The Accounting Standards Oversight Council (AcSOC) discussed the activities of the Accounting Standards Board (AcSB) and the Public Sector Accounting Board (PSAB), and related matters.
At its meeting in Toronto, Ontario, on February 21-22, 2019, AcSOC received presentations on, and discussed, the following:
- Chairman’s Opening Remarks
- PSAB Activities
- Not-for-profit Accounting
- Report on AcSOC Members’ Attendance at AcSB and PSAB Meetings
- CPA Canada Foresight Project Presentation
- AcSB Activities
- Update on International Accounting Matters
- The PRC’s Terms of Reference
- AcSOC’s Risk Assessment
- PSAB’s International Strategy
- The AcSB’s Framework for Reporting Performance Measures
- Other Matters
Chairman’s Opening Remarks
AcSOC Chair, Peter Jewett welcomed attendees, including those observing the meeting via the livestreaming video platform.
Mr. Jewett congratulated Shelley Brown for her appointment to the Order of Canada and welcomed AcSOC’s new secretary, Noor Abu-Shaaban.
Mr. Jewett also informed the Council of the passing of Michael Ferguson, Auditor General of Canada. He noted that Mr. Ferguson was an exceptional person and a contributor to standard setting and offered his sympathies to Mr. Ferguson’s family.
PSAB Chair, Charles-Antoine St-Jean, commented on recent PSAB activities, including decisions, key files, public interest considerations, and governance and operations matters.
Strategic Plan Extension
In September 2018, PSAB proposed a one-year extension of its 2017-2020 Strategic Plan pending feedback from stakeholders. This decision was made because the next Strategic Plan could vary significantly depending on the decisions made by PSAB on its International Strategy project in March 2020. The Board issued a Notice of Intent to extend the Strategic Plan in January 2019 and alerted stakeholders via FRASCanada.ca, the e-newsletter The Standard, and social media.
As of February 7, 2019, no responses from stakeholders were received.
Mr. St-Jean noted that on May 28, 2018, PSAB released a Statement of Concepts titled “A Revised Conceptual Framework for the Canadian Public Sector” and a Statement of Principles, “A Revised Reporting Model for the Canadian Public Sector”. PSAB reported that the extensive communication efforts resulted in a record high response rate of a total of 200 respondents for the Statement of Concepts and the Statement of Principles.
A preliminary review of the feedback received indicated that there are diverse views on the proposals and a variety of issues raised that need to be considered to ensure acceptance of the new Conceptual Framework and Reporting Model.
During the year, PSAB will receive regular updates from its Concepts Underlying Financial Performance Task Force, which will further analyze the feedback received and will begin developing the exposure drafts, the bases of conclusions, and the proposed consequential amendments for the new Conceptual Framework and Reporting Model.
In response to questions, Mr. St-Jean informed the Council that he hopes that PSAB will be able to release an exposure draft in the upcoming year, especially given that the Task Force will meet quarterly.
PSAB is reviewing its approach to International Public Sector Accounting Standards (IPSAS) (see below).
PSAB is considering its government not-for-profit (GNFP) strategy (see below).
In response to questions, Mr. St-Jean advised the Council that International Public Sector Accounting Standards Board (IPSASB) does not have standards developed specifically for GNFP organizations. Therefore, regardless of what PSAB decides on the International Strategy, it needs to move forward with its GNFP project.
PSAB issued the third Invitation to Comment, “Employment Benefits: Non-traditional Pension Plans”, on October 19, 2018 with a comment period end-date of February 1, 2019. Canada is at the forefront of non-traditional pension plans. These are plans that involve employers sharing different degrees of risk related pension benefits with other parties, including employees and other employers. 60 comment letters were received as of February 7, 2019 and further responses are expected because some stakeholders (including actuaries, pension plans and unions) have requested extensions of the comment deadline. Comments received indicate diverse views from different stakeholder groups.
