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AcSB

Terms of Reference

(Revised and approved by the Accounting Standards Oversight Council on February 12, 2021)

Mission

  1. The mission of the Accounting Standards Board (AcSB) is to support informed economic decision-making by maintaining frameworks that provide a basis for high-quality information about financial performance reported by Canadian private sector entities. The AcSB serves the public interest by establishing high-quality accounting standards, being accountable to stakeholders1 and contributing to global best practices in accounting standard setting for private sector entities.

Objectives

  1. The AcSB has the following objectives:
    1. To establish financial reporting standards and guidance that improve the quality of information reported by Canadian entities with due consideration for the costs and the benefits to the preparers and users of financial statements, and changes in the economic environment.
    2. To facilitate the capital allocation process in both the business and not-for-profit sectors through the provision of improved financial information.
    3. To participate with other standard setters in the development of global best practices in accounting standard setting for categories of reporting entities in Canada’s private sector for which standards are adopted or developed by the AcSB.
    4. To support the implementation of financial reporting standards and the resolution of emerging application issues.
  2. In meeting its objectives, the AcSB is committed to the following:
    1. Meeting the differing financial reporting needs of various categories of reporting entities, in particular publicly accountable enterprises, private enterprises and not-for-profit organizations (other than not-for-profit organizations in the public sector).
    2. Providing high-quality standards that promote confidence in reported financial information.
    3. Respecting and encouraging input from all of its stakeholders.
    4. Bringing objectivity to the consideration of issues.
    5. Respecting the ability of its stakeholders to exercise professional judgment.
    6. Responding to stakeholder needs in a timely manner.
    7. Seeking ongoing improvement to the process of standard setting.
    8. Acting as thought leaders on financial reporting issues.

Responsibilities

  1. The AcSB has the following responsibilities:
    1. To develop or adopt financial reporting standards and guidance on its own authority, when satisfied as to need, usefulness and practicality, following a review of financial reporting concepts and practice and a process of consultation with affected parties and debate (due process). This includes working to influence the development of International Financial Reporting Standards for publicly accountable enterprises, and liaising with the U.S. Financial Accounting Standards Board to take into account the interests of Canadian publicly accountable enterprises that have adopted U.S. GAAP.
    2. To implement effective working processes for all projects and activities. The AcSB may commission advisory committees or working groups to aid in the development of financial reporting standards, guidelines or other material.
    3. To undertake research and encourage research by others in support of the development of financial reporting standards.
    4. To be accountable to stakeholders by responding to them in a timely manner, and facilitating their participation and input into the development of standards that affect them.
    5. To account to the Accounting Standards Oversight Council (AcSOC) for the effective and efficient fulfillment of its mission and objectives. The AcSB submits plans and performance reports annually to AcSOC to demonstrate how it is meeting its responsibilities. The AcSB gives due consideration to the input from, and recommendations of, AcSOC in carrying out its work.
    6. To advise AcSOC as to the human and financial resources needed to accomplish the AcSB's objectives.

Membership

  1. The membership of the AcSB is, except for temporary vacancies, as follows:
    1. A compensated Chair, appointed on either a full-time or part-time basis.
    2. Between 11 and 13 volunteer members. A Vice-Chair may be appointed from among the volunteer members to assist in carrying out the role of the Chair.
  2. The following have a right to attend and participate in AcSB meetings and receive any meeting materials:
    1. The Vice-President, Standards of the Chartered Professional Accountants of Canada (CPA Canada).
    2. The Director, Accounting Standards.  
  3. The AcSB's members are appointed by AcSOC. Members of the AcSB are selected and their terms of office set by AcSOC to ensure that the AcSB has an appropriate balance of competencies and experiences to meet its objectives.
  4. The Chair plays a crucial role in the standard-setting process. The Chair takes the lead role in ensuring the performance of the AcSB’s responsibilities detailed on paragraph 4. This includes the following:
    1. Presiding over meetings of the AcSB and communicating with members between meetings, as necessary, concerning the AcSB's activities.
    2. Attending meetings of AcSOC and its committees.
    3. Serving as one of Canada's representatives at meetings relating to international financial reporting standards.
    4. Acting as Canada's leading spokesperson and contact on private sector financial reporting standards matters for both the media and the public.
    5. Representing the AcSB in meetings of other parties involved or interested in the AcSB's activities.
    6. Making presentations nationally and internationally on financial reporting matters.

