Accounting MARCH 31, Transparency Progress Independence

Transcription

1 Accounting Standards Board FOR THE YEAR ENDED MARCH 31, 2013 Transparency Progress Independence

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3 TABLE OF CONTENTS MESSAGE FROM THE ACCOUNTING STANDARDS BOARD CHAIR 3 INTRODUCTION 6 AcSB SCORECARD SUMMARY OF ACTIVITIES 9 IFRS ADOPTION STRATEGY 11 STRATEGY FOR PRIVATE ENTERPRISES 20 STRATEGY FOR NOT-FOR-PROFIT ORGANIZATIONS 23 STANDARD-SETTING CAPABILITY 25 COMMUNICATIONS 27 PLANS FOR THE FUTURE 29 CONCLUSION 30 MEMBERSHIPS 31

4 ACRONYMS USED IN THIS REPORT AcSB AcSOC CSA FASB GAAP IASB IFRSs NFPO PSAB SEC Accounting Standards Board Accounting Standards Oversight Council Canadian Securities Administrators US Financial Accounting Standards Board Generally accepted accounting principles International Accounting Standards Board International Financial Reporting Standards Not-for-profit organization Public Sector Accounting Board U.S. Securities and Exchange Commission

5 MESSAGE FROM THE ACCOUNTING STANDARDS BOARD CHAIR Where we ve been As my tenure as Chair of the Accounting Standards Board (AcSB) came to an end this June, I reflected on how proud I am of the Board s many achievements in While I served as Chair, the AcSB navigated the adoption of International Financial Reporting Standards (IFRSs) a complex undertaking. I m very happy to say that the first annual IFRS reporting was completed successfully by affected entities across Canada. Many entities have now finished two years of IFRS reporting. The transition to IFRSs was not without its challenges, but the AcSB was able to respond to these obstacles through discussions and communication with stakeholders and the International Accounting Standards Board (IASB). Pictured: Gord Fowler, Chair, AcSB One of the primary challenges impeding adoption of IFRSs by all publicly accountable enterprises in Canada was the lack of specific guidance for rate-regulated entities. The IASB decided to restart its project on rate-regulated activities this past year largely due to the considerable effort of the AcSB, its staff, and the immense input from stakeholders. Following a recommendation by the AcSB, the IASB issued a proposal for an interim standard that would allow Canadian rate-regulated entities to implement IFRSs, while continuing to use existing Canadian GAAP for the effects of their rate-regulated activities. The AcSB and other Canadian stakeholders will continue to be involved in the IASB s longer-term project to develop a Discussion Paper on rate-regulated activities that, hopefully, will ultimately lead to a final standard. As a result of these developments, the AcSB deferred the IFRS changeover date for rate-regulated enterprises until years commencing on or after January 1, In October 2012, the IASB finalized an amendment to its recently introduced standard on consolidated financial statements that will permit investment entities to avoid having to consolidate their controlled investments. The issuance of the final standard was the result of a strong case presented by the AcSB and other stakeholders. As a result, the AcSB deferred the IFRS changeover date for investment entities until years commencing on or after January 1, I m very pleased that the final challenges preventing adoption of IFRSs by all publically accountable Canadian entities appeared to be resolved before my time as Chair came to a close. 3

6 It is also a great distinction that the AcSB was recognized by the IASB in March 2013 with an appointment to its new Accounting Standards Advisory Forum. This forum replaces several bi-lateral arrangements between the IASB and several national and regional standard-setting organizations. The importance of this forum to international financial reporting serves to expand both the influence and reputation of the AcSB. In addition to significant headway being made in the adoption of IFRSs, the AcSB made progress in improving the standards for private enterprises. Several annual improvements to these standards were finalized, with substantial progress made towards future improvements on major topics. Where we re going... While the AcSB and its staff accomplished a great deal in , there is still important work to be done towards achieving the objectives set out in its Strategic Plan. The AcSB will need to continue to assist the IASB in developing specific guidance on rate regulation. Over the course of the next year, the standards for not-for-profit organizations (NFPOs) will continue to be an area requiring prudent discourse and the diligence of volunteers. I m extremely proud of the work done by the Joint Not-for-Profit Task Force and the co-operation between the AcSB and the Public Sector Accounting Board (PSAB). The approval of the Statement of Principles on issues effecting NFPOs by both Boards in April 2013 is the first step on a long journey towards instituting effective change in the sector. With thanks to... The work that the AcSB accomplished over the last year as well as the reputation it has cultivated globally would not have been possible without the dedication and high-quality work produced by the volunteers of the Board and its committees. Volunteers are essential to the development of high-quality standards and are an integral part of the changing Canadian accounting landscape. Over the past year, the Accounting Standards Oversight Council (AcSOC) lent tremendous support to the AcSB. AcSOC continues to be a vital resource for the Chair and the entire Board. The critical oversight of our activities by AcSOC ensures that we uphold the trust of the Canadian public and serve the public interest. Undoubtedly the achievements of the AcSB over the past year could not have been accomplished without the incredible dedication and effort of the AcSB staff. Our staff has been essential in initiating dramatic change to accounting standards in Canada and helped position this country for a strong future. 4

7 Last, but certainly not least, I would like to thank Linda Mezon for allowing me to step down as Chair with the knowledge that the AcSB will be guided by a passionate and knowledgeable accounting leader. I have no doubt that Linda will continue to advance the AcSB s mission to support informed economic decision making through high-quality financial reporting. Gord Fowler, FCPA, FCA Chair, Accounting Standards Board 5

8 INTRODUCTION This report summarizes the activities of the Accounting Standards Board (AcSB) for its operating year ending March 31, 2013, including performance relative to its Annual Operating Plan and its Strategic Plan. The AcSB was able to overcome one significant obstacle to the full implementation of its strategy for publicly accountable enterprises to adopt International Financial Reporting Standards (IFRSs) by assisting the International Accounting Standards Board (IASB) to finalize its new standard on investment entities. The IFRS changeover date for those entities was set at January 1, The AcSB was able to make significant progress towards removing the remaining obstacle to the full implementation of its IFRS strategy by working with the IASB to begin development of standards for rate-regulated entities. Accordingly, the AcSB was able to set the IFRS changeover date for those entities at January 1, The AcSB also made solid progress in advancing its strategies for the private enterprise and not-for-profit sectors by carrying out projects to improve the frameworks first applied in 2011 and 2012, respectively. Overall, the AcSB had a very successful year in It achieved the key objectives in its Annual Plan and remains on track to achieve the objectives in its Strategic Plan. It continues to make progress towards its long-term goal of having Canadian reporting entities produce decision-useful financial statements for their external stakeholders. On January 1, 2013, the Canadian Institute of Chartered Accountants (CICA) and Certified Management Accountants of Canada joined together to create the Chartered Professional Accountants of Canada (CPA Canada) as the national organization to support unification of the Canadian accounting profession under the CPA banner. CPA Canada will continue to provide funding for the AcSB and ensure that it has the required resources to work free of undue influence, as the CICA has done. 6

