ThinkTWENTY20

• Friend, Lover Or Fraudster? The CSA warns of Online Relationships Turning into Investment Scams
  https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=713

  Companies See ESG As Opportunity to Rise Above Competitors
  https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=712

  Ransomware: Securing Your First & Last Lines of Defence
  https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=711

  New Deloitte Research Highlights Increasing Concern About Climate Change
  https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=710

  Federal Security Agencies Warn of Potential Russian-Sponsored Cyberattacks https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=707

  Cybersecurity Spending Areas to Evaluate
  https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=704

  KPMG US: Investing in Our People
  https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=702

  IESBA Staff Releases FAQS on Revised Fee-Related Provisions of IESBA Code
  https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=701

  Great Expectations? What’s in Store for 2022 in the ESG and Climate Reporting Landscape
  https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=700

  Getting To Net Zero: An Assessment Of 20 Canadian Companies, Their Climate-Action Plans, And How They Communicate Them
  https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=699

  The Path Ahead: Predictions for the Next 20 Years: Anything is Possible https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=698

  Corruption Levels Show No Improvement, Tested in Part By COVID-19 https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=697

• U.S. SEC Chair Gensler Maps Out Potential Overhaul to Agency's Cyber Rules https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=696

  COVID-19 Dampens Business Leaders’ Optimism https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=695

• Canadian Securities Regulators Adopt Changes to Auditor Oversight Rules
  https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=693

  New Deloitte Global Report Shows Audit Committees are Unprepared for Climate Change
  https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=692

  Why Crypto Scams Are the Top Threat to Investors
  https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=691

  Director Survey by Deloitte: How the Pandemic Has Set New M&A Priorities
  https://thinktwenty20.com/index.php/688-director-survey-how-the-pandemic-has-set-new-m-a-priorities?layout=edit

  Here is a review of the article in our Winter 2021 issue by Gundi Jeffrey "How XBRL Supports More Meaningful Corporate Financial Reports in Regulatory Filings" by XBRL International. She interviewed Mike Willis, Associate Director in the US Securities and Exchange Commission’s (SEC) Division of Economic and Risk Analysis, head of its Office of Data Science and Innovation, and founding Chair of XBRL International and Kim B. Eriksen, founding partner and CEO of ParsePort. The review can be found at
  https://www.xbrl.org/news/more-meaningful-reporting-with-xbrl/

  Global Engagement Against Corruption: IFAC at the UNCAC CoSP9
  https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=682

  IBM Releases Study on How to Thrive in a Post-Pandemic Reality
  https://thinktwenty20.com/index.php?option=com_content&view=article&layout=edit&id=680 

• The Institute of Internal Auditors and ACCA Renew MoU
  On December 13, 2021, the Institute of Internal Auditors (IIA) and the Association of Chartered Certified Accountants (ACCA) renewed their existing memorandum of understanding (MOU).
  
  The three-year agreement will further strengthen and extend the current cooperation agreement and allow both bodies to continue to work closely together to advance their respective professions.
• The new Memorandum of Understanding was signed by IIA President and CEO Anthony Pugliese, CIA, CPA, CGMA, CITP and ACCA Chief Executive Helen Brand. Under the terms of the agreement, The IIA and ACCA will focus on advancing their members' careers, enhancing governance practices and serving the public interest.
• "This MOU builds on an already strong working relationship with ACCA," said Pugliese. "We look forward to our ongoing collaboration together. Internal audit plays a vital role in providing the independent, internal assurance that supports all types of external disclosures, so our global organizations represent complementary functions in many areas."
• The IIA and ACCA are partnering on joint research that will uncover new insights and solutions to address the ongoing impacts of digital transformation on internal control frameworks. The report will be released in 2022 and will provide important perspectives and guidance for internal auditors, Boards of Directors, regulators and other stakeholders. In addition, the organizations are exploring opportunities to conduct global research related to environmental, social and governance (ESG) and diversity, equity and inclusion (DEI). This research will seek to identify data and trends that will help advance the role and impact of internal auditors as leaders in these emerging areas, which are of vital importance to effective corporate governance and public trust.
  The parties will advocate for each other's qualifications and use their own channels to promote their partnership. They'll also raise awareness and promote advocacy of respective initiatives and programs to reflect the distinct but complementary roles played by professionals in the fields of accounting, public financial management, external audit and internal audit, in respect to effective governance; including The IIA's International Standards for the Professional Practice of Internal Auditing, as well as The Three Lines Model. 
• For more, see The Institute of Internal Auditors and ACCA Renew MoU (prnewswire.com).
   

• Connectivity, Core Work and Convergence – What’s Next for IFRS?
  In a speech delivered December 7, 2021, to delegates at the AICPA and CIMA Conference on Current SEC and PCAOB Developments in Washington, Andreas Barckow, Chair of the International Accounting Standards Board (IASB) said that, given the role IFRS Accounting Standards play in United States – and worldwide – he would focus on three strategic topics: sustainability, the IASB’s current and future work program and convergence.

  He began with sustainability, saying “the principle-based nature of IFRS means that sustainability issues such as climate change and other emerging risks are already covered by our existing requirements, even though such risks are not explicitly referenced—companies are required to consider sustainability-related matters in their financial statements when their effect is material to users of the financial statements.”

  About a year ago, the IASB published educational material that highlighted the potential relationship between current IFRS requirements and climate-related matters. “The bottom line is that even if a Standard does not say ‘this applies to risks and obligations arising from climate-related matters, too’, those requirements need to be considered.”

  Sustainability has become a mainstream topic for every company board of directors, Barckow said. “The topic is making its way from the investor relations and communications functions straight to the finance department, and for good reason – it is here where robust processes and controls resides. So, for those involved in financial reporting, let me assure you – sustainability is going to become part of your day job – if it isn’t already!”

