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AcSOC Public Meeting Report – October 17-18, 2019

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 October 17-18, 2019, AcSOC received presentations on, and discussed, the following: 

  • Chair’s Opening Remarks
  • PSAB Activities
  • AcSB Activities
  • Canadian Council of Comptrollers Presentation
  • Sustainability, Environmental, and Social Reporting
  • CPA Canada Foresight Project Update
  • Reports on Attendance at AcSB and PSAB Meetings

Chair’s Opening Remarks

AcSOC Chair, Miville Tremblay welcomed all attendees, including those observing the meeting via the livestreaming video platform. He congratulated Stephenie Fox, Vice-President of Standards, for her successful nomination for the Fellow of the Chartered Professional Accountants, Fellow Chartered Accountant.

PSAB Activities

Recent Activities

PSAB Chair, Charles-Antoine St-Jean commented on recent Board activities, including key strategies, key files, public interest considerations, and governance and operations matters.

PSAB Key Strategies

International Strategy

The Consultation Paper 2, “Reviewing PSAB’s Approach to International Public Sector Accounting Standards,” was approved at the March 2019 PSAB meeting and was released on May 8, 2019, in conjunction with the “Government Not-for-Profit Consultation Paper.” The Board released the two Consultation Papers together to allow stakeholders to consider the documents’ inter-relationship. The comment period deadline on the second Consultation Paper was September 30, 2019. The Board will review and analyze comments in December 2019. Mr. St-Jean noted that the Board has committed to its stakeholders and to the Council to decide on its approach toward International Public Sector Accounting Standards by March 2020.

In response to a question on the Board’s outreach activities for its International Strategy, PSAB Director Michael Puskaric said that staff issued a press release, targeted policy makers, conducted personal consultations, and gathered stakeholder feedback by other means. He added that the Board is comfortable that it has received feedback from a broad spectrum of the stakeholder community.

Government Not-for-Profit (GNFP) Project

In updating the AcSOC on PSAB’s activities as it relates to the GNFP project, Mr. St-Jean stated that the “Government Not-for-Profit Consultation Paper” was approved at the March 2019 Board meeting. It was released on May 8, 2019, in conjunction with Consultation Paper 2, “Reviewing PSAB’s approach to International Public Sector Accounting Standards.” PSAB staff developed a communications and outreach plan to ensure a wide variety of responses. Comments will be reviewed and analyzed at the Board’s December 2019 meeting.

In response to a question on PSAB’s collaboration with the AcSB on not-for-profit accounting, Mr. St-Jean said that both Boards have committed staffing resources to this project. Both Boards will be provided with an update on this project in the coming months.

Conceptual Framework

Mr. St-Jean informed AcSOC that PSAB’s Concepts Underlying Financial Performance Task Force has met several times over the past few months to analyze the feedback on the proposals for a revised conceptual framework and to develop the exposure draft. There is general support for the proposals put forward in the conceptual framework. The Task Force considered the respondents’ suggestions in developing the exposure draft. It is currently analyzing the feedback related to the reporting model proposals and expects to provide PSAB with an update at the December Board meeting.

Key Files

Employment Benefits

The Employment Benefits Task Force met in June and September 2019 to deliberate the 130 response letters to the three Invitations to Comment on employment benefits. The Task Force deliberated key issues related to the deferral approach, discount rates, and accounting for non-traditional plans. PSAB received project updates from the Task Force Chair and provided feedback at its June and September 2019 meetings. The Board decided not to issue a consultation paper but will rather proceed directly to developing an exposure draft.

Public Private Partnerships

Mr. St-Jean informed AcSOC that PSAB approved the Exposure Draft, “Public Private Partnerships,” at its September 2019 meeting. The Board aims to issue the Exposure Draft in early November 2019, with a comment period deadline of February 2020.

Financial Instruments/Foreign Exchange

As AcSOC recommended, PSAB is proceeding with an independent process review of the financial instruments standard to identify lessons learned and propose recommendations. The Board discussed and approved the Terms of Reference at its March 2019 meeting and contracted to conduct the review. The results of this review will be presented to the Board at its December 2019 meeting and to AcSOC in February 2020.

Purchased Intangibles

PSAB approved an exposure draft that proposes to remove the exclusion in the conceptual framework prohibiting recognition of purchased intangibles n financial statements. The exposure draft proposes allowing the recognition of intangibles purchased through an exchange transaction. Created, developed and inherited intangibles would remain excluded from recognition until the Board addresses these topics in its technical agenda. The exposure draft will be published on November 30, 2019, with a comment period deadline of January 31, 2020.