9 AcSB SCORECARD The AcSB achieved the key objectives in its Annual Plan and is on track to achieve the objectives in its Strategic Plan. The major accomplishments during the year were: the IASB s decisions to restart its project on rate-regulated activities and develop an interim standard, based in part on considerable time and effort invested by the AcSB and its stakeholders; the IASB s finalization of amendments to IFRSs on investment entities, also based in large part on considerable effort by the AcSB and input from stakeholders; the AcSB s appointment to the IASB s new Accounting Standards Advisory Forum, reflecting the high regard that the IFRS Foundation and the IASB have for the AcSB and its staff; finalization of several major and annual improvements to standards for private enterprises, and substantial progress on future major and annual improvements; and approval of the AcSB/PSAB Statement of Principles on NFPO issues. As discussed in its performance report for , the AcSB: supported the ongoing application of IFRSs in Canada by most publicly accountable enterprises; contributed to the improvement of IFRSs, at the strategic, standards and implementation guidance levels, through support of, and participation in, the International Forum of Accounting Standards Setters, requests to the IFRS Interpretations Committee for implementation guidance and responses to: proposed changes to the Constitution of the IFRS Foundation and the Due Process Handbook; each of the IASB s exposure drafts and formal requests for information; and requests for input from the IASB s Interpretations Committee and staff; continued to fulfill its responsibility for improving Canadian GAAP by: documenting its due process more fully and developing formal processes for monitoring and reporting on the application of due process; applying due process to the development and adoption of new and amended IFRSs, as well as domestic standards for private enterprises, NFPOs and pension plans; dealt with unexpected developments, including the challenges noted below; and maintained and developed its communications with stakeholders. As a result of these achievements, the AcSB made progress towards the long-term outcomes in its results chain. However, some issues were not resolved during and will take more time to deal with fully. Two main remaining challenges are: dealing with the current lack of any specific guidance in IFRSs concerning the effects of rate regulation, pending 5 further IASB action; and addressing practical implementation issues arising from the lack of clarity or the lack of specific guidance in some IFRSs. The AcSB monitored standards being developed jointly by the IASB and the U.S. Financial Accounting Standards Board on revenue recognition, leases, financial instruments and insurance contracts to be in a position to respond to exposure drafts and final standards on those topics as they are issued. 7

10 Different strategies for different categories of reporting entity all actively applied; activities to achieve long-term objectives proceeding Publicly accountable enterprises Adopt IFRSs Part I Standards in place First annual IFRS reporting now completed by all entities, except rate-regulated entities and investment entities, with no evidence of problems Solid progress in resolving challenges for rate-regulated entities IFRS amendment recently issued to resolve delay in transition by investment entities Ongoing AcSB participation with the IASB and related bodies at a high level Private enterprises Not-for-profit organizations Pension plans Create and adopt separate set of standards tailored to the needs of these entities Part II Create and adopt a separate set of standards tailored to the needs of these entities Part III Create and adopt a separate set of standards tailored to the needs of these entities Part IV Standards in place First annual reporting by most entities now completed, with no evidence of problems Annual improvements and major improvements projects underway Standards in place First annual reporting under the new framework in process, with no evidence of problems Project for major improvements underway in collaboration with PSAB Standards in place First annual reporting now completed, with no evidence of problems Maintain standard-setting capability Committee structure fully operational Resources and processes to carry out operating plans in place Succession plans for AcSB Chair and one volunteer member being carried out Address standards fatigue Period of relatively less AcSB activity from stakeholders perspective Improve communications Outreach programs continually expanding and improving; focus on the Board s online presence (for example, website, other online profiles, links to Board s website from other websites) and efforts (i.e., targeting and expanding) Overall assessment for : Objectives in the Annual Plan mostly achieved; good progress made towards longer term goals. Current challenges being addressed (see previous page). 8

11 SUMMARY OF ACTIVITIES In , the AcSB: continued to support the application of IFRSs in Canada by publicly accountable enterprises; assisted the IASB in moving forward towards development of standards on the effects of rate regulation, including development of an exposure draft of an interim standard. Pending completion of the restarted project, the proposed interim standard allows rate-regulated entities to proceed towards their first-time adoption of IFRSs in years beginning on or after January 1, The IASB s decisions to undertake this work represented the culmination of considerable effort over several years by the AcSB, its staff and other Canadians in helping the IASB to appreciate the need for specific guidance on this topic. assisted the IASB in resolving concerns about accounting by investment entities, allowing those entities to proceed towards their first-time adoption of IFRSs in years beginning on or after January 1, 2014; contributed to the improvement of IFRSs at the strategic, standards and implementation guidance levels by providing input to the development of IFRSs through such means as responses to: invitations to comment issued by the IFRS Foundation Trustees; each of the IASB s exposure drafts; and all requests for input from the IASB s staff. In recognition of the value that the IASB places on the AcSB s input, it has appointed the AcSB to membership in the newly created Accounting Standards Advisory Forum; finalized the first program of major improvements to the standards for private enterprises, dealing with employee future benefits and discontinued operations, and the second annual improvements program. The AcSB also advanced major improvements projects on consolidations and joint arrangements, carried out research on agriculture and commenced the third annual improvements program; approved for public comment a statement of principles on major issues specific to not-for-profit organizations (NFPOs), in collaboration with PSAB; continued to fulfill its responsibility of improving Canadian generally accepted accounting principles (GAAP) by applying due process to the development and adoption of new and amended IFRSs and domestic standards for private enterprises, NFPOs and pension plans; dealt with unexpected developments, including the challenges discussed below; and maintained and developed its communications with stakeholders. 9

12 As a result of those activities, the AcSB made progress towards the long-term outcomes in its results chain. However, some issues were not resolved during and will take more time to deal with fully. Two main challenges are: dealing with the lack of any specific guidance in IFRSs concerning the effects of rate regulation; and addressing practical implementation issues arising in the application of IFRSs by Canadian publicly accountable enterprises because of a lack of clarity or specific guidance in some IFRSs. The only noteworthy departures from the AcSB s Annual Plan for and Strategic Plan for , respectively, are: slower progress than anticipated in the projects to improve standards for private enterprises on consolidations and joint arrangements and develop a new standard on agriculture; and a decision to delay the post-implementation reviews of the major strategies for publicly accountable enterprises and private enterprises and the ensuing development of a new strategic plan, which will require stakeholder input to be sought through an exposure draft in The AcSB continues to monitor the development by the IASB and the U.S. Financial Accounting Standards Board (FASB) of major new standards on revenue recognition, leases, financial instruments and insurance contracts. Those standards will likely raise a number of concerns and implementation issues when they are finalized. The position of the United States on the adoption of IFRSs for U.S. enterprises remained a matter of particular interest to the AcSB and some of its stakeholders in , even though not a determinant of the AcSB s strategy. The situation in the United States remains unresolved at present. 10