  Barckow noted that the job of the new the International Sustainability Standards Board (ISSB) is to develop a comprehensive global baseline of investor-focused, sustainability-related disclosure standards for the global capital markets. “To facilitate a running start of the new Board, the ISSB will benefit from recommendations to create two standards – one on climate-related disclosures and one on general disclosure. These recommendations – or prototypes—have been developed in a joint effort by the IASB and leading investor-focused sustainability organizations.

  While both the ISSB and the IASB will be independent, he said, “our Trustees have made clear that the two Boards are expected to work in very close cooperation to drive compatible reporting from the outset. This is a message that we have also heard loud and clear from our stakeholders and advisory bodies – connectivity between accounting requirements and sustainability disclosure requirements is essential. The left hand must work in sync with the right. Hence, we will strive to make our Standards compatible and complementary – to facilitate seamless reporting by companies to provide investors with a comprehensive, decision-useful set of information.”
  
  He pointed out, however, that there is also clear delineation between the boards’ responsibilities. “The IASB is predominantly focused on reporting transactions and events that have taken place up until the reporting date; the ISSB’s focus is on risk and opportunities that could impact the company’s future value and cashflows. We must work to avoid gaps, frictions or unnecessary overlaps in the two boards’ literature. The two types of information should neatly fit together like two pieces in a puzzle.”

  Working with the ISSB will be important, Barckow said, “but we also have a lot to get on with ourselves.” Some of the bigger projects on the IASB’s current agenda include Primary Financial Statements, Post-implementation Reviews and Goodwill and Impairment.

  He also noted that among the new projects stakeholders have suggested as high priorities for the IASB’s future work plan include work on climate-related risks (including pollutant pricing mechanisms), cryptocurrencies and related transactions, going concern, intangible assets and the statement of cash flows. “We yet need to determine whether these issues are all for us – some items in this list may be better suited to the ISSB or may be areas to be considered jointly – and whether and how we should approach them. I have already confessed that I am very interested in starting work on intangibles. It’s a thorny issue but one where I think transparency is utterly needed and where I am sure we can make improvements.”

  For much more of Barckow’s informative speech, read IFRS - Connectivity, core work and convergence—what next for IFRS Accounting Standards?

  Stephen R. Bown & Mark Carney Win 2021 National Business Book Award
  For the first time in its 36-year history, two authors have been named winners of the National Business Book Award (NBBA) and its $30,000 prize. As announced in a press release dated December 8, 2021, “in an extraordinary year for the award, with its longest list ever of worthy nominees, Stephen R. Bown’s The Company: The Rise and Fall of the Hudson’s Bay Empire and Mark Carney’s Value(s): Building A Better World for All best exemplified the wide range and high calibre of outstanding Canadian business writing.”

  The Company: The Rise and Fall of the Hudson’s Bay Empire, published by Doubleday Canada, provides a fresh perspective on Canada’s founding myth. In re-telling the story of the Hudson’s Bay Company and its foundational role in the early development of our country, author Stephen Bown highlights the critical role that collaborative relationships with First Nations played in the venture’s earliest success. He also chronicles how competition, political agendas, economic shifts, and personalities converged to disrupt that fragile balance, ultimately contributing to the disenfranchisement of Indigenous people as Canada became a nation.

  After decades at the highest levels of domestic and international economic and political policy making, Mark Carney posits that there is opportunity embedded in disruption, offering a chance to forge a new consensus around common goals. Published by Signal/McClelland & Stewart, Value(s): Building a Better World for All is focused on “mission-oriented capitalism” and the solutions that can better address the complex challenges that have surfaced as the second wave of globalization come to an end and the fourth industrial revolution begins. Among those challenges are climate change, income inequality, a crisis of institutional trust and the urgent need for values-based leadership in the public and private sectors. Carney’s book was reviewed, with much acclaim, in the Fall 2021 issue of ThinkTWENTY20.

  For more on the winners of the award and their competitors, see STEPHEN R. BOWN & MARK CARNEY WIN 2021 NATIONAL BUSINESS BOOK AWARD (nbbaward.com)

• Changes Coming to Canada’s Financial Reporting and Assurance Standards
  On December 8, 2021, the Independent Review Committee on Standard Setting in Canada released its Consultation Paper – Independent Review Committee on Standard Setting in Canada (ircsscanada.ca). The paper outlines key matters the committee suggests should be considered to keep Canada’s financial reporting and assurance standards independent and internationally recognized.

  The IRCSS invites feedback on how best to do so – both for financial and sustainability standard setting. “Keeping up with the accelerating pace of change is a reality,” says IRCSS Chair Edward J. Waitzer. “We hope our review will result in changes to ensure Canada’s standard-setting processes are fit for the future.”

  The committee notes that the current Canadian standard-setting process has evolved over time. “Developments globally and rapidly shifting needs and expectations of stakeholders have led the committee to identify several key challenges.” These include:

  • A call for action on sustainability reporting standards: The committee recommends creating a Canadian Sustainability Standards Board. This new board would work alongside Canada’s existing standards boards and liaise with the new International Sustainability Standards Board, ensuring that the Canadian perspective is part of international decision making.

  • Safeguarding independence: The committee asks if additional safeguards are needed to keep Canadian standard setting independent, such as revisiting the current legal structure or funding model.

  • Being responsive to stakeholder needs: The committee asks if the established process for setting standards is timely and effective, including engaging the right stakeholders at the right time. The committee’s focus was informed by concerns for the public interest, diversity, equity and inclusion, and Indigenous rights – concepts the committee views as “interrelated and essential to ensuring that standard setting is relevant and responsive to Canada’s unique circumstances,” says Waitzer.

  The paper will be open for public comment until February 28, 2022. The committee welcomes input and hopes to actively engage with interested stakeholders. Feedback gathered will drive the final recommendations the committee makes next summer to Canada’s accounting and auditing oversight councils, who will ultimately decide how the recommendations should be implemented.