The Employment Benefits Task Force is expected to meet quarterly in 2019-2020 to deliberate responses for the three Invitation to Comment letters that were issued. PSAB intends to review the Statement of Principles for Employment Benefits in March 2020.
In response to questions, Mr. St-Jean said the he shares the same concern in terms of the time-to-market issue. He noted that he had several discussions with the PSAB Director and the Employment Benefits Task Force Chair to expedite the process in finalizing the standard.
PSAB approved the Exposure Draft, “Financial Instruments – Narrow Scope Amendments”, at its December 2018 meeting. This document was issued in January 2019 with a comment period of 90 days.
Mr. St-Jean also noted that the Board is proceeding with an independent process review of the financial instruments standard by a third party who will conduct their review during the summer of 2019. The results of the review will be presented at the September 2019 PSAB and October 2019 AcSOC meetings.
Public Private Partnerships
At its June 2018 meeting, Mr. St-Jean informed the Council that PSAB provided direction to its Public Private Partnerships Task Force on the issues it faced pertaining to the project scope and discount rates. To advance this project, staff put in place an agreed upon timeline and path to develop an exposure draft and added a new Task Force member to enhance the Task Force industry knowledge.
The Board expects to approve an exposure draft at its September 2019 meeting.
Public Interest Considerations
Public Sector Accounting Discussion Group
Mr. St-Jean informed the Council that the Group’s livestreamed meetings have been very successful in terms of outreach, reaching approximately 500 stakeholders across Canada annually.
Joint PSAB-AASB Project
Stephenie Fox, Vice-President, Standards, formed a joint working group with the Chairs and Directors of PSAB and the Auditing and Assurance Standards Board (AASB) to develop a common understanding of the issues pertaining to legislated accounting policies prepared in accordance with the CAS 210 audit opinion. The working group met for the first time on September 6, 2018.
An independent consultant was hired to develop an issues statement, which was presented to the joint working group in January 2019. The issues statement will be presented to PSAB at its March 2019 meeting.
Governance and Operations
Annual Member Declaration
PSAB members recommended the development of a Member Declaration form, which will highlight PSAB’s policies on conflicts of interest, undue influence, and confidentiality. At PSAB’s December 2018 meeting, the Member Declaration form was finalized. PSAB agreed that all members will sign this declaration annually beginning on April 1, 2019.
2018–2019 Performance Report
Richard Neville, Chair of the Performance Review Committee (PRC) informed the Council that the Committee met on February 4, 2019, where Tom Linsmeier was congratulated on becoming the new AcSOC PRC Chair effective April 1, 2019.
At this meeting, the PRC reviewed PSAB’s draft Performance Report in detail and provided its observations to PSAB’s Chair and Director. Committee members agreed with PSAB’s assessment that it is on track to achieve its 2018–2019 Annual Plan objectives and its 2017–2021 Strategic Plan.
He commented on PSAB’s key accomplishments, including the following:
- PSAB issued the Statement of Concepts, “A Revised Conceptual Framework for the Canadian Public Sector,” and the Statement of Principles, “A Revised Reporting Model for the Canadian Public Sector”, in May 2018.
- PSAB approved a project proposal for the GNFP Consultation Paper in June 2018.
- PSAB proposed a one-year extension of its 2017-2020 Strategic Plan in September 2018.
- PSAB established an Advisory Group and approved the Exposure Draft, “Financial Instruments: Narrow-scope Amendments”, in December 2018.
- The PSAB Chair and staff continued extensive outreach activities, using multiple communications channels to reach, engage, and receive input from stakeholders.
Mr. Neville informed the Council that the final performance report will be presented to the PRC in May 2019. The report will then be presented to the full Council at its meeting on June 6-7, 2019, for its input and assessment of PSAB’s performance during the year ended March 31, 2019.
Mr. Neville informed the Council that the final performance report will be presented to the PRC in May 2019. The report will then be presented to the full Council at its meeting on June 6-7, 2019, for its input and assessment of PSAB’s performance during the year ended March 31, 2019.
