Professional Documents
Culture Documents
5. Statement of Executive Compensation evaluation An assessment tool to evaluate your organizations Statement of Executive Compensation. The requirements, as set out in National Instrument 51-102, Continuous Disclosure Obligations, are included, along with an area for you to include commentary specific to your organization. The information which follows provides an overview of the assessment tools described above. The full assessment package may be accessed through our Centre for Corporate Governance (www.corpgov.deloitte.ca/self-assessments).
IFRS 7 amendments January 1, 2013, including interim periods within the annual periods IAS 32 amendments January 1, 2014
Final standard Amendments to IFRS 10, Consolidated Financial Statements, IFRS 11, Joint Arrangements, and IFRS 12, Disclosure of Interests in Other Entities: Transition Guidance The amendments clarify the transition guidance in IFRS 10 and provide additional transition relief in IFRS 10, 11 and 12, limiting the requirement to provide adjusted comparative information to only the preceding comparative period. For disclosures related to unconsolidated structured entities, there is no requirement to present comparative information for periods before IFRS 12 is first applied. Adoption of IFRSs by Entities with Rate-regulated Activities The mandatory date for first-time adoption of IFRS by entities with rate-regulated activities is interim and annual financial statements relating to annual periods beginning on or after January 1, 2012. Adoption of IFRSs by Investment Companies The deferral of the mandatory IFRS changeover date has been extended by one year for these entities. Annual Improvements to IFRSs: 2009-2011 Cycle The amendments affect IFRS 1, IAS 1, IAS 16, IAS 32 and IAS 34 and are largely of the nature of clarifications or removals of unintended inconsistencies between IFRSs. The amendments to IAS 1 reduce the amount of information from previous reporting periods which is required to be repeated in the event of: a change in accounting policy reclassification or restatement by limiting the requirement to present an additional statement of financial position to circumstances when the statement is materially affected and by clarifying that related notes to an additional statement of financial position are not required. IFRS 9, Financial Instruments This new standard replaces the requirements in IAS 39, Financial Instruments: Recognition and Measurement. The amendments provide relief from the requirement to restate comparative financial statements for the effect of applying IFRS 9. Additional transition disclosures will be required to help investors understand the effect that the initial application of IFRS 9 has on the classification and measurement of financial instruments. IFRS 10, Consolidated Financial Statements IFRS 10 replaces the consolidation requirements in IAS 27, Consolidated and Separate Financial Statements, and SIC12 Consolidation Special Purpose Entities. IFRS 10 identifies the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company and provides guidance to determine if control exists.
Addressed?
Comments
January 1, 2014 (early application permitted) January, 1 2013 (earlier application permitted, retrospective application required)
January 1, 2013 (early application permitted, provided IFRS 11, IFRS 12 and the related amendments to IAS 27 and 28 are adopted at the same time)
Final standard IFRS 11, Joint Arrangements IFRS 11 supersedes IAS 31, Interests in Joint Ventures, and SIC-13, Jointly Controlled Entities Non-Monetary Contributions by Venturer. IFRS 11 requires a party to a joint arrangement to determine the type of joint arrangement in which it is involved by assessing its rights and obligations arising from the arrangement. To account for interests in jointly controlled entities, the equity method is required. IFRS 12, Disclosure of Interests in Other Entities IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities.
Effective date January 1, 2013 (early application permitted, provided IFRS 10, IFRS 12 and the amendments to IAS 27 and 28 are adopted at the same time) January 1, 2013 (early application permitted, provided IFRS 10, IFRS 11 and the related amendments to IAS 27 and 28 are adopted at the same time) January 1, 2013 (early application permitted)
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Comments
IFRS 13, Fair Value Measurement IFRS 13 defines, sets out in a single IFRS a framework for measuring and requires disclosures about fair value measurements. It does not determine when an asset, a liability or an entitys own equity instrument is measured at fair value. The measurement and disclosure requirements of IFRS 13 apply when another IFRS requires or permits the item to be measured at fair value (with limited exceptions). IAS 12 (amendments), Deferred Tax: Recovery of Underlying Assets and SIC-21 (amendments), Income TaxesRecovery of Revalued Non-Depreciable Assets The amendment introduces a rebuttable presumption that an investment property measured using the fair value model is recovered entirely through sale unless the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits over time. As a result of the amendments, SIC-21 would no longer apply to investment properties carried at fair value. IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine IFRIC 20 requires that costs associated with a stripping campaign be accounted for as an additional component of an existing asset if certain criteria are met, and that this stripping component shall be depreciated, over the expected useful life of the specific section of the ore body that becomes directly accessible as a result of the stripping campaign. The units of production method should be applied. Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) Provides an exception to the consolidation requirements in IFRS 10 and require investment entities to measure particular subsidiaries at fair value through profit or loss, not consolidation. Also sets out disclosure requirements for investment entities.