• CPAB’s 2022-24 Strategic Plan: Enhancing Confidence in Public Company Audits
  Just released, the Canadian Public Accountability Board (CPAB)’s new strategic plan notes that CPAB is approaching 20 years of independent audit regulation in Canada. “There is much to be proud of, much has been accomplished. We have seen significant advances in audit quality and improvement in the quality control systems at the country’s largest public company audit firms.”

  The report notes that “we have been a catalyst for important changes in advancing audit quality on the international front. But there is more work to be done. Audit attention must be on those matters most important to the investing public. As an important foundation to the integrity, reliability and investment appeal of Canadian capital markets, the quality of audits cannot be static – we must strive for continuous improvement.

  “CPAB cannot stand still either. As we counted down the final months of our 2019-21 three-year strategic plan, we consulted with key stakeholders including investors, audit committees, other regulators and our employees to develop the next steps in our drive for higher quality audits. We also studied the findings from root cause analyses of audit deficiencies which identified common themes related to sufficiency of resources, culture, client acceptance and continuance, industry expertise and the complexity of the organizations and systems being audited.”

  Looking ahead, says the preface to the strategic plan, “we see challenges to audit quality including rising debt levels combined with new opportunities and challenges in emerging industries. Strong audit firm quality management systems will be essential to respond to this current environment and drive consistent levels of audit quality.

  “Over 2022-24, our strategic focus will be on the impact of and improvements needed in the culture and governance of audit firms responsible for public company audits, addressing audit quality issues related to Canada’s emerging industries, influencing changes to how the audit is performed, and supporting an outstanding team committed to serving the public interest. In addition, we’ll take a step back and perform an operational review to assess which activities and regulatory approaches have been most effective in advancing audit quality and identify opportunities to enhance our regulatory toolkit.”

  CPAB adds that, over the strategic planning period, “we will also complete the review of our public disclosures, which we consulted on in 2021, respond to the feedback received and make any required changes to what we disclose.”

  The team carrying out this work is critical, says CPAB. “We’ll be counting on our people to get this important work done; helping them to achieve their professional goals and supporting their workplace needs will be key to meeting our strategic commitments. We’ll also engage with other capital market regulators in Canada and around the world to drive quality improvements.”

  What will be different as a result of these efforts? According to CPAB, “over the next three years, we expect to see cultural changes at the audit firms that will reinforce their priority commitment to delivering high-quality audits. We will be agile and flexible in our focus on high-quality audits and financial reporting, adapting and getting ahead of challenges arising from emerging industries and novel issues.”

  For all the important steps that are part of the plan, and the outcomes expected, see 2022-24-strategic-plan-en.pdf (cpab-ccrc.ca).

• The Must-have CFO Skills for 2022
  A December 1,2021 on-line article in INTHEBLACK, the magazine published by CPA Australia, asked three finance leaders share the skills they will rely on in 2022. Here’s What the first one had to say.

  If the pandemic has taught us anything, says Lawrie Tremaine, FCPA, the CFO of Origin Energy, “it’s the importance of being ready to move at speed when we need to, which makes for a more resilient organization and culture.”

  He strongly believes that the job of running a business better is never finished. “However, having a strong purpose, a focus on getting the basics right and making it easier for our people to do their jobs stood us in good stead to navigate the pandemic. “The relatively seamless move to remote work and having robust systems and processes in place meant that we were able to execute and announce a major transaction less than two months into last year’s first lockdown. This year, the team delivered our end-of-year reporting remotely.”

  He adds that “listening to our people, customers and suppliers – and working out how we can help them – remains a key skill. We stepped up our focus on mental health and wellbeing for our people, extended assistance on energy bills for customers and reduced payment terms for the many small businesses we work with to help with cash flow.”

  He’s proud that, despite a challenging year, “we kept moving forward on our strategy. Reducing capital expenditure and improving cost performance allowed us to invest in a number of opportunities that will set Origin up well in the medium to longer term.”

  Tremaine believes that 2022 will likely feature continued restrictions in one form or another. “Regular communication, both formal and informal, and strong, visible leadership will be crucial, particularly with a large part of our workforce either working remotely or adopting a hybrid work model.”

  For the insights shared by the two other executives, please have a look at The must-have CFO skills for 2022 | INTHEBLACK.

  China, Sweden and Germany Lead the Way on the EY Electric Vehicle Country Readiness Index
  EY’s first Electric Vehicle Country Readiness Index puts China in first position in the global race for the transition to electric vehicles (EV). Sweden and Germany were in second and third place, respectively. According to the research findings, “a strong battery manufacturing sector, widespread charging infrastructure and government policy helps propel China to the top of the Index, which ranks the 10 leading automotive markets globally. The Index accounts for 75% of the global light-vehicle market – measured based on supply, demand and regulation.”

  Randy Miller, EY Global Advanced Manufacturing & Mobility Leader, says that, “as we approach the tipping point for global EV sales in 2033, the key questions are how we’ll get there and who will lead the way. This is not a competition, but the Index clearly highlights that some markets are doing better than others. Following the recent UN Climate Change Conference, ‘COP26,’ decarbonization of transport is set to be one of the key levers in helping the world tackle climate change. If countries want to reduce their carbon emissions, then governments and industry need to work together to meet the challenge by adopting sensible regulation and facilitating robust supply chains and consumer demand. The Index and research that underpins it can be used to help governments and manufacturers get further down the road toward a decarbonized future.”

  The Index shows that China, Sweden and Germany currently lead the rankings due to key EV market strengths such as original equipment manufacturer (OEM) presence, policy support and battery supply. The UK ranks fourth overall but features ahead of Sweden and Germany at third position in both the regulatory and demand readiness categories. The US lags major European markets in terms of EV demand, in part due to a lack of nationwide internal combustion engine (ICE) phase-out targets and continued poor consumer perception toward EVs.

