FMI Canada International Waves

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FMI CanadaInternational Waves

• Accounting Standards
• Stephenie Fox, Principal
• Standards Group

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Enron findings response

• It can happen here
• Multifaceted problem needs a multifaceted
  solution
• Accounting standards cannot compensate for
  weaknesses in other elements
• Standards vulnerabilities
• No major re-direction

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Multifaceted Problem

• Senior management
• Corporate governance
• Auditors and professional advisors
• Regulators
• Analysts/rating agencies
• Financial press
• Accounting standards

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Canadian Accounting Standard-Setting
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Accounting standards oversight

• Established by CICA in 2000
• Broad business representation
• Chair Tom Allen, QC, Vice-Chair Sen Michael
  Kirby
• Public meetings
• Public interest
• Appoints members, reviews performance
• Does not set standards

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Accounting standards

• Vulnerable areas
• Guarantees
• Special purpose entities
• Financial instruments
• Stock-based payment
• Revenue recognition
• Transparency

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Strategic Issues

• Principles and rules
• Will regulators be comfortable?
• Beyond financial statements
• Non-GAAP performance measures
• MDA
• Convergence
• New world order
• Ultimate objective is to have a single set of
  globally accepted standards

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Auditing and Assurance Standards Oversight
Council (AASOC)

• Independent body
• Oversight of auditing and assurance standards
  comparable to AcSOC
• Chaired by Jim Baillie
• Broad perspective reports to the public

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Canadian Public Accountability Board (CPAB)

• Chaired by Gordon Thiessen
• Mission to contribute to public confidence by
  promoting high quality independent auditing
• Oversight of design, implementation and
  enforcement of new system of independent
  inspection of auditors of public companies
• more rigorous inspection of auditors, tougher
  auditor independence rules and new quality
  control requirements
• Reports to the public annually

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Public Oversight Model (Canada)
AcSOC Nominations Sub-Committeeh
AcSOC Chair Tom Allen QC
AASOC Chair Jim Baillie QC
GAAP Standard Setting
GAAS Standard Setting
Profession (CICA/PICAs)
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Independence Standards

• Guidance to identify potential threats to
  independence
• Safeguards to protect independence
• Prohibits auditors from providing a number of
  non-assurance services to clients
• Principle based incorporates international
  thinking

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New World Order
US FASB
CAN AcSB
UK ASB
AUS AASB
IASB
NZ ARSB
D GASB
F CNC
J JASB
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New World Order

• Common conceptual frameworks
• Europe mandate IFRS from 2005
• Australia mandates IFRS from 2005
• NZ mandates IFRS from 2007
• US signs convergence protocol

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Discussion
For more information Bookmark www.cica.ca