13 IFRS ADOPTION STRATEGY The AcSB continued its ongoing work of monitoring issues that might affect its strategy of adopting International Financial Reporting Standards (IFRSs) for Canadian publicly accountable enterprises and permitting their use by other entities. The AcSB is committed under its Strategic Plan to undertake a full review of the strategy. It began preliminary planning in and the process is expected to continue over the next two years. The AcSB did not undertake any surveys of stakeholders in the publicly accountable enterprise sector in , as agreed with AcSOC and included in its Annual Plan. AcSB representatives continue to seek input from individual stakeholders through direct contacts in meetings and conferences, as well as written communications. The wide range and nature of views heard did not change significantly from previous years. Support for the IFRS strategy remains solid amongst the stakeholders the AcSB heard from, even though a minority still feels that the costs of adopting IFRSs outweigh the benefits or that adopting U.S. GAAP is preferable. Criticisms in some industries, such as insurance and rate-regulated utilities, are focused on specific aspects of IFRSs and not the strategy as a whole. Some stakeholders continue to question the timing of Canada s adoption of IFRSs relative to developments in the United States but it is increasingly clear that waiting for the United States would have left Canada in an untenable position. The AcSB remains of the view that no new arguments or evidence were identified during the year that would call the IFRS strategy into question. The ongoing uncertainties in the United States on the future of its financial reporting requirements, discussed further below, reinforce the AcSB s long-held view that its strategy should not be based on the actions of U.S. policymakers. Global adoption of IFRSs The AcSB continues to monitor financial reporting developments globally. Although some major economies have yet to adopt IFRSs, it remains clear that this constitutes the most practical path towards a single set of high-quality, globally accepted financial reporting standards. That objective remains on the program of the G20 and is generally accepted by those jurisdictions that have yet to adopt IFRSs. The adoption of IFRSs in practice continues globally but at an uneven pace. The United States, Japan, India and China remain the major holdouts but all are continuing to consider the matter in their own way. Japan took some steps to pave the way towards full adoption. China intends to adopt IFRSs in the long term but currently faces significant challenges in building the necessary infrastructure. Progress in India stalled in the face of opposition by those who consider change unnecessary. A 1 number of other countries are proceeding with plans to implement IFRSs. 1 The IFRS Foundation has recently published country profiles for all G20 countries and 46 other countries as part of a process to compile complete and up-to-date information on the status of IFRS adoption globally. The information is available at IFRS-June-2013.aspx. 11

14 The AcSB continues to keep a close watch over U.S. developments. The basis of financial reporting by public companies in U.S. capital markets is determined by the U.S. Securities and Exchange Commission (SEC), which has studied IFRSs for a number of years but has not come to any decision about adopting them for U.S. companies. Current circumstances make it unclear when the SEC will be in a position to deliberate and decide on the matter. The AcSB reviewed the July 2012 final report of the SEC s staff on IFRS-related issues as a check on its own strategic analysis and conclusions. The AcSB also reviewed the response of the IFRS Foundation staff to the report of the SEC s staff. The Foundation s response summarizes the actions taken or being taken to respond to many of the concerns raised by the SEC s staff. The AcSB found in the Foundation s response a number of comments that reinforce its decision to adopt IFRSs. The AcSB responded to several requests from Americans for information about Canada s experiences with adopting and applying IFRSs. There is clearly continuing interest amongst Americans in the adoption of IFRSs by U.S. companies. The AcSB recognizes the significance of U.S. circumstances to Canadian financial reporting and takes comfort that some developments in the United States support its decision to adopt IFRSs. Recent surveys of U.S. financial statement users indicate significant support for IFRS reporting and some prominent U.S. businesses are 2 advocating IFRS adoption in the United States. Nevertheless, in the AcSB s view, the current situation in the United States supports its conclusion that U.S. developments should not determine its core strategy for Canadian publicly accountable enterprises. Adoption of IFRSs in Canada The process of adopting IFRSs into Canadian financial reporting practice was well advanced at the AcSB s last year end but only finished for most affected entities in early Entities with non-calendar year ends, most notably the major chartered banks, have now all completed at least one full year of IFRS reporting. Many Canadian enterprises have now completed their second year of IFRS reporting. The transition required cost and hard work but the result was a generally smooth transition, with no serious problems reported to the AcSB. Commentators from other countries have remarked favourably on the quality of the Canadian transition process and the outcome. In assessing the quality of IFRS reporting, the AcSB watches the reaction of capital markets and remains in close contact with major Canadian stakeholder groups. As was observed in , the process of transition to IFRSs caused no reported problems. Some academic researchers are undertaking empirical research into the effects of the transition, with no unexpected results coming to light to date. More time will be necessary for sufficient empirical research to be completed to permit the AcSB to draw conclusions from that source. 2 See, for example, IFRS in the US: the investor s perspective, a survey by Forbes Insights for the UK-based Association of Chartered Certified Accountants (October 2012), available at and a joint submission by several major US corporations to the SEC (July 8, 2011), available at 12

15 AcSOC is supporting a study of the costs of the IFRS transition being undertaken by the Canadian Financial Executives Research Foundation at the request of the IFRS Foundation Trustees. The Research Foundation published an internet-based questionnaire in early 2013 to gather data and recently finalized a report summarizing and analyzing the results. The AcSB maintained its long-standing liaison with representatives of the key government agencies that have authority over financial reporting by Canadian publicly accountable enterprises, primarily the Canadian Securities Administrators (CSA) and the Office of the Superintendent of Financial Institutions. The AcSB did not hear concerns from them about the core strategy of adopting IFRSs. The CSA remain concerned about reporting by rate-regulated entities, as discussed below, and are engaged in finalizing the regulations required to permit IFRS reporting by investment funds. The regulators are continuing with their more routine activities of reviewing entities financial statements and reporting on their practices in applying IFRSs, with no unexpected results relative to the AcSB s strategy. To some extent, Canadian financial statement preparers and auditors continue to struggle with the greater degree to which IFRSs provide scope for differing interpretations on various issues, and explicit accounting policy choices in a few cases, compared to the pre-changeover domestic standards. Some prefer having a single acceptable treatment on all issues and worry about whether there is too much diversity in practice. Financial statement users seem generally able to cope with the effects of alternative treatments when they arise. The AcSB addresses concerns about lack of clarity and divergent practices primarily through its IFRS Discussion Group. The Group brings together representatives from the user, preparer, auditor and regulator constituencies, who meet in public to raise concerns, identify possible solutions and, in some cases, recommend that the AcSB propose action by the IASB or its Interpretations Committee. The Group met four times in and discussed six to eight issues in each meeting. Some issues were discussed primarily to make stakeholders more aware of them. Several issues were referred to the AcSB, with a recommendation that the issues be raised with the IFRS Interpretations Committee. Those issues were discussed by the AcSB and often required further research before formal submission to the IFRS Interpretations Committee. In some cases,informal discussion with IFRS Interpretations Committee staff resolved issues or refined them before a formal submission. In common with many stakeholders globally, the AcSB encouraged the IASB to put increased emphasis on the maintenance and improvement of the existing standards in responding in 2012 to the IASB s three-yearly agenda consultation. The IASB decided to adopt that approach and put more emphasis on interpretive guidance and narrow scope improvements. The concerns that the AcSB and others had in previous years concerning the operations of the IFRS Interpretations Committee were resolved. The IFRS Interpretations Committee is more active and more willing to develop helpful guidance, whether through IFRIC Interpretations, recommendations to the IASB for narrow scope amendments to IFRSs, or non-authoritative guidance of an educational nature. The AcSB staff is in close and continuing contact with the staff of the IFRS Interpretations Committee in raising issues and responding to requests for input. 13

