At its virtual meeting held on October 7-8, 2021, the Accounting Standards Oversight Council (AcSOC) received presentations on, and discussed the following:
- Chair’s Opening Remarks
- Public Sector Accounting Board (PSAB) Oversight and Chair’s Report
- Accounting Standards Board (AcSB) Oversight and Chair’s Report
Chair’s Opening Remarks
AcSOC Chair Miville Tremblay welcomed members and observers. He announced that Jean-Francois Trépanier has assumed the role of Vice-President, Standards, Helen Belanger has taken over the Council’s secretary role and Deven McFadden continues to support the Council as administrative coordinator. He also acknowledged Katharine Christopoulos who is the new AcSB Director, replacing Kelly Khalilieh.
PSAB Oversight and Chair’s Report
PSAB Chair Clyde MacLellan provided an overview on the Board’s activities since the last meeting, stating that it has made good progress. He presented Board’s key strategies and projects, noting that the comment period for the draft 2022-2027 Strategic Plan closed on October 6, 2021, and that the next several months will be spent analyzing the comments and deliberating. An update is planned at a special Council meeting in January 2022.
Mr. MacLellan stated that there has been a high level of support for the four key strategic pillars in the plan with no major changes expected to the overall direction. He presented PSAB’s key risks and associated risk ratings. He stated one key risk, resource capacity, was alleviated when CPA Canada removed its hiring freeze, allowing the department to hire two additional principals. Other staff changes in the organizational structure include the promotions of Antonella Risi and Martha Jones Denning to Associate Director, reporting to the PSAB Director Michael Puskaric.
On the International Strategy work plan, Mr. MacLellan stated that over the past several months, many international activities were planned to build awareness of the International Public Sector Accounting Standards with Canadian stakeholders and to encourage respondents to provide feedback to International Public Sector Accounting Standards Board (IPSASB) on their documents for comment. This has also provided an opportunity to engage more actively with the international community. In the context of increasing board-to-board contact, Mr. MacLellan noted that he attended IPSASB meetings in June and September 2021, providing updates to PSAB.
Mr. MacLellan noted a key change related to the financial instruments narrow-scope amendment on rate-setting transactions. Based on the Financial Instruments Advisory Group’s recommendation, PSAB decided not to proceed with the exposure draft.
Two documents are out for comment: the Exposure Draft, “Employee Future Benefits, Proposed Section PS 3251,” and the 2022-2027 Draft Strategic Plan. Mr. MacLellan noted that a communication and stakeholder consultation plan was developed for the Strategic Plan to encourage feedback from a broad range of stakeholders. The Chair and staff are performing extensive outreach before the Board decides on its final strategies in March 2022.
The Conceptual Framework and Reporting Model documents for comments received feedback from more than 200 respondents. The Government Not-for-Profit (GNFP) Strategy received feedback from approximately 100 respondents. In addition to the input from preparers and auditors, consultations have been broadened by focusing on users and increase the level of feedback.
The PSAB Chair and staff have participated as observers in some of the Accounting Standards Board’s (AcSB) outreach activities for the International Accounting Standards Board’s (IASB) Exposure Draft, “Regulatory Assets and Regulatory Liabilities.” Public sector stakeholders have provided input encouraging additional disclosure in the standard to address the reporting relationships that may exist in the public sector between a regulator and an underlying government. This was communicated to AcSB staff for consideration in their response letter.
Earlier in the year, the 2021-2022 Annual Plan was updated to reflect the extended comment periods approved for projects such as Conceptual Underlying Financial Performance, the GNFP Strategy, and Employee Benefits. As a result of delaying the response deadlines, a considerable amount of feedback was received for the Conceptual Underlying Financial Performance and GNFP Strategy projects.
Mr. MacLellan concluded that there were no reportable departures from PSAB’s due process.
Mr. Tremblay thanked and commended Mr. MacLellan and the PSAB staff for broadening outreach to a larger stakeholder base and emphasized the importance of continuing this type of outreach.
AcSB Oversight and Chair’s Report
AcSB Chair Linda Mezon-Hutter provided an overview of key developments and recent Board activities that included an update on key risks, staffing and staff changes, and the Strategic Plan. She introduced the new Accounting Standards Director Katharine Christopoulos and the AcSB Vice-Chair Armand Capisciolto.
Ms. Mezon-Hutter presented AcSB key risks and mentioned that inexperienced staff in standard-setting is one risk that is being addressed by helping staff adjust to the new environment and to change.
Ms. Mezon-Hutter presented the list of expected documents for comments driven by other AcSB documents and by the work of the IASB. She explained that in the case of the Disclosure Initiative – Targeted Standards-level Review of Disclosures project, the initial comment period was moved from the fall to January 31, 2022, after discussions with the Accounting Standards Advisory Forum and impressing upon the IASB that this project required a longer comment period to give stakeholders more time to consider the changes and provide comments. She described the effort required to prepare and process AcSB response letters, noting that two AcSB Exposure Drafts – Leases and IBOR Reform – were very time sensitive.
In reference to IASB’s Third Agenda Consultation, the AcSB organized a special event with a panel of users that included three AcSB members with user backgrounds. Nearly 100 stakeholders were consulted and 32 per cent of the feedback was from users. This same group of stakeholders will also be consulted on the AcSB’s draft Strategic Plan.
Upon invitation from the Acting Chief Accountant of the Securities and Exchange Commission, Ms. Mezon-Hutter participated in the panel discussion at the Journal of International Accounting Research conference. Topics included the relationship between financial and environmental, social and governance (ESG) reporting; the relationship of the potential International Sustainability Standards Board and the IASB; and the role of regulators in establishment of ESG reporting and the IASB’s priorities.
In the fourth quarter of 2021, when the Canadian Securities Administrators completes its deliberations and publishes its final non-GAAP rule, Ms. Mezon-Hutter stated the AcSB will issue a revised first edition of the Framework for Reporting Performance Measures that will include necessary amendments and revisions. The Message from the Chair will be updated to reflect the Board’s current operating environment and strategic direction with emphasis on sustainability and ESG reporting issues, and references to the new NI 52-112.
Ms. Mezon-Hutter informed AcSOC that the AcSB’s Due Process Manual is three years old and requires revision due to changes in the Board’s operating environment. Some additional processes will also be added such as references to accounting guidelines, Board member dissensions, and updating comment periods. The Board will discuss the requirements in November 2021 and appropriate updates will be given to the Council.
Mr. Capisciolto updated AcSOC on the Strategic Plan outreach activities and presented the preliminary feedback. He added that there has been much support for the three strategies that included delivering relevant high-quality standards, reporting beyond traditional financial statements, and raising the AcSB’s international influence. The Advisory Committees have been fully engaged and provided the Board with excellent input. Mr. Capisciolto mentioned that the AcSB has worked jointly with PSAB to gather feedback from roundtable engagement with Indigenous communities and government business enterprises. Going forward, more roundtables are planned targeting users, International Financial Reporting Standards stakeholders, and domestic stakeholders. To date, the feedback has been very positive.
The AcSOC Chair thanked Ms. Mezon-Hutter and Mr. Capisciolto for their presentations.
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.