  Canada, Italy and India occupy the last three places in the ranking. With a phase-out target of 2040 for ICE vehicles, Canada is 6th position in the regulatory rankings, yet struggles in relation to supply (9th) and demand (10th) along with Italy (8th in both supply and demand) and India (10th and 9th). This, notes the Index, is due to a range of factors, including insufficient charging infrastructure, fewer EV models available and high consumer preference for ICE vehicles.

  Governments across the globe are aiming to stimulate both demand and supply for EVs through initiatives such as the European Green Deal (Fit for 55), the UK Transport Decarbonisation plan and the US bipartisan Infrastructure Investment and Jobs Act.

  China tops the regulatory category, with the government adopting stringent emissions regulations as well as EV purchase incentives to set up a supportive EV ecosystem.

  Miller finds it “encouraging to see many governments implementing much needed regulation, challenging OEMs and industry to meet goals but also providing incentives for consumers to help them on the journey to electrification. However, we still need more collaboration and coopetition. The transition to EVs is too complex and challenging for one company or one industry alone to overcome. Industry players across the mobility, power and utilities, private equity and energy industries, as well as government, must come together to create an ecosystem that is efficient, interconnected and profitable.”

  For more on the Index findings and what the mean, go to China, Sweden and Germany lead the way on the EY Electric Vehicle Country Readiness Index | EY - Global.

• What COP26 Commitments Mean for Accounting and Finance
  Climate goals need to be underpinned by clear plans and data. Accountants can play a leadership role in strategy formation and sustainability reporting, say Alexis See Tho in the November 2021 issue of FM Financial Management.

• The high-profile UN climate change conference wrapped up in early November, with commitments and announcements to avert catastrophic effects of climate change that, if followed through, will have widespread implications for businesses and organizations.

  For finance professionals, says Tho, “working in companies with climate commitments or that supply such companies, the next key step is to help draw out a strategy with comprehensive and detailed plans.”

  As part of that, companies should also understand the difference between a decarbonization strategy and a transition strategy. “Decarbonization focuses on reducing greenhouse gas emissions, whereas a transition strategy focuses on shifting from a fossil-fuel-reliant business to a new model that operates within planetary boundaries. An example of a transition strategy would be fossil-fuel companies' investment into renewable energy and low-carbon technologies.”

  Following a strategy, organizations will need to report on actions taken and how they are progressing in their commitments.

  Tho pints out that, for the accounting and finance profession, “the most significant development was the IFRS Foundation's announcement of the creation of the International Sustainability Standards Board (ISSB) and the IFRS Foundation's planned consolidation of the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF), which houses the Integrated Reporting Framework and the Sustainability Accounting Standards Board standards, by June 2022. At the same time, two prototypes were released, offering an early look at the focus areas of the upcoming global standard for sustainability reporting.”
  .
  Kalra of Olam Food Ingredients said that CFOs should start thinking of getting data from the source and measure, manage, and report on relevant metrics. An important element in getting started is in training the finance team. "I see a big risk that there aren't enough finance professionals existing today who understand and know this [sustainability reporting]," he said. "It cannot be greenwashing where you have made a commitment, but you don't know how you'll make it happen. Goals have to be underpinned by actual systems, processes, and data. Lastly, it's about giving and getting assurance on a sustainability report."

  Companies' recognition of the climate crisis is an opportunity for accountants to take the lead in supporting business decisions, said Rohit Selvaratnam, FCMA, CGMA, the CFO of Celsus, a public-private entity that is responsible for the commercial operations of the Royal Adelaide Hospital in Australia. "This is an opportunity for accountants and CFOs to take the lead versus being led," he said. "We as accountants and finance people need to recognize that individuals are placing greater emphasis on their responsibility toward the environment and the community."

  For more, see What COP26 commitments mean for accounting and finance - FM (fm-magazine.com).

  The Main Challenges of Public Sector Accounting Reforms and the World Bank’s Public Sector Accounting and Reporting (PULSAR) Program

• An important article recently posted on IFAC’s Knowledge Gateway, written by Dimitri Gourfinkel, Governance Global Practice, World Bank Group, Washington, discusses the relevance of Public Sector Accounting (PSA) reforms currently under way, their key approaches and challenges, and the role of the World Bank’s PULSAR Program in supporting the Western Balkan and Eastern Partnership countries in their efforts to strengthen their current PSA systems.

  Gourfinkel notes that governments are entrusted to manage public resources and deliver a wide range of public services in a sound, cost-effective, and sustainable manner. “However, many countries still face significant challenges in the quality of financial reporting, including its consistency and comparability, which are often caused by a lack of underlying accounting systems that comprehensively capture all economic activities.”

  In this context, he says, “the implementation of PSA reforms, based on a robust set of international standards for the public sector and good international practices, such as International Public Sector Accounting Standards (IPSAS), represents an opportunity for governments to not only improve the quality and reliability of their public financial information that could be used for decision-making, but also to:
  • Assess the financial position, financial performance and cash flows of the governments.
  • Promote consistency and further comparability with peers at both regional and global levels.
  • Strengthen public investment planning and state assets management.
  • Achieve greater levels of fiscal transparency and accountability.”

  Gourfinkel then points out that, “according to the International Public Sector Financial Accountability Index 2021 status report, issued by the International Federation of Accountants (IFAC) and the Chartered Institute of Public Finance and Accountancy (CIPFA), 30% of the governments currently report on accrual-based accounting, while 40% of governments are transitioning from cash to accrual-based reporting. Moreover, 57% of the governments that have already adopted accrual-based accounting are making use of IPSAS. It is also expected that, by the end of 2025, 73% of the countries will report on an accrual basis and either use IPSAS as a reference point or apply IPSAS directly or indirectly.”