PSAB’s Draft 2019–2020 Annual Plan
Mr. Neville said that the PRC discussed PSAB’s 2019-2020 draft Annual Plan and gave input to the Board Chair and Director. Committee members agreed that the draft 2019–2020 Annual Plan would provide a basis for the Committee to assess PSAB’s performance for the year ended March 31, 2020.
The PSAB Chair discussed PSAB’s planned activities and future approval dates, including the timeline for its International Strategy and its GNFP project.
In discussing PSAB’s 2019–2020 objectives, Mr. St-Jean informed the Council that PSAB will develop a Stakeholder Engagement Framework, which intends to develop high-level principles and performance indicators, including targets, to ensure PSAB uses its resources efficiently for stakeholder outreach initiatives.
In responding to members’ comments on aspects of the Stakeholder Engagement Framework, Mr. St-Jean noted that for every project, PSAB develops a comprehensive communications plan. The Stakeholder Engagement Framework is a very important tool to ensure due process is followed because it will allow PSAB to understand the backgrounds of its stakeholders and will also allow PSAB to target certain stakeholder groups.
Mr. Jewett informed the Council that at the February 4, 2019 PRC meeting, the PRC emphasized a concern regarding not-for-profit accounting (see below). The PRC recommended that both PSAB and the AcSB build into their annual plans a high degree of collaboration on not-for-profit accounting.
Linda Mezon, AcSB Chair, reminded the Council that in 2014 the AcSB approved three not-for-profit projects and established its Not-for-Profit Advisory Committee. Ms. Mezon noted that the AcSB has currently completed its project on tangible capital assets, intangible assets and collections, which became effective on January 1, 2019.
The Chair also noted that the Board is currently conducting research and developing proposals for the AcSB’s ongoing Combinations project. With regards to Contributions, Ms. Mezon informed the Council that the Board is in the process of developing a Consultation Paper, which it expects to issue in 2019–2020.
Mr. St-Jean provided the Council with an overview of the approach to PSAB’s GNFP strategy and Consultation Paper. He noted that PSAB made a decision in 2017 to reassess and develop a GNFP strategy based on the challenges faced by users. He also noted that PSAB had developed a five-step approach, which includes two significant consultations with stakeholders. Mr. St-Jean informed the Council that staff consulted with over 100 GNFP stakeholders to identify and understand their financial reporting needs and perspectives. Mr. St-Jean shared PSAB’s goal of developing a GNFP strategy by 2021.
In informing the Council of the Boards’ plan to coordinate their activities for not-for-profit accounting, Ms. Fox said that PSAB and the AcSB agreed to develop a joint strategy to research the not-for-profit industry (private and public sector). They will also leverage Rebecca Villmann, Director, Reporting Initiatives and Research, Standards to coordinate research and gather data. Once a common understanding of the industry is developed, the Boards will make decisions to meet the needs of its stakeholders.
Members expressed their support in the collaboration of the two Boards for this initiative and noted that research is very much needed to help practitioners understand when and where there should be similarities between the two sectors.
A few members commented that the distinction and the boundary between the private and public sector for not-for-profit organizations (NFPOs) can be quite difficult. One member gave the example of universities, where some of these institutions utilize private entity accounting and their counterparts use public sector accounting guidance, although the source of revenue and operations are very similar. Given that the operations of these institutions are identical, some believe the accounting framework utilized should be uniform. The Boards need to ensure the distinction between the private and public sector NFPOs is made very clear to the users.
Report on AcSOC Members’ Attendance at AcSB and PSAB Meetings
Two members reported on their attendance at recent AcSB and PSAB meetings. They noted that the meetings were well run and attention was paid to due process. Both members were impressed with the quality of the discussions and the calibre of the participants in both Boards. The Chairs managed the agenda effectively and allowed all members to express their views.
CPA Canada Foresight Project
Tashia Batstone, Senior Vice-President, External Relations and Business Development, CPA Canada, provided the Council with details on a new initiative called CPA Canada Foresight.
