Accounting Standards Oversight Council
Terms of Reference
(Revised and approved by the Accounting Standards Oversight Council on February 24, 2017)
- The mission of the Accounting Standards Oversight Council (AcSOC) is 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 mission of the AcSB is to support informed economic decision-making by maintaining frameworks that provide a basis for and promote stakeholder confidence in the financial information reported by Canadian publicly accountable enterprises, private enterprises, not-for-profit organizations (other than not-for-profit organizations in the public sector) and pension plans. The AcSB serves the public interest by establishing high-quality standards and guidance for financial reporting for use by Canadian entities outside the public sector and by contributing to global best practices in accounting standard setting for private sector entities.
- 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 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, AcSOC supports the AcSB and PSAB in their missions as independent standard-setting bodies. AcSOC also encourages and supports the adoption and use of the financial reporting standards that the AcSB and 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. AcSOC recognizes that the authority to set technical agendas and the resulting financial reporting standards rests with the AcSB and PSAB.
- AcSOC has the following authority and responsibilities:
(a) To oversee the activities of the AcSB and 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 PSAB have each developed and approved statements of operating procedures that are appropriate and responsive to the public interest. (b) To appoint members to AcSOC in accordance with paragraphs 11 to 15, including the Chair and Vice-Chair of AcSOC. (c) To appoint members to the AcSB and PSAB, including Chairs and, where applicable, Vice-Chairs. (d) To provide input to the AcSB and 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 PSAB, as presented to AcSOC by those bodies. AcSOC actively assists the AcSB and PSAB to determine their priorities and strategies in their work programs with due regard for domestic needs and international developments. AcSOC determines whether the AcSB and PSAB have considered the needs of all categories of stakeholders appropriately in determining their priorities and strategies. (e) To inform the AcSB and PSAB of the diversity of views represented on AcSOC, as well as the views of other individuals or groups with an interest in accounting standards. This input includes views as to the priorities of the AcSB and PSAB and the technical matters before those bodies. (f) To protect the independence of the AcSB and PSAB and to be satisfied that the AcSB and PSAB have maintained their independence in carrying out their respective missions. (g) To be satisfied that the standard-setting activities of the AcSB and PSAB are appropriate and responsive to the public interest and conducted in accordance with acceptable due process procedures. In this regard, AcSOC undertakes an annual review of the performance of the AcSB and 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 PSAB. In this regard, AcSOC reports annually to the public on its own activities and ensures that the AcSB and PSAB each report annually to the public on their respective activities. (i) To determine whether AcSOC, the AcSB and PSAB have the financial and human resources necessary to support their work. (j) To advise the AcSB and PSAB on any matters as requested by their respective Chairs.
- AcSOC, except for temporary vacancies, comprises not fewer than twenty and not more than twenty-five volunteer members as follows:
(a) A Chair; (b) A Vice-Chair; and (c) Eighteen to twenty-three other members.
- The term of each AcSOC member is determined by AcSOC on a basis that ensures an orderly changeover of membership over time while maintaining the experience and balance of backgrounds necessary to meeting AcSOC’s objectives.
- The following have a right to attend and participate in AcSOC meetings and receive any meeting materials, except the in camera portions of the meetings that exclude management and any related materials:
(a) The Chairs of the AcSB and PSAB; (b) The Vice-President, Standards of CPA Canada; (c) The Director, Accounting Standards; and (d) The Director, Public Sector Accounting.
- Any member of AcSOC who fails to attend in any twelve-month period, at least 50 per cent of all meetings of AcSOC in the absence of circumstances that, in the opinion of the Nominating Committee, are extenuating, will cease to be a member of AcSOC. A member is deemed to be absent from a meeting of AcSOC unless he or she is in attendance for substantially all of it.
- AcSOC members 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 AcSOC are selected on the basis of individual merit. Members are selected also on a basis that ensures that 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 PSAB. A diverse membership enables AcSOC to have a broad perspective on the issues and potential issues facing the AcSB and PSAB.
- AcSOC has established a Nominating Committee to recommend nominees to fill vacancies in the membership and in the positions of Chair and Vice Chair of AcSOC, the AcSB and PSAB. The members of the Nominating Committee comprise five members of AcSOC who are appointed from time to time by the Chair and the Vice-Chair of AcSOC and the Chair of the Nominating Committee. The Chair of the AcSB, the Chair of PSAB and the Vice-President, Standards of CPA Canada have a right to attend and participate in meetings of the Nominating Committee and receive meeting materials.
- The following organizations are 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 AcSOC, so that each organization may have one representative on AcSOC:
(a) Canadian Academic Accounting Association; (b) Financial Executives International Canada; (c) The CFA Institute; (d) The Canadian Securities Administrators; and (e) The Office of the Superintendent of Financial Institutions. These various representatives are 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 PSAB it represents, the Nominating Committee may designate a different organization to represent the constituency in question.
- The Nominating Committee presents its recommendations to AcSOC for approval.
- AcSOC has established a Performance Review Committee to assist it in carrying out its reviews of the performance of the AcSB and PSAB. The members of the Performance Review Committee comprise five members of AcSOC who are appointed from time to time by the Chair and the Vice-Chair of AcSOC and the Chair of the Performance Review Committee. The Chair of the AcSB, the Chair of PSAB and the Vice-President, Standards of CPA Canada have a right to attend and participate in meetings of the Performance Review Committee and receive meeting materials.
- The Performance Review Committee undertakes an annual review of the performance of the AcSB and PSAB, submits its findings to AcSOC and presents its recommendations to AcSOC for approval.
- AcSOC has established a Strategy Committee to assist it in reviewing matters of a strategic nature. The members of the Strategy Committee comprise five members of AcSOC who are appointed from time to time by the Chair and the Vice-Chair of AcSOC. The Chair of the AcSB, the Chair of PSAB and the Vice-President, Standards of CPA Canada have a right to attend and participate in meetings of the Strategy Committee and receive meeting materials.
- AcSOC reviews its Terms of Reference at least once every three years to ensure that they continue to meet the needs of AcSOC and the public interest it represents.
- AcSOC develops and adopts a statement setting out the principal operating procedures it follows in fulfilling its responsibilities. AcSOC applies those operating procedures, except in unusual circumstances and following agreement on any departure from the procedures. AcSOC reviews its principal operating procedures at least once every three years to ensure that they continue to meet the needs of AcSOC and the public interest it represents.
- AcSOC will 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 AcSOC is an ex officio member of all committees of AcSOC.
- Meetings of AcSOC are open to public observation, other than in camera discussions of human resources and other confidential matters.
- The results of AcSOC’s periodic reviews of its Terms of Reference are submitted to the Board of Directors of CPA Canada. Amendments to the Terms of Reference of AcSOC require the concurrence of the Board of Directors of CPA Canada.
- CPA Canada supports 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 AcSOC and the standard-setting activities is provided from the budget of CPA Canada, based on a proposed budget submitted as part of CPA Canada’s annual budget approval process.
- AcSOC provides such other reports as may reasonably be required by the Board of Directors of CPA Canada.
- The Vice-President, Standards of CPA Canada has liaison responsibilities to administer the relationship between AcSOC and CPA Canada.