Public Interest Considerations

Public Sector Accounting Discussion Group

The PSAB Chair informed AcSOC that the Public Sector Accounting Discussion Group has not met since June 2019. The Group’s next meeting is scheduled for November 15, 2019. The Group will have seven new members at its next meeting. Five members retired and were replaced. Two new members have been appointed: one from the Indigenous government finance community and another from the millennial demographic.

Rate-Regulated Accounting

At its March 2018 meeting, PSAB agreed to monitor rate-regulated accounting developments in the Canadian public sector environment and present monitoring results to PSAB biannually. In conducting a jurisdictional scan for the period from September 2018 to February 2019, the Board did not identify a systemic issue with its standards that required immediate Board action.

Governance and Operations Matters

Strategic Plan 2021

Mr. St-Jean noted that PSAB held its strategic planning session on September 25, 2019. Board members and staff discussed potential themes for the 2021 Strategic Plan. The Board plans to approve an exposure draft of the 2021 Strategic Plan at its June 2020 meeting.

Stakeholder Compliance

Mr. St-Jean advised AcSOC that PSAB proposes a rotation approach to assess stakeholder compliance with Public Sector Accounting Standards (PSAS) and to inform the Board’s strategic plan and other key decisions. This approach will include monitoring the Board’s four main stakeholder groups: senior governments, municipal governments, Indigenous government, and GNFP organizations. Each year the Board will monitor the senior governments’ compliance with PSAS, plus one of the three remaining stakeholder groups.

AcSB Activities

Recent Activities

AcSB Chair, Linda Mezon welcomed Kelly Khalilieh to her first AcSOC meeting as AcSB Director. Ms. Mezon commented on the Board’s recent activities related to achieving its international work, its domestic projects, and its compliance with due process.

International Activities

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 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases.

Ms. Mezon informed AcSOC that the International Accounting Standards Board (IASB) published its Exposure Draft, “Amendments to IFRS 17,” in June 2019. The Exposure Draft responds to concerns and challenges stakeholders identified in implementing the new insurance standard. The IASB has agreed to defer the effective date from 2021 to 2022. The AcSB noted that a common global adoption date is critical to transitioning successfully to global comparability. Ms. Mezon also updated the Council on her trip to Hong Kong to meet with local standard setters and take part in a panel on insurance

The AcSB Chair noted that the Board continues to monitor the IASB’s activities with regards to rate-regulated activities and extractives. Ms. Mezon said that extractives are of interest to Canada because it has more entities in mining, oil and gas than any other jurisdiction in the world.

In response to a question on extractive activities, Ms. Mezon said that the IASB requested the AcSB’s assistance on the Extractives project. The Board issued a report to the IASB on its updated work on extractives. The IASB has not indicated if it will initiate standard-setting activities on this project.

On the relevance of financial reporting, Ms. Mezon noted that the IASB currently has a Primary Financial Statements project, which intends to balance the needs of management and the users. The project proposes the requirement of additional subtotals and the disclosure of management performance measures.

In response to a question on leases, Ms. Mezon said that the AcSB continues to monitor the new standard’s implementation. She expects to have more to discuss with AcSOC on leases at its February meeting, when companies begin issuing their annual financial statements. The annual financial statements will provide the Board with feedback on post-implementation challenges of the new standard.

Domestic Activities

Ms. Mezon informed AcSOC that the AcSB issued its Exposure Draft, “Revenue,” on May 1, 2019, with a comment deadline of July 31, 2019. The Board deliberated the feedback on the Exposure Draft at its September 2019 meeting and considered whether the changes required re-exposure. The Board concluded that re-exposure is not required and approved the issuance of the final amendments, subject to final drafting and a written ballot. The Board plans to issue the final amendments in December 2019.

In discussing the Employee Future Benefits project, Ms. Mezon said that the AcSB issued the Exposure, Draft, “Employee Future Benefits – Use of a Funding Valuation,” in September 2019, with a comment deadline of December 16, 2019. The proposed amendments modify the guidance for defined benefit plans for which a funding valuation is required to address recent changes in pension legislation as well as issues with defined benefit plans for which a funding valuation is not required.

Compliance with Due Process

AcSOC was advised by the Board that there were no reportable departures from due process or “comply or explain” actions, nor were there any unusual events in applying due process from May 1, 2019 to August 31, 2019.

Canadian Council of Comptrollers Presentation

Geoff Gatien, Associate Deputy Minister and Controller of Nova Scotia, accompanied by Aurel Tess, the Provincial Comptroller of Manitoba, addressed AcSOC Council about the Canadian Council of Comptrollers’ concern with the planned amendments to Section PS 3450, Financial Instruments, and Section PS 2601, Foreign Currency Translation. Both standards become effective on April 1, 2021.