Ms. Batstone stated that the accounting profession is on the precipice of a fundamental transformation and how we respond and manage these changes will impact the future of Chartered Professional Accountants (CPAs), the profession, and Canadian business. She further noted that new technologies, including blockchain and artificial intelligence, shifting attitudes towards inclusion and sustainability, and blurring boundaries between industries all have a profound impact on the accounting profession and the businesses CPAs support.
Foresight aims to develop a holistic view of the changing nature of business and the role of the accounting profession (both in Canada and globally). The outcome of this initiative will be the development of a work plan, which identifies the key projects the accountancy profession must undertake to become future-ready.
In developing the work plan, Ms. Batstone informed the Council that a multi-stakeholder (investors, preparers, auditors, regulators and other influencers) approach to consultations was employed. She said that social media and new artificial intelligence technologies were also used to engage membership in a parallel process through a dedicated platform.
Ms. Batstone noted that there are five issues facing the accounting profession – economic, geopolitical, technological, environmental, and societal. In sharing the learnings of this project Ms. Batstone mentioned that CPAs have a role to play in how data is protected, trusted, governed and used in decision making. CPAs must consider new ways of unlocking value, and core skills such as resiliency, creativity, application of judgement, and leadership, which will be increasingly essential.
After a question and answer period, Mr. Jewett thanked Ms. Batstone for presenting the CPA Canada Foresight initiative to the Council.
Ms. Mezon commented on the AcSB’s recent activities related to achieving the Board’s strategic objectives, its international work, its domestic projects and its research program. She also discussed the AcSB’s compliance with due process.
Ms. Mezon noted that the AcSB is achieving its strategic objectives by connecting with key parties, recruiting quality volunteers and advancing major projects, both domestically and internationally. These major projects include Insurance, Financial Instruments, and Revenue.
In March 2019, the Board will meet in Vancouver at the CPA British Columbia offices. Ms. Mezon informed the Council that the Board will not only meet in Vancouver, it will perform outreach activities to obtain stakeholder feedback for its ongoing projects and facilitate a professional development session, where 400 professionals are expected to attend. She noted that offsite meetings are a great opportunity for all AcSB members to engage with important stakeholder groups. The AcSB hopes to continue hosting offsite meetings annually.
The AcSB continues to undertake various activities to support Canadian preparers and auditors in implementing standards and addressing emerging accounting topics in practice. The Board continues to ask various industry groups, committee volunteers and other stakeholders about the challenges of implementing new standards, including IFRS 16, Leases,IAS 41 Agriculture and IFRS 9,Financial Instruments. For IFRS 16, Leases,Ms. Mezon noted that most leases will now be recognized on the balance sheet in the new standard. An awareness campaign was undertaken by the AcSB because this standard impacts a wide-range of preparers.
One AcSOC member suggested that in its post implementation review of the new standard, AcSB also assess the challenges faced by other user groups such as regulators and covenant holders. Ms. Mezon noted his recommendation and thanked him for the suggestion.
The Board further discussed two topics referred to the Board by its IFRS® Discussion Group related to the accounting for cannabis within the scope of IAS 41, Agriculture at its December meeting. The issues relate to the accounting for costs incurred related to biological transformation and the presentation of the statement of comprehensive income. In considering whether entities in other jurisdictions are encountering similar issues in applying IAS 41, the Board decided and is in the process of submitting an issue to the IFRS Interpretations Committee (IFRIC). The submission asks IFRIC to clarify whether IAS 41 intends for costs incurred for the development of biological assets, measured at fair value less costs to sell, be capitalized or expensed.
On Insurance, Ms. Mezon noted that the AcSB is focused on the status of global and Canadian implementation. The Chair holds monthly calls with an International Accounting Standards Board (IASB) member, who is also the official board advisor on the Insurance project, to receive updates on the Insurance standard. Ms. Mezon and the AcSB staff also hold regular calls with the European Financial Reporting Advisory Group and other national standard setters to receive updates on their respective endorsement processes.