  In this context, Gourfinkel says, “the following approaches of the PSA reform implementation might be observed across the globe: (i) adoption of cash or accrual basis IPSAS; (ii) transition from cash to accrual-based accounting; (iii) development of national PSA standards, which might or not be aligned with the IPSAS or with the International Financial Reporting Standards (IFRS); and (iv) PSA harmonization between different levels of government (national vis-à-vis subnational).”

  Meanwhile, he notes, the main objective of the World Bank’s PULSAR Program is to support the enhancement of PSA and financial reporting frameworks of participating countries in line with international standards and in accordance with good practices, in order to: (i) improve government accountability, transparency, and performance; and (ii) provide a platform for knowledge sharing.

  But, in practice, says Gourfinkel, “many countries and different jurisdictions face multiple challenges associated with PSA reform implementation, including: (i) political support and willingness of the key stakeholders to initiate and carry out the reform; (ii) agreement on a reform strategy and feasible implementation timeline; (iii) establishment of proper reform coordination and management arrangements; (iv) availability of required resources, including financial and human; (v) amendment of legal and regulatory frameworks; (vi) definition of structure of the new PSA system; (vii) definition of risk management and mitigation mechanisms; (viii) development of change management and capacity building strategy; (ix) integration between different PFM functions, and upgrading the existing or development of a new IFMIS; (x) establishment of monitoring and evaluation arrangements.”

  In this context, Gourfinkel lauds the World Bank’s PULSAR Program as representing “a valuable source of knowledge generation and sharing, and also acts as catalyst for promoting PSA reforms in beneficiary countries. Its regional and country dimensions and their respective subtasks allow to raise awareness of PSA reform rationale as well as to support the design and implementation of financial reporting frameworks and the knowledge development of accountants and finance professionals.”

  For more on how countries are dealing with the challenges of PSA reforms and the help and advice the World Bank is offering, please read Gourfinkle’s complete article at The Main Challenges of Public Sector Accounting Reforms and World Bank’s Public Sector Accounting and Reporting (PULSAR) Program | IFAC.

• COP26 A Seismic Moment for Businesses On Climate Change
  Financial firms’ pledges and the creation of a global standards body are among moves to boost sustainable business, say Ross Kerber and Simon Jessop in a November 8, 2021 article in FM Financial Management magazine.

  A week into the UN's high-profile climate conference in Glasgow, executives and financial analysts said they are optimistic the talks will lead to changes needed for business to play a bigger role in tackling climate change.

  For investors and companies, the most significant step at the conference was the creation on November 3 of the International Sustainability Standards Board, meant to create a baseline for companies to describe their climate impact. According to Peter Lacy, Accenture's global sustainability services lead, “it a seismic moment for business and in line with the hopes of CEOs Accenture surveyed ahead of the conference.”

  The new board, Lacy said, "will give investors and stakeholders a much better understanding of related risks and opportunities and help guide the allocation of the huge amount of capital needed as the world transitions to net zero.”

  Some business observers at the conference pointed to several steps by world leaders they said could boost sustainable business and investing efforts to mobilize the vast sums of money needed to wean the world off fossil fuels. These include a pledge by financial firms with a combined $130 trillion in assets to focus on climate change, the creation of a global standards body to standardize corporate climate claims, and pledges to cut methane emissions and to save forests.

  According to the article, although many of the steps lacked specific promises, “they showed a global consensus forming to tackle climate change that will make it easier for private investors and governments to put in money and effort.”

  Critics say many of the conference's key announcements lack specifics and give companies wiggle room. For instance, banks, insurers, and investors pledged to work to cut emissions to net zero by 2050, but each entity has made its own net-zero commitments "with potential overlap across initiatives, institutions, and assets," according to the group's press statement.

  A well, says the article, quoting Leslie Samuelrich, president of Green Century Capital Management in Boston, "the speed with which some have adopted this makes me cautious.”
  But other finance executives say, according to the article, that it is inevitable businesses will move to cut emissions under pressure from customers and to chase profits

  For more on this topic, go to COP26 a seismic moment for businesses on climate change - FM (fm-magazine.com).

  US-China Climate Deal Lifts Hopes as UN Talks Turn to Dollars and Cents
  And FM reported more good news November 11, when it posted an article saying that “a surprise deal between China and the US, the world's two biggest greenhouse gas emitters, has boosted the COP26 UN climate summit” as it entered its two final days of tough bargaining to try to stop global warming from becoming catastrophic.

  US climate envoy John Kerry and his Chinese counterpart Xie Zhenhua unveiled a joint declaration late Wednesday in which China, the biggest producer and user of coal, promised to accelerate its transition from the dirtiest fossil fuel.

  According to the FM article, “the deal between two global powers, which have been divided by many diplomatic disputes on other issues, sent a powerful message to COP26, including the producers of the fossil fuels that are the main cause of man-made global warming.”

  Although scant on numbers, summit leaders said it offered a strong signal to other countries and could persuade them to do more to seal agreement at the summit. "This is a boost to negotiations as we go into the final days of COP26 and continue working to deliver an ambitious outcome for the planet," UK Prime Minister Boris Johnson said on Twitter.

  Kerry told a news conference: "Together we set out our support for a successful COP26, including certain elements which will promote ambition."

  China, home to half the world's coal-fired plants, said it would begin phasing out its coal consumption from 2026 to 2030 and also cut its emissions of methane, a greenhouse gas many times more potent than carbon dioxide.

  "It's really encouraging to see that those countries that were at odds in so many areas have found common ground on what is the biggest challenge humanity faces today," EU climate policy chief Frans Timmermans told Reuters.

  For much more, read US-China climate deal lifts hopes as UN talks turn to dollars and cents - FM (fm-magazine.com).
  
  COVID-19 Pandemic Leading to Higher Levels of Employee Burnout
  Even though more companies than ever are offering a better work-life balance through the use of hybrid work schedules, employee burnout and turnover are on the rise. A new study from MindEdge Learning and the HR Certification Institute, released late October, 80% of respondents said they are seeing an increase in employee burnout, with 37% citing a major increase. This according to an October 28, 2021 article in TechRepublic, which also points out that burnout is a widespread problem, regardless of industry."