The Chair may delegate these responsibilities to the Vice-Chair, if one has been appointed, or to the Director, Accounting Standards, except that the responsibilities in sub-paragraph (b) may be delegated only with the agreement of the Chair of AcSOC.

  1. The role of the Vice-Chair, if one has been appointed, is to act on behalf of the Chair in a temporary capacity, at the request of the Chair or in his or her absence, in:
    1. presiding over meetings of the AcSB;
    2. presiding over meetings of committees of the AcSB that are normally presided over by the Chair and, similarly, attending meetings of other committees of the AcSB that are normally attended by the Chair; and
    3. attending meetings of AcSOC or any of its committees, with the agreement of the Chair of AcSOC.

The Vice-Chair also undertakes such other responsibilities as the Chair may delegate to him or her from time to time in accordance with paragraph 8. An appointee to the position of Vice-Chair is not thereby designated as a successor to the current Chair.  

  1. Any member of the AcSB who either:
    1. fails to attend more than two meetings of the AcSB in succession; or
    2. fails to attend, in any twelve-month period, at least 50 per cent of all meetings of the AcSB

in the absence of extenuating circumstances, will cease to be a member of the AcSB as of the end of the meeting at which he or she was in default. The Chair makes a recommendation to the Nominating Committee of AcSOC concerning any extenuating circumstances and the Nominating Committee decides whether the defaulting member may continue as a member. A member is deemed to be absent from a meeting of the AcSB unless he or she is in attendance for substantially all of it.

Reporting to AcSOC

  1. The AcSB reports annually to AcSOC and the public on its activities, including its risk management process.
  2. Each year, the AcSB presents its proposed agenda and project priorities to AcSOC for comments and considers the views and comments of AcSOC in determining its priorities and agenda. If, for any reason, the AcSB does not wish to incorporate specific views and comments of AcSOC into its priorities and agenda, the AcSB advises AcSOC as to its reasons and provides AcSOC with an opportunity to respond. The AcSB discusses with AcSOC any changes to the annual plan and advises AcSOC of significant decisions made in carrying out the plan.
  3. The AcSB is accountable to AcSOC to demonstrate that it has used the resources allocated to it effectively and efficiently and that it has assessed how well it is meeting its mission.
  4. The AcSB submits such reports as may be required by AcSOC from time to time in addition to those otherwise specified in these Terms of Reference.
  5. The AcSB reviews its Terms of Reference and principal operating procedures at least once every three years to ensure that they continue to meet the needs of the AcSB and the public. The AcSB reports the results of these reviews to AcSOC.

Operations

  1. The AcSB develops a statement setting out the principal operating procedures it follows in fulfilling its responsibilities and submits the statement of operating procedures for ratification by AcSOC. The application of those procedures is subject to such direction as AcSOC may provide.
  2. The AcSB will create such committees, including committees of its own members, as it deems necessary in carrying out its responsibilities.

Consultation and Communication

  1. The AcSB develops and publishes a Standard-Setting Due Process Manual that outlines its rigorous set of procedures for developing and endorsing financial reporting standards, including communication and consultation with all interested stakeholders.   
  2. The AcSB disseminates information about standard-setting activities, together with invitations to the public to provide input on those activities.
  3. The AcSB supports the development of examples and guidance to assist stakeholders in understanding and applying financial reporting standards consistently.

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1 As described in paragraph 4(d), the AcSB is accountable to stakeholders by responding to them in a timely manner, and facilitating their participation and input into the development of standards that affect them.