Whats New and Coming in Financial Reporting and

What’s New and Coming in Financial Reporting and Related Engagements This material deals with complex matters and may not apply to particular facts and circumstances. As well, the material and the references contained therein reflect standards and practices that are subject to change. For these reasons, the material should not be relied upon as a substitute for specialized professional advice in connection with a particular matter. Although the material has been carefully prepared, none of the persons involved in the preparation accepts any legal responsibility for its contents or any consequences arising from its use. What’s New

The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails. – William Arthur Ward What’s New 2

• Private Enterprises • Not-for-Profit Organizations • IFRS • Canadian Auditing Standards • Assurance and Related Services Standards • Practice Matters and Practice Inspection What’s New 3

Private Enterprises • Completed Projects – 2017 Annual Improvements –Post-implementation Review: Section 3856, Financial Instruments –Subsidiaries, Interests in Joint Arrangements and Investments What’s New 4

Private Enterprises • Active Projects – Agriculture – Consultation on Priorities for Part II – Retractable or Mandatorily Redeemable Shares Issued in a Tax Planning Arrangement (renamed Redeemable Preferred Shares Issued in a Tax Planning Arrangement) – Financial Instruments What’s New 5

Private Enterprises • Agriculture • when an asset should be recognized • measurement on initial recognition • measurement in subsequent periods • accounting for agricultural produce • disclosure – Discussion Paper – December 2015 – ED being developed – no later than Q 3 2018 What’s New 6

Private Enterprises • Consultation on Priorities for Part II – Targeted outreach (surveys, advisory committees, consultations) – Consider for future projects What’s New 7

Private Enterprises • Consultation on Priorities for Part II – Post-implementation review of 3856 – Targeted • Section 1000 - Financial Statement Concepts • Section 3400 – Revenue • Section 3840 - Related Party Transactions – Current status - research ongoing What’s New 8

Private Enterprises • Redeemable Preferred Shares Issued in a Tax Planning Arrangement What’s New 9

Private Enterprises • Exposure Draft – September 2017 – Classification exception – control retained – Guidance on control assessment – Reclassification from equity when exception no longer met – Prohibition on transfer from liability to equity – Liability – measure at redemption amount – Guidance for equity component if liability – Retrospective What’s New 10

Private Enterprises • Accounting for Related Party Financial Instruments and Significant Risk Disclosures - Exposure Draft - October 2017 – Initial and subsequent measurement of RP FI – Initial measurement of compound RP FI – Impairment and forgiveness of RP FI – Modification and extinguishment of RP FI – Disclosure – Retrospective (with transitional provision) What’s New 11

Not-for-Profit Organizations • Completed Projects – Joint Not-for-Profit Review • Statement of Principles – issued 2013 – Accounting Standards Improvements for Notfor-Profit Organizations What’s New 12

Not-for-Profit Organizations • Accounting Standards Improvements for Notfor-Profit Organizations – Fiscal years beginning January 1, 2019 – Section 4433 - Tangible Capital Assets Held by Not-for-Profit Organizations (replace Section 4431) – Section 4434 - Intangible Assets Held by Not-for. Profit Organizations (replace Section 4432) – Section 4441 - Collections Held by Not-for-Profit Organizations (replace Section 4440) What’s New 13

Not-for-Profit Organizations • Key Features – Tangible capital assets and intangible assets • Follow Part II, except contributed assets and write downs – Works of art, historical treasures and similar items not part of a collection • Continue to account for as tangible capital assets, intangible assets, investments or as inventory What’s New 14

Not-for-Profit Organizations – Collections • Recorded - cost or at nominal value • Guidance on cost, impairment • Guidance on disposal – Transition • 4433 & 4434 – prospective (with transitional guidance) • 4441 - retrospective (with transitional guidance) What’s New 15

Not-for-Profit Organizations • Active Projects – Contributions – Revenue Recognition and Related Matters • Pledges, Stipulations, Contributions of materials and services • Elimination of $500, 000 size exemption • Apply Part II presentation standards What’s New 16

Not-for-Profit Organizations • Reporting Controlled and Related Entities by Not-for-Profit Organizations – Deferred What’s New 17

IFRS • Effective January 1, 2018 – IFRS 15 - Revenue from Contracts with Customers – IFRS 9 - Financial Instruments • Effective January 1, 2019 – IFRS 16 – Leases • Influence on ASPE? What’s New 18

Canadian Auditing Standards • Auditor Reporting – Pre 2010 What’s New 19

Canadian Auditing Standards – Periods ending on or after December 14, 2010 What’s New 20

Canadian Auditing Standards – Periods ending on or after December 14, 2018 What’s New 21

Canadian Auditing Standards • For all audits – Opinion section first – Enhanced reporting on going concern – Affirmative statement about auditor’s independence – Enhanced description of auditor’s responsibilities What’s New 22

Canadian Auditing Standards • Listed entities – New section to communicate key audit matters • Required significant auditor attention • High risk • Significant judgments • Significant events/transactions – Disclosure of name of the engagement partner What’s New 23

Canadian Auditing Standards • CAS 720 - The Auditor's Responsibilities Relating to Other Information – Documents issued in connection with the release of the financial statements • Annual report • MD&A – Emphasis on identifying inconsistent, unreasonable, inappropriate What’s New 24

Canadian Auditing Standards • Other new reporting standards – CAS 800, Special Considerations – Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks – CAS 805, Special Considerations – Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement – CAS 810, Engagements to Report on Summary Financial Statements What’s New 25

Canadian Auditing Standards • Active Projects – Auditing Accounting Estimates – Auditor Reporting – Group Audits – Identifying and Assessing the Risks of Material Misstatement – Quality Control What’s New 26

Assurance and Related Services Standards • Completed Projects – Standards for Review Engagements – Special Reports – Assurance on Compliance with Agreements, Statutes and Regulations • CSAE 3530 - Attestation Engagements to Report on Compliance • CSAE 3531 - Direct Engagements to Report on Compliance What’s New 27

Assurance and Related Services Standards • Active Projects – Agreed-upon Procedures – Auditor’s Consent to the Use of the Auditor’s Report in Connection with Designated Documents – Compilation Engagements – Reporting on Controls at a Service Organization What’s New 28

Practice Matters and Practice Inspection • SME Audit Issues – IAASB project to explore the challenges in auditing small and medium-sized entities – Consultation paper to be issued later this year – IAASB working to improve the way it describes requirements to have a degree of conditionality (consider size and complexity) – Separate standards for SME? – Different services for SME (not full audit)? What’s New 29

Practice Matters and Practice Inspection • Reporting Performance Measures – June 2018 – Draft Framework for Reporting Performance Measures – Concerns • Quality of performance measures • Lack of consistency, transparency, comparability • “Expectation Gap” • Limited guidance What’s New 30

Practice Matters and Practice Inspection • Focus on Practice Inspection Reportable Deficiencies – 2016 -17 – Issued October 2017 What’s New 31

Practice Matters and Practice Inspection • Keeping Current – Knotia – knotia. ca – CPA Canada – cpacanada. ca – Financial Reporting & Assurance Standards Canada – frascanada. ca What’s New 32

Wrap-Up • Thank you for participating today • Any Questions? What’s New 33