16 Challenges in adopting IFRSs in Canada Effects of rate regulation The AcSB and its stakeholders have experienced some significant challenges in achieving a complete adoption of the IFRS strategy and in coping with its implications in practice. The most problematic issue arises from the lack of any specific guidance in IFRSs for reporting the effects of rate regulation. Current reporting practices in Canada s rate-regulated industries result in information that is widely considered to be useful to investors, lenders and other financial statement users. The IASB s decisions concerning this topic over the past several years have created uncertainty for Canadian first-time adopters of IFRSs in rate-regulated industries. Very few have adopted IFRSs, pending action to address their perceived shortcomings. The AcSB has extended the mandatory changeover date for this sector pending resolution of those shortcomings. The IASB abandoned an uncompleted project on rate regulation in September 2010 but began to indicate in early 2012 that it might restart the project in response to input it received through its three-yearly agenda consultation. As the prospects for restarting the project began to improve, the AcSB decided in March 2012 to extend the mandatory IFRS adoption date for affected entities by one year. The AcSB encouraged the IASB in its investigation into the need for a project and the nature of the issues to be considered. The AcSB also assisted the IASB staff in that regard and provided a briefing for members of the IFRS Advisory Council, the IASB and its staff in June With input from the AcSB and others, the IASB reactivated its project and is now working to complete a discussion paper by the end of A formal request for information was issued in March Despite early progress, a final standard is unlikely to become effective for several years. As it became clear that the IASB had committed itself to reactivating its project on rate regulation, the AcSB decided in September 2012 to extend the mandatory IFRS adoption date for affected Canadian entities by one more year, to January 1, The change was made in the hope that the IASB might have an interim standard on the effects of rate regulation in place by that time that would facilitate the adoption of IFRSs by Canadian entities with operations subject to rate regulation. The AcSB proposed to the IASB that an interim standard should essentially grandfather existing national practices of first-time IFRS adopters while the IASB completes its project. To help the IASB in coming to a decision on adopting an interim standard, the AcSB drafted up such a standard as a basis for the IASB s discussion. In its December 2012 meeting, the IASB agreed to develop an interim standard on a basis that would not delay progress on its full standard-setting project. In January 2013, the IASB considered the content of an exposure draft of an interim standard that would draw heavily on the draft proposed by the AcSB. In light of the IASB s decision to draft an exposure draft for issuance by April 2013, the AcSB decided that it should defer the mandatory transition to IFRSs for Canadian rate-regulated entities to January 1, 2015 to give them sufficient time to adopt IFRSs, as amended by the proposed interim standard. That date coincides with the expiration of exemptive relief granted to a number of rate-regulated entities by the Canadian Securities Administrators, permitting those entities to adopt U.S. GAAP instead of IFRSs for a three-year period. In April, the IASB issued its Exposure Draft. 14

17 The AcSB will continue to monitor progress on the IASB project to provide any necessary support to the IASB project team. In the meantime, publicly accountable Canadian rate-regulated entities are reporting under several different accounting frameworks (IFRSs, U.S. GAAP, old Canadian GAAP and various hybrids). This state of affairs is unsatisfactory as a long-term strategy and causes some confusion. However, capital markets appear to be able to cope with the current diversity of accounting frameworks in practice as most rate-regulated entities have applied a framework that results in continued recognition of assets and liabilities arising as a result of rate regulation. The AcSB, its staff and the Chairman of the IASB s Advisory Council have all put in considerable effort over the course of to convince the IASB of the importance of addressing the effects of rate regulation and providing an interim solution. As a result, the last group of Canadian publicly accountable enterprises should be able to change over to IFRSs within the foreseeable future (subject to the long-standing policy of the Canadian Securities Administrators to allow SEC registrants in any industry to adopt U.S. GAAP). This outcome now appears possible without the AcSB having to resort to any made-in-canada interpretations of, or modifications to, IFRSs. Investment companies The other category of Canadian publicly accountable enterprises not yet reporting on an IFRS basis is investment companies. Early in the process of preparing for IFRSs, the AcSB identified a significant concern about having to change the accounting for investment companies controlled investees. It asked the IASB to undertake a project to revise IFRSs so as to continue fair value reporting for all investments of an investment entity and built a compelling case for doing so. The IASB undertook such a project jointly with the FASB but it was not completed in time for Canada s 2011 transition to IFRSs. Accordingly, the AcSB provided deferrals of the IFRS changeover date for investment companies pending completion of the IASB s project. The AcSB worked hard to assist the IASB in finalizing a standard on a timely basis. The AcSB s staff and affected stakeholders provided considerable assistance to the IASB project staff in the final drafting stage to ensure that the standard addressed issues of concern to Canadian entities. The IASB completed its project and issued a final standard in October 2012, permitting the AcSB to take another major step towards the complete fulfillment of its IFRS strategy for Canadian publicly accountable enterprises. After reviewing the IASB standard and surveying preparers and auditors of investment companies financial statements, the AcSB decided in December 2012 to confirm the mandatory adoption of IFRSs by investment companies for years beginning on or after January 1, The CSA are currently finalizing their related requirements for investment funds, consistent with the AcSB s decision. On a related matter, the AcSB decided to discontinue a project it had started in 2010 to expand the scope of its standard on financial reporting by pension plans to include reporting by pension funds, which are essentially investment companies created to hold assets of pension plans (without any responsibility for the pension liabilities of the related plans). With the issuance of the new IFRS on investment entities, this step was deemed unnecessary. 15

18 Implementation challenges IFRSs are less detailed and prescriptive on some issues than on others and also less specific on some issues than the former Canadian standards they replaced in The result is diversity in practice in accounting for some circumstances. This diversity detracts from comparability of reported financial information and frustrates preparers and auditors. The IASB s Interpretations Committee was unwilling to address many such implementation issues in past years. In response to requests from many countries and following an inquiry into the efficiency and effectiveness of the Interpretations Committee s operations, the Committee has now adopted a much more responsive policy and broadened the range of tools it deploys to try to assist stakeholders. The AcSB s IFRS Discussion Group was very active in in identifying and assessing IFRS implementation issues. The Group recommended to the AcSB that certain issues be forwarded to the IFRS Interpretations Committee. No issues forwarded by the AcSB in have resulted in formal interpretive action but some issues were addressed in less formal ways and others are still pending. In addition to initiating issues for consideration by the IFRS Interpretations Committee, the IFRS Discussion Group and other Canadian stakeholders have assisted the Committee in assessing issues raised by stakeholders from other countries. The AcSB applied a policy of responding to all requests for input from the Committee or its staff. It responded to a considerably larger number of such requests in than in previous years. As a result of the work of the AcSB, its IFRS Discussion Group, its staff and other Canadian stakeholders in discussing implementation issues and bringing them to the IASB, its IFRS Interpretations Committee and its staff, a number of Canadian concerns about IFRSs were dealt with successfully. As a result, the AcSB was able to maintain its policy of not modifying or interpreting IFRSs. Canadian enterprises are able to report in accordance with IFRSs as issued by the IASB, the global gold standard in financial reporting. Standards fatigue The IFRS strategy introduced an element of standards fatigue amongst individuals and entities that went through the transition over the past few years. Users, preparers and auditors have had to work hard to become familiar with a complete new set of standards and determine how they apply in various circumstances. To varying degrees, reporting entities may have had to redesign their information systems and accounting procedures and then implement changes to support IFRSs. As discussed elsewhere in this report, entities had to face a number of implementation issues and, at the same time, stay current with ongoing changes to IFRSs newly issued by the IASB or still under development. Stakeholders dealt well with the transition, even though it clearly put some strain on Canadian financial reporting. 16