The Chair informed the Council that the IASB is considering amendments to IFRS 17, Insurance Contracts based on stakeholder feedback, including those highlighted by Canadian stakeholders. The IASB plans to issue an exposure draft by the end of the second quarter of 2019.
With regards to mutual entities, the Chair informed the Council that mutual entities’ laws and regulations differ across jurisdictions. Canadian mutual entities are smaller in size and are formed under different legislation. The new IFRS 17 can be read to require the surplus in these entities to be treated as a liability whereas the Canadian mutual entities argue that it should be treated as part of equity. The AcSB has signaled to the IASB that it believes that the matter needs to be determined based on the underlying legal requirements for these entities. The Board will continue to meet with mutual entities to determine if the underlying support of the surplus would in fact be treated as a liability.
The Chair also informed the Council that the AcSB continues to respond to exposure drafts and IFRIC requests for information on issues, including a Discussion Paper on Financial Instruments with Characteristics of Equity.
The IFRS Discussion Group continues to attract increased attention, nationally and internationally. Ms. Mezon informed the Council that International regulators are viewing the Group’s meetings to determine the issues Canada is facing in implementing IFRS® Standards.
Private Enterprises and Not-for-Profit Organizations
The Chair stated that in July 2018, the Board approved a project to address stakeholders’ issues regarding insufficient guidance for revenue in Section 3400, Revenue in Part II of the CPA Canada Handbook – Accounting. She noted that the Board intends to propose additional guidance on multiple-element arrangements, percentage of completion method, bill-and-hold arrangements, reporting revenue gross or net, and upfront non-refundable fees/payments. The Board received input from its Private Enterprise Advisory Committee on the topics discussed above. The Board will further discuss transitional provisions and the proposed effective dates of the amendments at its March 2019 meeting. Ms. Mezon informed the Council that the Board plans to issue an exposure draft by the second quarter of 2019.
With regards to Combinations, the Board decided that its Combinations project will be split into two separate projects based on the sections of the Handbook. The Board will discuss the accounting requirements for combinations of NFPOs to be considered a merger or an acquisition at its March 2019 meeting.
On October 31, 2018, the Board closed the comments on its Exposure Draft, “Agriculture”, noting that the overall feedback received was positive. The Board will continue to deliberate the feedback from its stakeholders and its Agriculture Advisory Group at its March 2019 meeting.
In discussing narrow-scope amendments, Ms. Mezon noted that in September 2018, the Board issued an Exposure Draft, “Section 3465, Income Taxes”. Seven comment letters were received indicating an overall positive outlook of the revisions. All respondents agreed with the transition and effective date. The AcSB also issued Exposure Draft, “Investments”, in September 2018, overall feedback received was positive, with many respondents agreeing with the proposals with no additional comments. The Board will deliberate feedback at its upcoming meeting.
The Board continues to build out its research program, designed to support evidence-based standard setting.
Ms. Mezon informed the Council that the AcSB was contacted by the IASB to gather more information on Extractive Activities because Canada has the highest number of extractive entities in the world, this initiative was led by Ms. Villmann. Ms. Mezon also noted that the AcSB performed some research for IASB on hybrid pension plans, in cooperation with four other national standard setters.
She highlighted that AcSB will be performing more research activities in the upcoming year.
In response to questions, Ms. Mezon noted that Ms. Villmann is a shared resource between the AcSB, PSAB and the AASB. Oversight over the research function will be provided by Ms. Fox.
Ms. Mezon also noted that this is separate from CPA Canada’s research function. Ms. Villmann is closely liaising with the CPA Canada research group to ensure there is no duplication of efforts.
Compliance with Due Process
Council members were advised that there were no reportable departures from due process or “comply or explain” actions, nor was there any unusual event in the application of due process during the October 2018 to January 2019 period.