  The article quotes Toni Frana, career coach and team lead at FlexJobs and Remote.co as saying that, "especially with remote work, where job and personal responsibilities are happening in the same space, even in the best of times there are friction points when balancing work and life. The pandemic has amplified these issues for everyone."

  And, says the article, a recent FlexJobs survey found that 56% of remote workers experienced burnout during the pandemic, with 39% stating their mental health is worse now than it was in January 2020.

  Realizing this to be a serious issue, most MindEdge survey respondents said their organizations are introducing ways to reduce stress or plan to do so, a 9% increase over 2020's survey responses. Only 38% of respondents said their organizations were not doing anything to address employee burnout.

  Employee turnover also is a major concern for HR. A majority (54%) of respondents said turnover is higher today than before the pandemic.

  "I think there are other factors affecting turnover," said Frank Connolly, director of communications and research at MindEdge Learning. "Some people are reassessing their career goals and their life goals because of what they've been through in the last year-and-a-half.”

  The pandemic also has forced a large majority of organizations to implement hybrid work arrangements to offer full- and/or part-time remote work structures, a trend that will likely continue into the future, the survey found. With 63% of respondents reporting their organizations have instituted remote work programs that will likely continue for some time, 52% said they are hiring at a faster rate than before the pandemic. At 63%, respectively, healthcare and manufacturing are experiencing the greatest rates of increased hiring. Only 13% of respondents said they were hiring at a slower rate than before the pandemic, or not hiring at all.

  For more on this survey, check out COVID-19 pandemic leading to higher levels of employee burnout - TechRepublic.

• Next, a Sustainability Standards Board for Canada
  The need for a Canadian Sustainability Standards Board is clearer than ever, says Edward J. Waitzer, Chair of the Independent Review Committee on Standard Setting in Canada, in a press release issued by CPA Canada November 9, 2021.

  “Growing demand for disclosing sustainability information has led to environmental, social, and governance (ESG) reporting initiatives worldwide,” Waitzer notes. “This is all well and good, but the diversity and even conflicting guidance isn’t getting us to where we need to be. After years of too few standards, there may now be too many.”

  The new International Sustainability Standards Board (ISSB) announced last week is set to respond to a much-needed consistent approach at a global level by addressing the disparities in the guidance and frameworks on ESG reporting that have resulted in limited effectiveness and increased reporting complexity.

  The Independent Review Committee on Standard Setting in Canada is working to review the governance and structure for existing Canadian accounting, auditing and assurance standards and to identify what might be needed for the future – specifically sustainability standards, Waitzer says. “Our goal is to ensure that Canadian standard setting continues to be relevant and responsive, as well as independent and internationally recognized.

  “As a result, we think it is critical to establish a Canadian Sustainability Standards Board that works alongside Canada’s existing accounting, auditing, and assurance standards bodies.” A Canadian Sustainability Standards Board will also liaise with the new ISSB, ensuring that the Canadian perspective is part of international decision making. The committee will be issuing a consultation paper in early December 2021 that will outline its thinking on why a Canadian Sustainability Standards Board is important, seeking comment on the design of such a standard-setting body and other key matters it sees as being relevant to existing standard-setting processes.”

  The consultation paper will be open for public comment until February 28, 2022, Waitzer says, “and the committee hopes to actively engage with a broad range of stakeholders. Feedback will drive the final recommendations the committee makes next summer to Canada’s accounting and auditing oversight councils, who will ultimately decide how the recommendations should be implemented.”

  For more information see IRCSSCanada.ca.

  The Audit Committee Frontier: Addressing Climate Change
  A recent Deloitte global survey found that audit committees around the world are unprepared for climate change. The finding stems from a survey described in the first issue of the Deloitte Global Boardroom Program’s new series, The Audit Committee Frontier, which aimed to answer the question: What are leading practices for audit committees with respect to climate?

  The Audit Committee Frontier report, which features findings from a survey of more than 350 audit committee members spanning 40 countries, revealed several obstacles standing in the way toward progress, “each of which point to a broader sense of uncertainty surrounding climate and sustainability in the boardroom and companies at large.” The report also details potential solutions for audit committees struggling to help their organizations address climate change.

  The two main takeaways from the survey are:
  • Most audit committees worldwide do not discuss climate on a regular basis, barely half consider themselves “climate literate,” and half do not believe they are well equipped to fulfill their climate regulatory responsibilities
  • Forty-two percent of respondents say they are disappointed in the strength and speed of their organization’s climate response, and 65% say their companies lack a clear strategy on climate
  As a start, therefore, says the report, “businesses should be assessing their own environmental risk profiles, establishing mitigation plans to reduce their carbon footprints, and accurately reporting on their progress. With this in mind, audit committees are beginning to address how assumptions about the future should be reflected in financial statements and risk assessments. However, for many, incorporating assumptions about our changing climate into both financial reporting and the data and narrative of non-financial reporting is a daunting task.”

  Among the survey results is one that found nearly 60% of all audit committee members surveyed indicated that they do not discuss climate on a regular basis, and over half do not consider themselves ‘climate literate.’ Informative climate reporting requires a complex transformation of reporting processes, of data collection, education of the finance function and, in many cases, of the audit committee itself.”

  Yet, despite the urgency and magnitude of the task, many boards are hesitating in the face of inconsistent standards, fragmented global standard-setting, and myriad expectations from investors. According to the report, “the good news is that the World Economic Forum has identified a set of global ESG reporting standards which businesses around the world, including Deloitte, are increasingly adopting as part of their own reporting processes.”

  For much more on this survey, download the report at Frontier Topics for Audit Committees: Climate & Audit Committee | Deloitte Global.