January 1, 2012
Final standards Section PS 3260, Liability for Contaminated Sites This new Section establishes recognition, measurement and disclosure standards for liabilities relating to contaminated sites of governments and those organizations applying the CICA Public Sector Accounting Handbook. Section PS 3410 (Revised), Government Transfers Establishes standards on how governments should account for and report government transfers to individuals, organizations and other governments from both a transferring government and a recipient government perspective. Section PS 3450, Financial Instruments Provides comprehensive guidance on the recognition, measurement, presentation and disclosure of financial instruments, including derivatives, by government organizations. Section PS 3510, Tax Revenue Establishes recognition, measurement, presentation and disclosure standards relating to tax revenue reported in financial statements. Section PS 4200 PS 4270, Government Not-for-profit Organizations The PSAB approved the inclusion of the PS 4200 to PS 4270 series of standards into the PSA Handbook for use by government organizations applying the standards for not-forprofit organizations.
Addressed?
Comments
April 1, 2012
January 1, 2012
Securities
Instruments, rules and policies CSA Staff Notice 52-306 (Revised), Non-GAAP Measures and Additional GAAP Measures An additional GAAP measure presented in financial statements under IFRS is: (i) a line item, heading or subtotal that is relevant to an understanding of the financial statements and is not a minimum line item mandated by IFRS, or (ii) a financial measure in the notes to financial statements that is relevant to an understanding of the financial statements and is a measure not presented elsewhere in the financial. CSA Multilateral Instrument 51-105, Issuers Quoted In the U.S. Over The-Counter Markets This instrument: (i) requires disclosure by issuers with a significant connection to a Canadian jurisdiction whose securities are quoted in the U.S. OTC markets; and (ii) discourages the manufacture and sale in a Canadian jurisdiction of U.S. OTC quoted shell companies that can be used for abusive purposes. OSC Staff Notice 52-720 Office of the Chief Accountant Financial Reporting Bulletin (February 2012) The objective of the bulletin is to provide information to market participants that may be useful in preparing financial reports during 2012. Issued February 17, 2012 Addressed? Comments
January 1, 2013
January 1, 2012
Final Standards Prudential Requirements Insurers Memorandum to the Appointed Actuary (Life) for 2012 This years Memorandum includes the following changes from the 2011 Memorandum: 1. The ongoing low interest rates continue to be of concern. As a result, OSFI requires disclosure for scenarios of 1.5%, 2%, 2.5% and 3% for all future reinvestment assumptions. 2. For insurers who have included the costs and benefits of any hedge programs in the valuation, OSFI has requested additional information. 3. OSFI has modified its disclosure requirements on nonfixed income assets and asset liability management in the memorandum. OSFI encourages insurers to improve the clarity of these disclosures. The Appointed Actuary should ensure that the disclosure of methods, assumptions and the rationale for assumptions are clear in his/her report.
Addressed?
Comments
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New accounting policies How was it ensured that subsidiaries, interests in joint ventures and investments in associates have properly adopted accounting policy changes in their financial statements that were used for consolidation purposes? Did any of the required disclosure changes cause difficulty and why? Why do you believe your organizations set of adopted accounting policies presents fairly its financial position/condition, results of operations and cash flows? Were there any disagreements with the external auditors as to the appropriate accounting treatment to be applied and, if so, please describe them? What comments do the external auditors have in respect of your organizations answers to the above questions? Newly adopted financial reporting framework When compared to the current years balance sheet, does the opening balance sheet provide the same level of detail as required to provide consistent information to users? Do the reconciliations between the historical financial information and that reported under the new financial reporting framework properly explain the identified differences? Do the accounting practices clearly explain the policies adopted and significant judgments and estimates made by the organizations management? What alternatives were considered and what was the impact of these alternatives on the financial statement results and/or disclosures? Why were the selected new accounting policies adopted over the available alternatives? Why do you believe your organizations set of adopted accounting policies present fairly its financial position/condition, results of operations and cash flows? Where non-GAAP or additional GAAP measures are reported in the financial statements, does management explain in sufficient detail differences from the corresponding GAAP measures? Where financial information is provided for the first time, was sufficient comfort obtained by the organizations management to ensure reliability of the supporting data? How has it been ensured that all of the disclosure and other requirements relating to the new framework recommendations have been properly included in the notes to the financial statements? Did any of the required disclosure changes cause difficulty and why? Were there any disagreements with the external auditors as to the appropriate accounting treatment to be applied and, if so, please describe them? What comments do the external auditors have in respect of your organizations answers to the above questions?
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Conversion to a new financial reporting framework Has the conversion plan been reviewed and updated for current progress on a regular basis? Have any unforeseen obstacles been identified? Is a communication strategy in place for investors, analysts and other stakeholders to address reporting under the new financial reporting framework? What is the status of the following key elements of the conversion plan: Selection of all accounting policies (including first time adoption choices) Preparation of the opening balance sheet Restatement of Q1, Q2 and Q3 interim information Preparation of interim and annual financial statement drafts Should an agreed-upon level of assurance be obtained from the external auditors on your organizations opening balance sheet? Do your organizations year-end financial filings meet the standard-setter requirements with regards to communications regarding its conversion?
