. Financial Executives International Canada; e. The CFA Institute; f. The Canadian Securities Administrators; and g. The Office of the Superintendent of Financial Institutions. These various representatives shall be included in the eighteen to twenty-three members referred to in paragraph 6(c) above.
- If any of the organizations identified above ceases to exist or ceases, in the opinion of the Nominating Committee, to be the appropriate representative of the particular constituency whose interests in the activities of the AcSB or the PSAB it represents, the Nominating Committee may designate a different organization to represent the constituency in question.
- The Nominating Committee shall present its recommendations to the AcSOC for approval.
- The AcSOC shall establish a Performance Review Committee to assist it in carrying out its reviews of the performance of the AcSB and the PSAB. The voting members of the Performance Review Committee shall comprise five voting members of the AcSOC who shall be appointed from time to time by the Chair and the Vice-Chair of the AcSOC and the Chair of the Performance Review Committee. The Chair of the AcSB, the Chair of the PSAB and the Vice-President, Standards of CPA Canada shall be non-voting members of the Performance Review Committee.
- The Performance Review Committee shall undertake an annual review of the performance of the AcSB and the PSAB, submit its findings to the AcSOC and present its recommendations to the AcSOC for approval.
- The AcSOC shall establish a Strategy Committee to assist it in reviewing matters of a strategic nature. The voting members of the Strategy Committee shall comprise five voting members of the AcSOC who shall be appointed from time to time by the Chair and the Vice-Chair of the AcSOC. The Chair of the AcSB, the Chair of the PSAB and the Vice-President, Standards of CPA Canada shall be non-voting members of the Strategy Committee.
- The AcSOC shall review its Terms of Reference at least once every three years to ensure that they continue to meet the needs of the AcSOC and the public interest it represents.
- The AcSOC shall develop and adopt a statement setting out the principal operating procedures it follows in fulfilling its responsibilities. The AcSOC shall apply those operating procedures, except in unusual circumstances and following agreement on any departure from the procedures. The AcSOC shall review its principal operating procedures at least once every three years to ensure that they continue to meet the needs of the AcSOC and the public interest it represents.
- The AcSOC shall create such committees of its members, in addition to the Nominating Committee, the Performance Review Committee and the Strategy Committee , as it deems necessary in carrying out its responsibilities. The Chair of the AcSOC shall be an ex officio member of all committees of the AcSOC.
- Meetings of the AcSOC shall be open to public observation, other than in camera discussions of human resources and other confidential matters.
Relationships with CPA Canada
- The results of the AcSOC’s periodic reviews of its Terms of Reference shall be submitted to the Board of Directors of CPA Canada. Amendment to the Terms of Reference of the AcSOC shall require the concurrence of the Board of Directors of CPA Canada.
- CPA Canada supports the AcSOC in the performance of its activities. In doing so, CPA Canada respects the independence of AcSOC, which is not subject to direction or influence by CPA Canada or other representatives of the accounting profession.
- Funding for reasonable and necessary expenses of the AcSOC and the standard-setting activities shall be provided from the budget of CPA Canada, based on a proposed budget submitted as part of CPA Canada’s annual budget approval process.
- The AcSOC shall provide such other reports as may reasonably be required by the Board of Directors of CPA Canada.
- The Vice-President, Standards of CPA Canada shall have liaison responsibilities to administer the relationship between the AcSOC and CPA Canada.