19 The transition is now history for most stakeholders in the publicly accountable enterprise sector. However, change continues in the form of eight major new or amended standards coming into effect in 2013 and projects on other topics still underway, plus a steady stream of annual improvements, narrow scope improvements and interpretations. Canadian stakeholders spent considerable time and energy in preparing to apply the 2013 wave of new requirements on: consolidations; joint arrangements; disclosure on interests in other entities; fair value measurement; employee benefits; investments in associates and joint ventures; financial statement presentation of other comprehensive income; and stripping costs in the production phase of a surface mine. Like their counterparts in other countries, Canadian stakeholders are coping with these changes. Issues arising from the new requirements required attention by the AcSB, its IFRS Discussion Group and staff. As discussed below, entities are also beginning to think about how they will deal with standards currently under development on revenue, leasing, financial instruments and insurance contracts. Those new standards will constitute future waves that will need to be managed. The prospect for the longer term is for a lighter burden on most stakeholders. The IASB is bringing its major projects closer to completion and shifting its strategy to put more emphasis on maintenance of existing standards, development of an improved conceptual framework and research to support possible future projects. Participating in the development of IFRSs The IASB remained very active in in developing new standards and improving existing ones, following through on topics it worked on for several years. The ongoing projects are set out in the IASB s work plan. The four main agenda topics revenue, leasing, financial instruments and insurance contracts were carried out largely in collaboration with the FASB. The IASB completed only three smaller projects in , dealing with investment entities, amended transition guidance for three major standards becoming effective in 2013 and annual improvements. It issued two major proposals to amend the standard on financial instruments as well as other proposed amendments arising from two series of annual improvetments and seven separate narrow scope projects. Stakeholders were asked to respond to a Request for Information document issued to initiate the IASB s first post-implementation review project, dealing with IFRS 8 Operating Segments. The IFRS Interpretations Committee issued two draft Interpretations for comment, the first such proposals it had produced in over two years. The IFRS Foundation Trustees also remained active in The Trustees issued their final recommendations for improving the efficiency and effectiveness of the IFRS Interpretations Committee. They also issued proposed enhancements to the IFRS Due Process Handbook and a review draft of a proposed amendment to the Foundation Constitution to separate the roles of Foundation CEO and IASB Chairman. The Trustees Due Process Oversight Committee continued to be very active in carrying out its function. 17

20 The AcSB continued its longstanding involvement in, and support of, the International Forum of Accounting Standard Setters (formerly the National Standards Setters). The International Forum of Accounting Standard Setters meets semi-annually to discuss matters of mutual interest and provide input to the IASB. Canada currently provides the Chair and secretarial support to this group and participates in developing and presenting agenda papers. In November 2012, following a preliminary discussion with the members of the International Forum of Accounting Standard Setters, the IFRS Foundation Trustees issued a proposal to establish an Accounting Standards Advisory Forum. This body provides a formal mechanism for the IASB to receive input directly from national and regional standards bodies. It replaces existing bilateral arrangements with certain standards bodies and gives all an opportunity to participate. The AcSB responded by the December 17, 2012 comment deadline that it supported the proposal and, in March 2013, was selected as one of the three representatives from the Americas on the twelve-member body. The Chair attended the inaugural meeting of the Accounting Standards Advisory Forum in April. The AcSB believes that selection to membership in the new Forum gives it the greatest scope for influencing the future development of IFRSs. During , the AcSB, its committees and its staff continued to follow the processes developed in previous years for participating fully as a national standard setter in the work of the IASB. The AcSB remains committed to the Statement of Best Practice: Working Relationships between the IASB and other Accounting Standard-Setters that it subscribed to in In accordance with that agreement, the AcSB undertakes a number of activities in support of the IASB and the development and application of IFRSs. Those activities include important communication steps to facilitate engagement of Canadian stakeholders with the IASB. For example, the AcSB s User Advisory Council provides input directly to the IASB through the participation of IASB members and staff in Council meetings via teleconference. This input is particularly valuable to the IASB. Members of the IASB and its staff have advised the AcSB that, in various ways, it is making important contributions to the IASB s work. Current assessment of the IFRS strategy Developments during continued to validate the AcSB s original strategic decision to adopt IFRSs as Canadian GAAP, despite the challenges the AcSB and its stakeholders have faced. Progress was made in dealing with two industry sectors for which the adoption of IFRSs had to be deferred. In other sectors, the transition to IFRSs was recently completed, with no serious problems reported to the AcSB, and continuing application is now relatively routine. Stakeholders are also able to cope with the ongoing processes for improving the standards. Preparations are underway for applying the first round of significant revisions to IFRSs since the standards were first adopted, applicable to fiscal years beginning on or after January 1,

21 The AcSB will be preparing in to undertake its first post-implementation review of its IFRS strategy in , which will include gathering information and feedback on a systematic basis. However, early evidence, both anecdotal and through empirical research, suggests that evidence of the benefits is beginning to emerge and the costs of Canada s transition were not excessive. The AcSB did not see any indications of a decline in the overall quality of financial reporting by Canadian entities that have adopted IFRSs. Performance measures for the AcSB s IFRS strategy The AcSB s Annual Plan for sets out the following measures for assessing the success of its work during the year on its strategy of adopting IFRSs: a high level of participation by the AcSB and stakeholders in the publicly accountable enterprise sector in global standard-setting activities; and satisfaction of stakeholders, assessed through direct feedback. The Annual Plan did not include gathering stakeholder input through a survey as was done in previous years. The response rates for the surveys in past years were quite low, statistically invalid and declining from year to year. The AcSB receives more feedback from more people and higher quality information through its extensive direct contacts with stakeholders. Those contacts include participation in liaison meetings with key stakeholder groups, private meetings and correspondence. Neither of the planned performance measures lend themselves to objective quantitative reporting. In the AcSB s view, it achieved a desired level of success relative to both measures in Throughout the year, the AcSB was fully engaged with the IASB, its IFRS Interpretations Committee, the IFRS Foundation and other national and regional standards bodies in all aspects of global standard-setting activity. The AcSB s contributions are valued by those other bodies. As discussed above, the AcSB s efforts have produced very positive results in addressing issues associated with rate-regulated enterprises and investment entities, relative to the associated challenges. In recognition of the value that the IASB places on the AcSB s input, it appointed the AcSB to membership in the newly created Accounting Standards Advisory Forum. Stakeholders appear to be generally satisfied with the AcSB s work. A few letters were received expressing disappointment that the issue of reporting by rate-regulated enterprises cannot be resolved more quickly and to the complete satisfaction of all parties. Some stakeholders have commented that they still do not see payback for the costs of adopting IFRSs. However, the AcSB also heard positive feedback for its efforts in working with the IASB and advancing Canadian issues and concerns. Many of the stakeholders the AcSB heard from now agree that the IFRS strategy is, in the long run, the right path to follow. In summary, the AcSB is satisfied that it attained its objectives in advancing the implementation of its IFRS strategy in The situation of rate-regulated entities remains a problem that will take several more years to resolve but the way forward now appears to be clear. The AcSB is satisfied that it is making progress towards its long-term objective for the publicly accountable enterprise sector. 19