Comments
Where management believes that the adoption of a new accounting recommendation does not result in fair presentation, management must explain the alternative presentation in your organizations MD&A in order for the CEO and CFO to be able to properly certify the financial statements in conformity with Multilateral Instrument 52-109. In these circumstances it is very important that the board of directors conduct a thorough due diligence of the matter.
Next steps
Now that you have completed the analysis of your organizations 2012 financial statements, listed below are some suggested next steps in performing your due diligence.
Evaluate your results Discuss your findings with the other members of the board of directors, management and your external auditors. Establish your action plan Identify what needs to be done to ensure the financial statements are compliant, relevant and transparent. Review with your external auditors their quality assessment of the financial statements. Inquire as to the processes put in place to enable the CEO and CFO to fulfill their certification obligations for 2012. Ensure the audit committee minutes document your review process and conclusions regarding the financial statements and other financial filings. Ensure you understand the external auditors summary of unadjusted misstatements both quantitative misstatements and disclosure deficiencies, and the impact on controls. Comments
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Keep current with the new accounting and regulatory pronouncements affecting your financial reporting.
Please consider subscribing to the following Deloitte periodicals as sources of information that have been developed to help you to stay abreast of accounting and regulatory developments: Centre for Corporate Governance A web site specifically designed to help board members with their responsibilities. It provides the latest information on regulatory and legislative developments, accounting and financial reporting, board roles and responsibilities, and best practices. (www.CorpGov.Deloitte.ca) Deloitte Learning Academy The Deloitte Learning Academy offers a range of courses targeted to accounting professionals which can be selected a la carte, bundled into a specific learning program, or delivered as a full start-tofinish suite. Our current offerings include International Financial Reporting Standards (IFRS); Accounting Standards for Private Enterprises (ASPE); and Public Sector Standards (PSAS). (www.deloittelearningacademy.ca/welcomecanada) DeloitteLINK A weekly e-newsletter that helps you stay on top of standard-setting initiatives. Deloitte Update Our new live webcast series featuring our professionals discussing critical issues that affect your business. On the Agenda A periodic e-newsletter that advises directors about recent developments affecting their responsibilities, including the points of view of Deloitte specialists. Standard-setting Activities Index Provides you with monthly updates on recent developments in standard-setting from a comprehensive list of standard-setting organizations. Audit Committee Brief An e-newsletter of key U.S. regulatory, technical and professional developments in corporate governance and accounting.
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Comments
Procedure With regards to the annual certificates required to be filed as per National Instrument 52-109, review the certificates and ensure the following: They are filed in the exact wording prescribed by the required form The representations included are consistent with the disclosure in the MD&A Your IFRS transition plan is clearly disclosed. [For details as to specific disclosure requirements regarding the changeover to IFRS, review CSA Staff Notice 52-320 Disclosure of expected changes in accounting policies relating to changeover to IFRS.] Note: this applies only to those organizations who benefit from an IFRS adoption deferral (for example. rate-regulated entities and investment enterprises) and have not yet converted to either IFRS or U.S. GAAP. The impact of the transition to IFRS on ICFR and DC&P has been disclosed (i.e., any material change in ICFR that may occur due to the transition and the ongoing preparation of financial statements in accordance with IFRS must be disclosed). Note: this applies only to those organizations who benefit from an IFRS adoption deferral (for example. rate-regulated entities and investment enterprises) and have not yet converted to either IFRS or U.S. GAAP. Meet with management and discuss any findings arising from your review. You may want to hold discussions with your internal auditors as well. Review with your external auditors their assessment of the MD&A. Document your review.
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Conclusion
If you have any questions or require clarification on any of the referenced matters please contact one of the professionals listed hereunder. Deloittes professionals have a broad range of expertise and are able to offer a range of solutions whether it be technical accounting, governance or technological skills that can be customized to meet your organizations specific compliance needs. Subject to appropriate independence safeguards and service pre-approval, Deloitte can assist you to ensure that your financial filings are in compliance in all respects. Let us help design a strategy that can turn the continuous disclosure obligations into value generators for your organization.
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Disclaimer
This guide is limited in nature, and does not comprehend all matters relating to an organizations financial filings and its continuous disclosure obligations. We make no representation as to the sufficiency of this guide for your purposes. This guide should not be viewed as a substitute for other forms of analysis that directors and management should undertake in order to assess whether their financial reporting or corporate governance practices are adequate or appropriate for your purposes. The information in this guide is not intended to constitute legal, accounting, tax, investment, consulting, or other professional advice or services. Before making any decision or taking any action which might affect your personal finances or business, you should consult a qualified professional advisor. The guide, and the information contained herein is provided as is, and Deloitte makes no express or implied representations or warranties regarding this guide or the information. Your use of this guide and information is at your own risk. Deloitte will not be liable for any direct, indirect, incidental, consequential, punitive damages or other damages, whether in an action of contract, statute, tort (including, without limitation, negligence) or otherwise, relating to the use of this guide or information.
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