  IAASB Publishes First Digital Handbook, Enhancing Capacity and Accessibility of Standards
  The first fully digital International Auditing and Assurance Standards Board (IAASB) handbook of pronouncements is now live on a new web application, e-International Standards (eIS). The press release announcing the new version of the Handbook says that “the first iteration of the platform marks a milestone in the IAASB’s commitment to improving the usability of and access to its standards by harnessing technology. For the first time, users will be able to benefit from optimized search functions, cut and paste capabilities, and easy navigation.”

  “The launch of our digital standards platform responds to the demand for increased accessibility and is another step in pursuing our strategic objective of benefiting from technological innovation,” said IAASB Chair Tom Seidenstein. “Over time, we will continue to improve e-International Standards to account for user feedback and improve the usability of the platform and of the IAASB standards.”

  eIS was launched by the International Federation of Accountants (IFAC) and developed collaboratively with IAASB, the International Ethics Standards Board for Accountants (IESBA), and the International Public Sector Accounting Standards Board (IPSASB). “Designed to meet stakeholders’ needs, the platform allows for quick reference to other standard-setting boards’ standards and related resources, driving a strong connection between adherence to IAASB standards and the IESBA’s International Code of Ethics for Professional Accountants.”

  The platform is accessible via the IAASB website or at eis.international-standards.org.

• IFRS Foundation Announces International Sustainability Standards Board, Consolidation with CDSB and VRF and Publication of Prototype Disclosure Requirements
  According to a press release issued November 3, 2021, as world leaders meet in Glasgow for COP26 October 31 to November 12, 2021, the UN global summit to address the critical and urgent issue of climate change, the IFRS Foundation Trustees have announced three significant developments to provide the global financial markets with high-quality disclosures on climate and other sustainability issues:
  • The formation of a new International Sustainability Standards Board (ISSB) to develop – in the public interest – a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs.
  • A commitment by leading investor-focused sustainability disclosure organizations to consolidate into the new board. The IFRS Foundation will complete consolidation of the Climate Disclosure Standards Board (CDSB – an initiative of CDP) and the Value Reporting Foundation (VRF – which houses the Integrated Reporting Framework and the SASB Standards) by June 2022.
  • The publication of prototype climate and general disclosure requirements developed by the Technical Readiness Working Group (TRWG), a group formed by the IFRS Foundation Trustees to undertake preparatory work for the ISSB.

  Together, says the press release, “these developments create the necessary institutional arrangements, set out in the Foundation’s revised Constitution, and lay the technical groundwork for a global sustainability disclosure standard setter for the financial markets. They fulfil the growing and urgent demand for streamlining and formalizing corporate sustainability disclosures.”

  The ISSB will work in close cooperation with the IASB, ensuring connectivity and compatibility between IFRS Accounting Standards and the ISSB’s standards – IFRS Sustainability Disclosure Standards (IFRS SDS). To ensure public interest legitimacy, both boards will be overseen by the Trustees, who are in turn accountable to a Monitoring Board of capital market authorities responsible for corporate reporting in their jurisdictions. The ISSB and the IASB will be independent, and their standards will complement each other to provide comprehensive information to investors and other providers of capital.

  For much more on these developments, see IFRS - IFRS Foundation announces International Sustainability Standards Board, consolidation with CDSB and VRF, and publication of prototype disclosure requirements.

  Montreal Chosen as An Office for New International Sustainability Standards Board
  On the same date, CPA Canada welcomed the IFRS Foundation’s decision to establish an office of the ISSB in Montreal, Quebec. “CPA Canada is among a broad array of private and public institutions and organizations, including the Government of Canada, that came together to back this country’s offer to host the ISSB. Collectively, the group is known as Canadian Champions for Global Sustainability Standards,” says a CPA Canada press release.

  “Selecting Montreal to host an office of the new international Board demonstrates that the IFRS Foundation recognizes this country’s strong commitment to sustainability governance, something showcased by the extensive support behind the Canadian bid,” explains Charles-Antoine St-Jean, president and CEO, CPA Canada. “It is a significant achievement and we look forward to seeing Canada’s role evolve as the ISSB takes shape. The IFRS Foundation has clearly signaled its trust in Canada helping the ISSB establish a global footprint.”

  Once officially launched, the new board – as noted in the press release above – will develop a much-needed set of global standards for reporting on environmental, social and governance matters. This is critical because there are currently multiple reporting frameworks and standards related to sustainability.

  The ISSB will feature a global and multi-office structure. According to the IFRS Foundation announcement: “Offices in Frankfurt (the seat of the Board and the office of the Chair) and in Montreal will be responsible for key functions supporting the new Board and deeper co-operation with regional stakeholders.”

  There will also be offices in San Francisco and London providing technical support and platforms for market engagement and regional stakeholder co-operation. Further discussions are also ongoing in relation to proposals from Beijing and Tokyo to establish the new Board’s footprint in the Asia Oceania region.

  “Canada has a proven history of being an engaging and effective facilitator when it comes to bringing various parties and diverging views together to reach a consensus or in finding a path forward,” says St-Jean. “In this context, Canada is well positioned to engage with developing and emerging economies, which the IFRS Foundation has acknowledged will be an important priority.”

  According to this press release, “Canada has a solid track record of working with global institutions on sustainability and standard setting, including the IFRS Foundation. In fact, Canada’s decision to adopt international financial reporting standards several years ago over U.S. GAAP served as a catalyst in moving other jurisdictions to the international standards.”

  “This country is again ready to be at the forefront as a new standard-setting process is established,” adds St-Jean.
  
  Visit the link https://www.ifrs.org/projects/work-plan/sustainability-reporting/#current-stage for more information on the IFRS Foundation’s work toward establishing the ISSB.

  IFAC Pledges Ongoing Support for New ISSB
  And in yet another press release to appear November 3, IFAC – which comprises 180 member and associate organizations and represents over 3 million professional accountants globally – welcomed the establishment of the International Sustainability Standards Board (ISSB) working in close cooperation with the International Accounting Standards Board (IASB), under the governance structure and leadership of the IFRS Foundation.