AcSB’s 2018 – 2019 Performance Report
Mr. Neville stated that at its February 4, 2019 meeting, PRC members reviewed the AcSB’s draft Performance Report in detail and provided their observations to the AcSB’s Chair and Director. Committee members agreed that the AcSB is having a very successful year.
He commented on the AcSB’s key accomplishments, including the following:
- developing and issuing the Framework for Reporting Performance Measures, which aims to enhance the relevance of financial information for public, private and NFPOs.
- engaging with stakeholders, including virtual roundtables, podcasts, numerous roundtables, meetings, webinars and presentations.
- progressing on domestic standard-setting projects, including agriculture, financial instruments, revenue and other narrow-scope amendments.
- having a strong international presence, including discussing emerging issues such as cannabis accounting and cryptocurrencies and providing extensive implementation support for IFRS 17, Insurance Contracts.
AcSB’s Draft 2019–2020 Annual Plan
Mr. Neville said that the PRC discussed the AcSB’s 2019-2020 draft Annual Plan and gave input to the Board Chair and Director. Committee members agreed that the draft 2019–2020 Annual Plan would provide a basis for the Committee to assess the AcSB’s performance for the year ended March 31, 2020.
The AcSB Chair noted that the 2019–2020 Annual Plan sets out the major elements of the Board’s program of annual activities in carrying out its Strategic Plan. The Annual Plan includes an environmental scan and interim reassessments of risks to refine aspects of the strategic plan.
Ms. Mezon noted that relative to 2018–2019, the draft 2019–2020 Annual Plan contains some key additions or changes, including:
- a new section on Strategic Planning, which outlines activities that the Board may undertake to begin the development of the 2022–2027 Strategic Plan; and
- combining the private enterprise and NFPO sections because the Board’s Part III stakeholders also use certain sections within Part II of the Handbook, and the concepts behind the standards may often be similar. Therefore, it leads to a more efficient process.
In responding to a member’s comment, Ms. Mezon noted that the allocation to translation on the budget is driven by the projects undertaken by the Board in any given year. Mr. Neville informed the Council that the PRC does some review of the Board’s’ budgets prior to their approval by CPA Canada’s Board of Directors.
Another member inquired of the challenges faced by the AcSB with regards to time-to-market. Ms. Mezon said that time-to-market is a very common challenge for standard setters. The AcSB continues to focus on the timely execution of projects in order to reduce the time-to-market.
Mr. Jewett reiterated the PRC’s recommendation that both PSAB and the AcSB build into their annual plans a high degree of collaboration on not-for-profit accounting.
Mr. Jewett thanked Mr. Neville and the Committee members for their extensive and dedicated work.
Update on International Accounting Matters
Sheila Fraser, Vice-Chair, IFRS Foundation Trustees, provided an update on several matters discussed at the Trustees’ meeting held in Kuala Lumpur, Malaysia on January 29, 2019.
Regarding the IASB’s technical activities, Ms. Fraser’s remarks included the following:
- The IASB is currently evaluating 27 issues that were raised regarding the new IFRS 17, Insurance Contracts. In evaluating these issues, the Board has set out two criteria to determine if a possible amendment is necessary:
- The amendment would not result in a significant loss of useful information that would have been available under IFRS 17.
- The amendments should not delay or disrupt implementation.
Ms. Fraser noted that one of the issues raised pertains to the implementation date of the new standard. The Board has proposed a one-year deferral to January 1, 2022.
The IASB will issue an exposure draft for comments by the end of June 2019. The comment period will likely be shortened.
- In October 2018, the IASB added a research project on interbank offered rate (IBOR) reform and its effects on financial reporting. Most recently, the Board has instead decided to perform standard-setting activities on this topic. The first focus will be on the effects before the reform is fully implemented due to potential issues in hedge accounting. The Board intends to issue an exposure draft by May 2019 with final amendments by year-end.
- The Trustees discussed and proposed changes to its IASB’s Due Process Handbook. An exposure draft will be issued by April 2019.