22 STRATEGY FOR PRIVATE ENTERPRISES During , the AcSB continued its programs for supporting the separate set of standards developed for the Canadian private enterprise sector while monitoring the adoption of the standards in practice. The AcSB continued to devote a considerable amount of time and resources to maintaining the quality of the standards through its annual improvements process and improving the standards through major standard-setting projects. The new standards for private enterprises continue to be generally well received by stakeholders in that sector. Although the standards were first effective for fiscal years beginning on or after January 1, 2011, the effects of applying them in practice were just beginning to become apparent at the end of the AcSB s operating year. It is now clearer that the transition from old Canadian GAAP standards went smoothly and stakeholders accept the new framework. As is the case for the IFRS strategy, the AcSB will be carrying out a post-implementation review of the strategy for private enterprises over the next two years. The AcSB continued its communication activities to inform affected stakeholders of the new standards and provided limited implementation support in the form of presentations and supplementary guidance, when needed. The AcSB s staff assisted the professional bodies in developing non-authoritative guidance and professional development materials. Information obtained from stakeholders in the sector indicates that preparers and assurance providers were well prepared for the changeover and have sufficient implementation guidance and support available to assist them in applying the new standards. The AcSB and its staff are working with the assistance of the Private Enterprise Advisory Committee to develop proposals for amending or replacing individual standards within the new accounting framework. The Advisory Committee continued to meet quarterly and provided valuable assistance to the AcSB from the perspective of preparers and users of financial statements in the private enterprise sector. The membership of the Advisory Committee has been gradually turning over, particularly amongst the user representatives, but the AcSB is able to recruit new members with solid credentials. The annual improvements process is now becoming established after some initial experimentation over the past two years. Individual issues are accumulated over the course of a calendar year and solutions developed towards the end of the year. Proposed amendments to the standards are then exposed for public comment early in the following year and finalized in time to be applied in preparing financial statements for that same year. The process is designed to clarify and correct standards but not to provide interpretations that would eliminate all diversity in practice. Some stakeholders have indicated that they would like to see the scope of the process broadened to provide interpretations, somewhat along the lines of the past Emerging Issues Committee consensuses. However, the AcSB concluded that such an approach would be contrary to the principles-based structure underlying the development of accounting standards for private enterprises. 20

23 The AcSB and its Advisory Committee are also working on several major improvements to the original version of the standards for private enterprises. The objective of this program was to release a package of new and amended standards in 2013, with a view to their adoption in 2014 or later. This timeframe allows for due process in developing the standards and a reasonable period between their issuance and mandatory adoption. It also provides stakeholders with a period of relative calm between their initial adoption of the set of standards and the first major changes. As of March 31, 2013, the AcSB had approved amendments to the standards dealing with discontinued operations and employee future benefit plans providing defined benefits, which were issued in May The AcSB also has several projects in progress that are expected to be completed later and will constitute the second program of major improvements, expected to become effective two years after the first program. In determining how to develop major improvements to the standards for this sector, the AcSB decided that it will look first to new or recently amended IFRSs for the basic direction. However, it also decided that this approach does not mean copying individual IFRSs. Instead, the AcSB is working to minimize the extent of change wherever possible and focus on what requires improvement. This approach was taken to improve the standards on discontinued operations and defined benefit pension plans. The responses to exposure drafts issued during on those issues indicate that this approach is working well and was accepted by stakeholders. Work is also proceeding on other projects within the current major improvements program. Exposure drafts are in preparation on joint arrangements and consolidations of entities controlled by means other than voting interests, for issuance in The AcSB s approach to financial reporting by private enterprises received unexpected support in from the United States. The American Institute of Certified Public Accountants issued a proposal to adopt the AcSB s standards, with a few modifications, as a suitable accounting framework for U.S. private enterprises not wishing to adopt U.S. GAAP. Performance measures for the AcSB s private enterprise strategy The AcSB s Annual Plan for sets out the following measures for assessing the success of its work during the year on its strategy of adopting a separate accounting framework for private enterprises: timely completion of planned steps for supporting the new set of private enterprise standards; and satisfaction of stakeholders, assessed through feedback in face-to-face contacts and from correspondence received. In respect of the strategy for publicly accountable enterprises, the AcSB did not conduct stakeholder surveys this year in the private enterprise sector. Obtaining feedback in this sector is more difficult and the AcSB will consider how it will be able to determine the success of its strategy next year in planning for a post-implementation review. 21

24 The AcSB was not able to move ahead as quickly as planned on certain aspects of the major improvements projects. As reported above, the projects on employee future benefits and discontinued operations proceeded as planned to completion in mid However, developing a replacement for the current standard on consolidating variable interest entities proved to be more technically challenging than expected. Accordingly, the AcSB decided to take extra steps, such as testing the proposals on various fact patterns found in practice, to ensure that the amended standard will be of sufficiently high quality when exposed for public comment. Planned improvements to the standard on joint ventures are linked to the improvements to the standard on consolidations, resulting in slower progress with that project as well. Work to develop a completely new standard on agriculture is also moving more slowly than originally expected. The AcSB decided during that it should issue a discussion paper on this topic rather than proceeding directly to an exposure draft. As a result, three of the five projects that the AcSB started in moved ahead more slowly than originally expected. There is relatively little pressure from stakeholders to move ahead more quickly and the AcSB thinks that the additional due process steps it is undertaking will ensure high-quality results. From limited face-to-face contacts and correspondence with stakeholders, there appears to be widespread satisfaction with the new accounting framework designed specifically for private enterprises. In particular, the financial statement user representatives on the Private Enterprise Advisory Committee have expressed no concerns about the quality of financial statements they are receiving. The AcSB received no criticisms of its strategy from stakeholders and developments in the United States and the United Kingdom provide some additional support for it. In summary, the AcSB made solid progress in satisfying its objective for the private enterprise sector in The initial adoption of the new framework proceeded well. Progress on some major improvements projects was slower than anticipated in the Annual Plan but work continued in carrying out modified project plans. Overall, stakeholders appear well satisfied and the AcSB is confident that it is achieving the expected outcomes from its strategy for this sector. 22

