Financial Reporting for Public Companies: What You Need to Know – Q2- 2017 Update

September 11, 2017

At BDO we recognize that not all companies have the time to stay informed on expected changes to financial reporting requirements. In order to help ensure your company's continuous disclosure obligations are met, we have developed a quarterly update webinar series, Financial Reporting for Public Companies: What You Need to Know.

This newsletter provides highlights from our Q2-2017 webinar. For more detailed information, consider viewing the entire Q2-2017 webinar.

CSA Consultation Paper 52-403: Auditor Oversight Issues in Foreign Jurisdiction

In April, the CSA issued Consultation Paper 52-403 to gather stakeholder opinions on the need to update National Instrument 52-108 “Auditor Oversight” related to component auditors – particularly when audit firms in foreign jurisdictions audit foreign assets, operations, subsidiaries or divisions that are highly significant to a Canadian public company's financial statements. The paper also requested stakeholders' views as to whether there should be public disclosure of instances where restrictions were placed on CPAB's ability to inspect the work of foreign auditors.

Given the consultation period ended in June, our Q2-2017 webinar provides both an overview of the paper's major discussion points and summarizes stakeholder opinions.

CSA Consultation Paper 51-404: Survey on Regulatory Burden for Non-Investment Entities

In April 2017, the CSA issued Consultation Paper 51-404 to gather stakeholders' views on reducing the regulatory burden for issuers. In June, we hosted a dedicated webinar to discuss the paper's key components and to survey stakeholder opinions on:

  • The potential use of size-based distinctions between categories of reporting issuers.
  • Whether reducing historical information from three years to two years would impact an investor's decision-making in an initial prospectus offering.
  • Whether auditor review of interim financial statements should continue to be required in a prospectus.
  • The perceived value of pro forma information - both related to recently acquired businesses and related to companies planning to use funds to acquire other companies.
  • Whether the MD&A, AIF (if applicable) and financial statements should be consolidated in one document.
  • Whether semi-annual reporting should be an option for reporting issuers.

We presented a summary of the results of our survey and related implications in our Q2-2017 webinar.

IFRS - New or Amended Standards and Interpretations

During the second quarter of 2017, there were two major changes related to IFRS standards.

IFRS 17, Insurance Contracts

IFRS 17 is a new standard that establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the standard.

While it will become effective as of January 1, 2021, the impact of the standard will be felt much sooner as IFRS 17 requires companies to retrospectively restate information. Companies will need a December 31, 2020 comparator for their balance sheet being January 1, 2020 - the first day of the comparative period in which the standard is first applied.

IFRIC 23, Uncertainty over Income Tax Treatments

IFRIC 23 is an amendment that clarifies how entities should measure current and deferred taxes that arise from situations where there is uncertainty over whether the relevant tax authority will accept the tax treatment under the law. This amendment is effective for reporting periods beginning on or after January 1, 2019.

IFRS Discussion Group Update

The IFRS Discussion Group is a panel that discusses topics and application issues related to IFRS implementation in Canada. During its May 2017 meeting, the group covered a variety of topics, including:

  • Consideration of when, and for how long, an entity could use the preceding period's assessment of goodwill impairment under IAS 36.
  • How purchase returns are considered under IFRS 15.
  • Accounting for variable consideration receivable in an asset sale under IFRS 9, IFRS 15 and IAS 16.
  • The interplay between IFRS 16 and IAS 34 when accounting for variable lease payments in interim financial statements.
  • Whether easements are within the scope of IFRS 16 (Leases).
  • Matters that non-financial entities should consider when implementing IFRS 9 (Financial Instruments).
  • The effects on transition to IFRS 9 as a result of the IFRS Interpretations Committee's discussion on modifications or exchanges of financial liabilities that do not result in derecognition.
  • The key points of the IFRS Interpretations Committee's discussion on the accounting for interest and penalties related to income taxes (IAS 12) and the implications, if any, on current practice.
  • Cap and Trade Program

Our Q2-2017 webinar provides in-depth details related to a number of the above topics, including specific examples covered during the discussion group's meeting.

IFRS Interpretation Committee Agenda Decisions

Key outcomes from the IFRS Interpretation Committee's May 2017 meeting include:

Final Decisions

  • IAS 41: Biological assets growing on bearer plants
  • IAS 19: Discount rate
  • IAS 33: Tax arising from payments on participating equity instruments
  • IFRS 9: Centrally cleared client derivatives.

Tentative Decisions

  • Whether a financial instrument, classified as equity by the Issuer in accordance with IAS 32.16A-16D, is eligible to be classified as “Fair Value through Other Comprehensive Income” classification in terms of IFRS


  • The IC discussed a recommendation to finalize an agenda decision related to modifications or exchanges of financial liabilities that do not result in derecognition to the board. In light of comments received, the Interpretation Committee decided to refer the matter to the Accounting Standards Board.

IASB Workplan

The IASB has a number of ongoing projects to be aware of. These include:

  • Post-implementation Review of IFRS 13, Fair Value Measurement: Request for information feedback.
  • Definition of Material (Amendments to IAS 1 and IAS 7): Exposure draft expected in Q3-2017.
  • Accounting Policies and Accounting Estimates (Amendment to IAS 8): Exposure draft in progress.
  • Property, Plant and Equipment – Proceeds before Intended Use (Amendments to IAS 16): Comments requested by October 19, 2017.

For Further Information

We hope this summary of our Q2-2017 regulatory activities has been helpful. For more in-depth insights, view our Q2-2017 webinar.

If you have any additional questions or would like to discuss any potential impacts to your company, we encourage you to reach out to a member of our Public Company Service team or to your BDO Advisor.

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