- With the presence of a new Executive Director and a new Chair, the IFRS® Foundation discussed the Foundation’s strategy. Ms. Fraser noted that this was a good discussion, which will likely continue over the next few meetings.
- The Foundation was briefed on its staffing strategy and developed a working plan to respond to issues raised in its staff engagement survey.
Ms. Fraser’s responses to questions include the following:
- The Foundation has begun a process to replace three Trustees (one of whom is Ms. Fraser). Trustees are selected based on the Foundation’s needs which are identified by a composition matrix. Trustees also undergo an interview process by the Foundation’s Nominating and Governance Committee and are appointed by the Monitoring Board. Trustees typically serve two terms of three years.
- In an effort to maintain a Canadian presence at the IFRS Foundation, AcSOC may wish to identify strong candidates and pass the names onto the Foundation’s nominating and governance committee for further assessment and consideration.
- No updates since the last meeting on Brexit.
Mr. Jewett thanked Ms. Fraser for her update and noted that AcSOC values her perspectives on international matters.
Ms. Fraser expressed her congratulations to Mr. Jewett for successfully chairing the Council and wished him good luck in his future endeavors.
PRC Terms of Reference
Richard Neville, PRC Chair, informed the Council that the PRC is seeking input and approval from AcSOC on the PRC’s draft Terms of Reference.
He noted that one of the recommendations of the joint subcommittee between AcSOC and the Auditing and Assurance Standards Oversight Council was that separate Terms of Reference be developed for each of the standing committees of both councils. Previously, the mandate for the PRC was included in AcSOC’s Terms of Reference and statement of operating procedures. AcSOC’s Terms of Reference and statement of operating procedures have since been updated and the details related to the PRC were removed with the intention that these form the basis of separate Terms of Reference for the PRC.
He informed the Council that the PRC reviewed and approved the Terms of Reference at its February 4, 2019 meeting.
After a discussion, the Council approved the PRC’s new Terms of Reference.
AcSOC’s Risk Assessment
Cathy Riggall, AcSOC’s ad hoc Risk Review Committee Chair, noted that the Committee identified 29 risks facing the Council. These risks were classified into four distinct categories (membership, operations, strategic and external).
Ms. Riggall reminded the Board that Committee members presented a draft report to the full Council at its meeting on October 25-26, 2018, at which time Council members were provided with a survey link and asked to provide their input on the probability of each of the identified risks occurring and the potential impact.
She noted that the Committee gathered and analyzed the Council members’ survey responses and mapped the survey results onto a heat-map to create a consensus view of the risk profile of the Council for final presentation to, and approval by, Council members at this meeting. Ms. Riggall informed the Council of the Committee’s observations that two-thirds of respondents note that AcSOC’s risk profile is not changing. The second observation pertained to the fact that external risks represent the area of highest concern for AcSOC.
The Council discussed and, subject to minor modifications, agreed with the risks and mitigating factors identified by the ad hoc Risk Review Committee. The Council approved the Committee’s report.
Ms. Riggall thanked the Committee members and staff for their hard work and noted that AcSOC should continue to have these important discussions.
Mr. Jewett informed the Council that a risk assessment will be performed on an annual basis by AcSOC’s Nominating and Governance Committee as part of its governance mandate. He thanked the Committee for their efforts.
PSAB’s International Strategy
Mr. St-Jean reminded the Council that PSAB’s Strategic Plan outlines the broad strategic objectives that guide PSAB in achieving its mandate over a period of time. One of the strategies highlighted in the Strategic Plan pertains to reviewing PSAB’s approach to IPSAS, which reflects the increasing trend towards global harmonization of accounting standards in both the private and public sectors.
Mr. St-Jean noted that PSAB has committed to its stakeholders and to the Council that it will be in a position to make a decision regarding its approach towards IPSAS by March 2020.
He noted that the Board is seeking the Council’s feedback on the overall approach to PSAB’s Consultation Paper 2, “Reviewing PSAB’s Approach to International Public Sector Accounting Standards”, which is expected to be approved by PSAB in March 2019. This second Consultation Paper intends to summarize the feedback that was provided by respondents on its first Consultation Paper, share PSAB’s preferred approach, and provide clarification of certain points based on feedback received.