25 STRATEGY FOR NOT-FOR-PROFIT ORGANIZATIONS Implementation of the strategy for not-for-profit organizations (NFPOs) in the private sector began, by design, a year later than for the for-profit sectors. The new set of standards for the not-for-profit sector is effective for fiscal years beginning on or after January 1, Accordingly, many organizations have not yet reported on the new basis or are just doing so. The changeover from one accounting framework to another is not expected to result in much change in practice for most organizations. Limited feedback from stakeholders indicates that the changeover is proceeding without significant problems. As is the case for the strategies for profit-oriented entities, the AcSB will be carrying out a post-implementation review of the strategy for NFPOs over the next two years. Since creating Part III of the CICA Handbook Accounting for NFPOs, the Accounting Standards Board (AcSB) embarked on a major project to revise and update the standards that were carried forward from the previous accounting framework essentially unaltered. The AcSB concluded that the standards need to be updated and improved, having remained largely unchanged since their finalization in The work to replace the existing standards began in January 2011 and made progress during The initial work was carried out by the Joint Not-for-Profit Task Force of the AcSB and PSAB. The membership of the Task Force was drawn from both the public and private sectors and includes preparers, auditors and users of financial statements. The two Boards are working to reach common positions on the issues to the greatest extent possible, although that objective may prove challenging on some issues. The Joint Task Force met five times in and completed its discussion of the many issues to be addressed. The AcSB subsequently discussed a draft of a proposed statement of principles in three separate meetings before approving it in December 2012, subject to final drafting changes and a written ballot approving publication. PSAB gave similar approval, with the result that the Boards were able to issue the Statement of Principles in April 2013 for public comment. The Boards plan a major program of outreach to stakeholders to inform them of the proposals in the Statement of Principles and to gather their feedback. Some of the proposals are expected to be controversial. The staff members who support the AcSB s work on NFPOs have also been monitoring changes to the standards for private enterprises, as NFPOs applying Part III of the CICA Handbook Accounting also apply the private enterprise standards. The AcSB separately considers the effects on NFPOs of any new requirements for private enterprises. In , the AcSB decided that it would need to develop separate requirements for NFPOs to modify certain aspects of the recently approved changes to the private enterprises standard on employee future benefits. The separate requirements are necessary to address certain unique aspects of NFPOs and their financial reporting environment. The AcSB will issue an exposure draft in mid

26 Performance measures for the AcSB s NFPO strategy The AcSB s Annual Plan for sets out the following measures for assessing the success of its work during the year on its strategy of adopting a separate accounting framework for NFPOs: timely completion of planned steps for supporting the new set of NFPO standards; and satisfaction of stakeholders, assessed through feedback in face-to-face contacts and from correspondence received. As is the case with for-profit enterprises, the AcSB did not conduct stakeholder surveys this year in the not-for-profit sector. Obtaining feedback in this sector is challenging and the AcSB will consider how it will be able to determine the success of its strategy next year in planning next year for a post-implementation review for this sector. The AcSB was able to carry out the steps in its annual plan for the sector on a timely basis, as discussed above. From limited contact with stakeholders in this sector, they appear to support the AcSB s strategies and activities. Some have expressed concern about the possible effects that future changes to the standards may pose for smaller, less sophisticated organizations. In summary, the AcSB attained its objectives in implementing the new strategic direction for the not-for-profit sector and preparing to make significant improvements to the current standards in the coming years. The mechanism for working jointly with PSAB to improve the existing standards is working well. Stakeholders the AcSB heard from have not indicated any concerns with the AcSB s overall strategy for the sector. The AcSB is satisfied with its continuing progress towards its long-term objective for NFPOs. 24

27 STANDARD-SETTING CAPABILTY One of the AcSB s objectives for was to ensure that it continued to have the structures, processes and resources appropriate for implementing its strategies for all categories of reporting entities. Its Annual Plan called for evolutionary improvements to the regime established over the preceding three years while the new strategic directions were being put in place. As suggested by the preceding sections of this report, the AcSB was able to carry out its plans for the year on a wide range of issues. The basic standard-setting structure of a single board responsible for all three main categories of reporting entities, supported by advisory committees and staff, is working well. The AcSB had no difficulty in attracting qualified individuals to serve on the board and committees. The AcSB has taken steps to prepare for the succession from its current Chair to the Chair-designate. The AcSB had sufficient time available within its established meeting schedule in to address all of the matters requiring its attention. The call on volunteer members time to attend AcSB meetings remained consistent with the level over recent years. Members do a considerable amount of preparation work outside of meetings, four volunteer members have devoted additional time to serving on AcSB committees, and some members have participated in communication activities. The total call on members time, while significant, was not considered excessive. The AcSB and its committees were successful in retaining volunteer members, although there has been some turnover amongst financial statement users on the Private Enterprise Advisory Committee. The AcSB had no difficulty recruiting new volunteers with solid credentials to fill routine vacancies as they have arisen. The AcSB s staff and consultant resources provided the support necessary to carry out its plans. The deployment of staff resources continued to change over time to suit the needs of the AcSB. In , an increased amount of time was devoted to the not-for-profit sector compared to previous years, with a corresponding reduction in the amount of time devoted to IFRSs commensurate with the current status of the main IASB projects. The AcSB also had sufficient financial resources in to pay for all necessary operating costs in addition to staffing. As a follow-up to last year s project to improve its documentation of due process, the AcSB instituted improved documentation of compliance with due process for each active project and new processes for periodic monitoring of compliance and reporting on it to AcSOC. It also reviewed and updated all of the operating policies required by its statement of operating procedures to ensure that they reflect current circumstances and contribute to achieving the AcSB s plans and objectives. One of the AcSB s objectives for was to carry out its activities with due consideration for standards fatigue amongst its stakeholders. The AcSB has limited influence over the pace of activity at the IASB but has commented on the standards fatigue issue, particularly in responding to the IASB s agenda consultation. In designing its future agenda, the IASB paid heed to calls for fewer major 25

28 projects. However, it is also under pressure to complete its four major current projects at the same time that stakeholders are preparing to apply a number of changes to IFRSs that become effective from January 1, The AcSB recognizes the challenges but considers that they are not excessive. AcSB activity to improve accounting standards for private enterprises and not-for-profit organizations was slower but there were no indications that stakeholders are concerned about the pace of change in those sectors. Performance measures for the AcSB s standard-setting capability The AcSB s Annual Plan for set out a number of measures for assessing whether it has the structures, processes and resources appropriate for implementing its strategies for each category of reporting entity. The results of the AcSB s annual self-assessment and similar assessments by its five major committees indicate that the volunteers think that the Canadian standard-setting function is operating well. The AcSB received 40 completed questionnaires from the 79 volunteers surveyed. Committee members are clear on the objectives of their committees and think their objectives are being met. They are satisfied with the operations of their committees and the staff support provided and enjoyed their experiences in contributing to the standard-setting process. Much of the specific input received related to suggestions for modifying the membership profiles of the committees. Prominent individuals associated with standard setting globally expressed high regard for the AcSB s contributions. In summary, the current structure, process and resource arrangements worked well in and appear to be sufficiently robust to continue to contribute to the fulfilment of the AcSB s mandate in the foreseeable future. The AcSB considers that it applied its due process appropriately in setting standards during It relied on comply or explain provisions of due process to depart from normal practices on several occasions, each of which was reported to AcSOC. Due regard was paid to the potential for standards fatigue amongst stakeholders. 26