Mr. Gatien noted that net debt and net debt to gross domestic product are key indicators to the financial condition of governments. He and Mr. Tess stated that the Canadian Council of Comptrollers does not believe that the standards as drafted are in the public interest. Mr. Tess said that the risk of artificial volatility will change the debt management practices of senior governments, which will lead governments to be reluctant to borrow in foreign markets. This will likely increase the cost of borrowing in the Canadian markets and reduce the funds available to governments. Mr. Gatien added that the artificial volatility will have to be explained to members of the Legislature and the public. This may lead to numerous qualifications in government financial statements, which may erode confidence in Canadian public sector accounting standards.

Mr. Gatien informed AcSOC that the PSAB Chair expressed willingness to consider a solution developed by senior government representatives.

Following a question-and-answer period, Mr. Tremblay thanked Mr. Gatien and Mr. Tess for their presentation. He noted that AcSOC takes their feedback seriously and wants to ensure stakeholders have an opportunity to voice their concerns.

Sustainability, Environmental and Social Reporting

CPA Canada’s Vice-President of Research, Guidance and Support, Gordon Beal, updated AcSOC on sustainability, environmental, and social reporting.

Mr. Beal noted that the movement of expectations from key stakeholders is driving the fundamental change for companies to understand their role in corporate social responsibility. He said that climate change was identified as a top vulnerability by the Bank of Canada in 2019. Mr. Beal explained that stakeholders believe companies must integrate societal issues into their corporate thinking and take responsibility for the effects of operations on society.

In his presentation, Mr. Beal informed AcSOC that stakeholders, including governments, customers and shareholders/investors, are demanding more information about how firms are affecting society and the environment. He noted that today’s successful companies:

  • understand that business responsibilities extend to environmental and social responsibilities;
  • handle the interconnectedness and complexity of the business issues related to environmental and social matters;
  • challenge the status quo, working proactively with stakeholders; and
  • have dialogues and report strategically.

On the evolving corporate reporting landscape, Mr. Beal said that financial statements remain at the core of corporate reporting today. However, there is an increased interest in an integrated approach to financial reporting that connects information, focuses on long-term decision making and encompasses a holistic set of value drivers (e.g., natural, human, and social capital).

Mr. Beal’s comments on members’ questions included the following:

  • CPA Canada has established a chief financial officer (CFO) network on sustainable finance to integrate economic, environmental and social issues into business strategy, processes, and decision making. This network is intended to address common challenges to engage and enable the wider CFO community to embed sustainability into decision making to drive sustainable business models and a sustainable economy.
  • Seventy-six per cent of stakeholders believe that chief executive officers should take the lead on corporate social responsibility rather than wait for the government to impose it.

Mr. Tremblay thanked Mr. Beal for his presentation.

CPA Canada Foresight Project Update

Mr. Tremblay reminded AcSOC of the presentation on CPA Canada’s Foresight Project at its February 2019 meeting and that Mr. Beal will provide an update on the project.

Mr. Beal reiterated that the accounting profession is on the precipice of a fundamental transformation and how it responds and manage these changes will affect the future of Chartered Professional Accountants (CPAs), the profession, and Canadian businesses. He said that CPAs have a role to play in data governance and value creation.

He said that data is taking on a far more prominent role in the economy in how organizations deliver value. Models and methodologies exist to assess the value of data through research organizations and big technology platforms. CPAs will assess and report on the value of data as an asset. They can:

  • develop metrics to describe and grade data;
  • assess the relevance, accuracy and completeness of datasets;
  • manage data access;
  • foster ethical and trustworthy artificial intelligence applications; and
  • provide value, context, and judgment for the effective use of data in value creation.

In discussing the CPAs role in value creation, Mr. Beal noted that in the past, value creation was described in financial terms. Today, how companies are measured has fundamentally changed beyond profit. CPAs are sought to be creators, enablers, reporters, and preservers of value. They are currently adding value in the emerging digital economy. However, new competencies, skills, and practical tools are needed.

In response to an AcSOC member’s concern that the market for CPAs will decrease, Mr. Beal commented that CPAs will continue to provide insight and assurance. However, they will need to develop themselves to address stakeholders’ evolving needs.

Reports on Attendance at AcSB and PSAB Meetings

Three AcSOC members commented on their attendance at recent AcSB and PSAB meetings. They noted that the meetings were well run, and attention was paid to due process. Council observers were impressed by the quality of the discussions and the caliber of the participants in both Boards. The Board Chairs managed the agendas effectively and allowed all Board members to express their views.


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.