One member suggested that PSAB not express a preferred approach. He noted that in assessing whether the AcSB should transition to IFRS Standards, the AcSB did not indicate a preferred approach until consensus was obtained from stakeholders’ feedback. He further noted that it is easier for stakeholders to express their opinion when there is not already a pre-determined outcome set out by PSAB. Several members agreed with this comment.
Another member recommended that in Consultation Paper 2, PSAB discuss the structure of the IPSASB and how it is funded. Mr. St-Jean noted the comment and thanked the member for this suggestion.
In response to a member’s question, the Chair stated that regardless of the option chosen, PSAB needs to ensure its members know that PSAB’s GNFP project needs to be progressed because IPSASB does not have a standard for GNFP entities.
Mr. St-Jean thanked the Council for their valuable input and assured the members that the feedback will be shared with PSAB.
The AcSB’s Framework for Reporting Performance Measures
Ms. Mezon informed the Council that the Framework for Reporting Performance Measures was issued by the AcSB in December 2018, in time for the 2018 reporting cycle. Based on initial feedback, the Chair noted that 71% of respondents deem the Framework as valuable and 76% are likely to use the guidance in the Framework. Since publication, the Board has not gathered formal feedback on the usefulness of the Framework because entities were busy with their reporting cycles.
In November 2018, per the Council’s recommendation at its October 2018 meeting, the AcSB shared the near final draft of the Framework with the Canadian Securities Administrators (CSA) Chief Accountants Committee (CAC) with the goal to obtain the CAC’s feedback. Ms. Mezon assured the Council that edits were made to the Framework based on the feedback received to ensure consistency with the proposed CSA’s National Instrument (NI) 52-112, “Non-GAAP and Other Financial Measures Disclosures.”
Going forward, the Board intends to promote awareness of the Framework and encourage its use in Canada and globally. It will also ensure updates are made on an as-needed basis.
Ms. Mezon’s responses to questions included the following:
- The Board’s stakeholders did not express confusion on how the Framework differs from the CSA’s proposed NI. At roundtables, webinars, and other tools of communication, the Board ensured to clearly clarify the goals and objectives of the Framework in order to prevent any confusion with this regard.
- The Chair of the CAC expressed satisfaction in the AcSB’s attempt to address the CSA CAC’s concerns.
- The Board believes collaboration with other interested parties is the best way forward.
In closing the discussion Mr. Jewett stated that over the past few years, the Council has expressed concern about the amount of information, which does not fall within the realm of traditional audits. He asked Ms. Mezon to inform the Board that the Council is very much appreciative of the leadership role taken by the AcSB in the field of non-GAAP performance measures.
Mr. Jewett thanked Lois Fine, Richard Neville, Tricia O’Malley, and Martha Tory for their many years of service on AcSOC.
On behalf of the Council, Miville Tremblay expressed his appreciation for Mr. Jewett’s many years of valuable service as AcSOC Chair and congratulated him for a very successful chairmanship.
The Accounting Standards Oversight Council (AcSOC) is an independent, volunteer body established by the Canadian Institute of Chartered Accountants (CICA)* in 2000. It serves the public interest by overseeing and providing input on the activities of the Accounting Standards Board (AcSB), which sets financial reporting standards for profit-oriented enterprises and not-for-profit organizations, and the Public Sector Accounting Board (PSAB), which sets financial reporting standards for governments and their organizations. AcSOC’s responsibilities include appointing the AcSOC, AcSB and PSAB members. Reporting to the public and made up of representatives that include regulators, investors and other users, preparers and auditors of financial reports, AcSOC brings a broad perspective to complex issues facing standard setters in both the private and public sectors.
*The CICA, CGA Canada and CMA Canada have since consolidated under the CPA Canada banner as the profession’s national body.