29 COMMUNICATIONS The AcSB continued with its extensive program of communications with stakeholders, building incrementally on the programs developed in previous years and modifying practices when improvements are possible. The AcSB was able to extend its reach by making connections with additional stakeholder groups and communication media while maintaining existing connections. The Standards Group Communications Manager is instrumental in making improvements by bringing professional communications expertise to bear at the staff level. The Communications Manager worked to increase the AcSB s connections with the news media and supported existing programs such as webinars, s, newsletters and the website. The website remains a cornerstone of the AcSB s communications programs. A considerable amount of staff effort was devoted to redesigning the Standards Group s website in , which is now largely independent of the site of the Canadian Institute of Chartered Accountants. The new design requires more effort to maintain but also facilitates a higher profile for the site s information. A more sophisticated analysis of traffic is being used to help identify the most effective uses of the site, as well as areas for improvement. The AcSB is aware of the need to keep reminding stakeholders of its strategies and the underlying rationale. It continues to use every opportunity to convey its messages through its own communications media (enewsletters, conference presentations, articles and face-to-face liaison meetings), partnering with other organizations and using their communications media, and through the limited opportunities available in the business press. The AcSB continued its ongoing relationship with the IASB communications programs. The IASB made further progress in developing its various outreach programs in Various members of the IASB and its senior staff continue to visit Canada in person from time to time and participate by teleconference in the AcSB s outreach activities, most notably the meetings of its User Advisory Council. Performance measures for the AcSB s communications program The AcSB s Annual Plan for sets out the following measures for assessing the success of its communication activities: adoption of new processes and tools, establishment of new contacts and maintenance of current stakeholders under the communications plan; nature and extent of contacts with stakeholders, as indicated in the schedule of communication activities; and satisfaction of stakeholders, assessed through feedback in face-to-face contacts and from correspondence received. 27

30 As discussed above, the AcSB made progress in adopting new processes and establishing new contacts, primarily through the construction and operation of its new website. Quantifiable increases in stakeholder reach were observed, particularly via internet search engine results; the website is consistently listed in the top five search results of Google.ca, Yahoo.ca and Bing.ca when searching using basic key words and phrases, such as accounting standards. This, and other new features and functionalities, and also the use of and enewsletters to drive stakeholders to the site, caused traffic on the website to increase. The number of web page views increased by 39 percent compared to the previous year. Strengthened contact with other organizations having an interest in financial reporting issues, such as professional bodies and firms and business organizations, resulted in those other organizations reporting the AcSB s messages more widely. In summary, the AcSB carried out an extensive communications program that reflects its strategies and stakeholder needs. It built on past efforts to extend the reach of its communications to wider audiences using up-to-date and appropriate communication tools. Opportunities for further improvements exist and are being pursued. The AcSB s communication efforts over the past several years to support the implementation of its new strategies were substantial and contributed to the successful adoption of the new strategies. 28

31 PLANS FOR THE FUTURE The AcSB s Strategic Plan includes requirements for the AcSB to carry out post-implementation reviews of its major strategies in and, based on the results, develop a new strategic plan for subsequent years. The AcSB decided, after considering input from AcSOC, to propose delaying the completion of the post-implementation reviews and development of a new strategic plan. In coming to that decision, the AcSB considered: experiences to date with the adoption of the new accounting frameworks in Canada; the need to obtain the results of more experience by stakeholders in applying the new frameworks and using the resulting information; the IASB s experiences in carrying out post-implementation reviews of individual International Financial Reporting Standards (IFRSs); and the AcSB s initial work in planning its reviews. Those factors indicate that it is both unnecessary and impossible in practice to complete within the next operating year the type of review that the AcSB thinks appropriate as a basis for drawing sound conclusions on its current strategies. Further, it would be impossible to complete a new strategic plan in , based on the results of the post-implementation reviews, while applying normal due process to the development of a plan. The AcSB concluded that it would be appropriate, subject to exposure for public comment and further input from AcSOC, to extend the term of the current strategic plan by two years to provide the time necessary to carry out the reviews and develop a new strategic plan. 29

32 CONCLUSION The AcSB met the key objectives in its Annual Plan and made significant progress towards achieving the broader objectives in its Strategic Plan and its long-term goals. The AcSB considers that there is nothing of significance to its long-term goals that it would have done differently in or was unable to do. The difficulties encountered in the transition to IFRSs by rate-regulated entities and investment entities in and the previous two years were due to factors beyond the AcSB s control. Those difficulties will take time to resolve completely but good progress was made in , due in part to the efforts of the AcSB and its stakeholders in assisting the IASB to finalize the standard on investment entities and make progress towards a standard on rate regulation. The AcSB was unable to advance some of its projects to improve private enterprise standards as far as planned but it foresees being able to complete the projects with only a small delay. The foundations for major progress on standards for not-for-profit organizations were established. Overall, the AcSB had a very successful year in It made more progress than it expected on some key IFRS-related issues, which clearly outweigh the effects of minor delays on private enterprise projects. The AcSB is confident that it has the right strategies in place to maintain and establish accounting standards in the public interest and will be able to achieve its broader objectives in the current strategic plan while beginning the work to develop a new plan over the next two years. 30

33 MEMBERSHIPS ACCOUNTING STANDARDS BOARD Pictured: (L-R; back row) Ron Salole, Jocelyn Patenaude, Brian Drayton, Peter Martin, Michel Magnan, Anthony Scilipoti, Adam Sheparski. (L-R; front row) Gale Kelly, Linda Mezon, Gord Fowler, Lara Gaede, Karen Higgins. Gord Fowler, FCPA, FCA CHAIR Accounting Standards Board, Toronto Jocelyn Patenaude, CPA, CA Behna, Cormier, Gougeon, Ouellette s.e.n.c.r.l., Montréal Linda Mezon, FCPA, FCA, MBA, CPA (MI), CGMA VICE-CHAIR RBC Financial Group, Toronto (Appointed January 1, 2013) Brian Drayton, FCA, BComm, CMC MNP LLP, Regina Lara Gaede, CA, CFA Alberta Securities Commission, Calgary (Appointed April 1, 2012) Karen Higgins, FCPA, FCA Deloitte & Touche LLP, Toronto Gale Kelly, FCPA, FCA KPMG LLP, Toronto (Appointed April 1, 2012) Michel Magnan, FCPA, FCA, MBA, PhD, ASC, CDir Concordia University, Montréal Anthony Scilipoti, FCPA, FCA, CPA (US) Veritas Investment Research Corporation, Toronto (Membership ended March 2013) Adam Sheparski, CA Sobey s Inc., Stellarton NON-VOTING Paul Cherry, OC, FCPA, FCA Chair, IFRS Advisory Council, London, UK Ron Salole Vice-President, Standards, CICA, Toronto Peter Martin, CPA, CA Director, Accounting Standards, Toronto STAFF SUPPORT Harry Klompas, CPA, CA Accounting Standards, Toronto 31