  “IFAC congratulates the IFRS Foundation Trustees for moving with unprecedented speed to meet the needs of investors, provide a holistic view of enterprise value, and address the climate crisis. Climate and other sustainability issues are global in nature and the ISSB will deliver a global solution for sustainability disclosure. The multi-jurisdictional footprint of the ISSB reflects this realty and can hopefully facilitate implementation of the ISSB’s standards.”

  IFAC also welcomed the commitments to combine the CDSB and Value Reporting Foundation with the IFRS Foundation, “providing much needed consolidation and contributing support and resources toward the success of the new ISSB.” According to IFAC, “this positions the ISSB to build upon the high-quality work of existing sustainability-related initiatives and harmonize the standard-setting landscape – delivering a comprehensive global baseline of sustainability information material to enterprise value, connected to financial reporting through the fundamental concepts and guiding principles of integrated reporting.”

  “Now is the time for policymakers around the world to focus on how to capitalize on the forthcoming work of the ISSB,” said IFAC CEO Kevin Dancey. “As with the success of IFRS Standards for financial reporting, IOSCO’s support is key. Jurisdictions around the world need to take the next step – deciding to use, implement, and enforce IFRS Sustainability Disclosure Standards as part of a Building Blocks Approach that will deliver the global baseline for sustainability-related reporting needed for investors and capital markets.”

  That approach enables global standards set by the ISSB – compatible with any multistakeholder-focused disclosures that some jurisdictions may require – to result in consistent, comparable, and assurable sustainability-related information that enhances corporate reporting. IFAC urges its member organizations to support this initiative and engage now, at the local level, to help make new global standards into local reporting requirements.

  Read more about IFAC’s support for global sustainability-related standards on the IFAC website.

• Finance Automation Is Critical to Productive Hybrid Working
  The November 2021 issue of FEI Canada Finance and Accounting Review contains an article, sponsored by RICOH, that says “finance automation can help your business save on costs, time, and resources while building resilience in a challenging economy. As a data-driven and knowledge-based function, finance was pre-programmed for the hybrid workplace.”

  The article points out that a recent UK survey showed 83% of 9,000 surveyed finance professionals were keen to adopt hybrid working. “So, what now? The primary task for any organization looking to forge a hybrid working practice is finding the most appropriate technology for your accounting functions to run smoothly.”

  Finance automation, which works to build seamless processes between business finances, suppliers and customers, is critical, the article says. “These systems must afford finance professionals time, data security and flexibility, whether working from home or the office.
  Creating a thriving hybrid working model could be your top priority, but building back resilience is equally important in today’s climate. Automation in finance – specifically for accounts payable – can help with this too.”

  When you prioritize accounts payable, the article adds, “you have the opportunity to strengthen supplier and customer relationships and build profitability back into the business – even when the landscape appears bleak. If financial planning feels impossible, your accounts payable should give you the answers and help you work intuitively in challenging times.”

  Using process automation, accounts payable software makes it possible for employees to digitally receive and process invoices and purchase orders efficiently. The technology also allows everyone to access the exact version of the same document anytime and anywhere.

  The article goes on to say that “critically, automated accounts payable also has precise reporting functions, giving a full sight of cash visibility and putting you in a position to maximize the value of rebates and discounts. For example, if you notice a surplus, you can pay a supplier early, potentially obtaining a discount in the process. In this case, you can build profitability just by monitoring the health of a supplier account.

  For much more, see E-Newsletters | FEI Canada.

  Cybersecurity: Meeting the Emerging Challenge
  In a speech given to the Los Angeles County Bar Association October 29, 2021, SEC Commissioner Elad L. Roisman said that cybersecurity is becoming increasingly important for companies and regulators as more SEC registrants’ operations have moved online. “The threats, strategies, and motives of cybercriminals can take many forms. To name just a few, they may be: simple account intrusions that seek to steal assets from an investor’s or customer’s accounts; ransomware attacks that seek to disable business operations in order to extract payments; and even acts of “hacktivism” that disrupt services to make a political point. Cyber events can often be hard to detect, hard to measure quickly, and can involve reporting obligations to multiple government agencies and stakeholders.”

  The reasons for Roisman’s speech are manifold, he said, “including to emphasize the challenging position SEC registrants, in particular, face when dealing with cyber threats. I also want to stress that the SEC is only one part of the cyber regulatory landscape, but we have some specific requirements and guidance in place about areas on which to focus. He also pointed out that he believes “there is more that the Commission should contemplate in terms of cyber guidance and/or rules to ensure that companies understand our expectations and investors get the benefit of increased disclosure and protections by companies.”

  After a detailed review of the cybersecurity landscape, what it involves, who is being affected and the rules and disclosures in place, Roisman noted that “cybersecurity will only become more important in our personal and professional lives. The SEC, like many government agencies and private parties, is devoting significant resources to assessing and addressing cybersecurity. We are not alone. Congress is also considering legislation in this area and it would be great if we could achieve a cross-federal government solution to the coordination needed among regulators as well as other issues. This is a large and complicated problem, and there is much work left to be done. However, I am happy that we are trying to bring greater clarity and hopefully will work hand-in-hand with the public and registrants to understand what can be done to ensure appropriate cyber-readiness and protections for investors.”

  While he talked a lot about areas where he hoped that the SEC will bring more clarity to registrants in the cybersecurity arena, he suggested that there are several things that registrants can think about doing right now. “Identifying, ahead of time, certain providers and experts that a registrant should call in the event of a cyber-incident shows prudence and diligence. Similarly, table-top exercises are a way that companies can proactively work to mitigate harm in case of a cyber-event. That’s not to say that such lists or exercises will address every cyber event or incident. But, they offer a level of procedures and pro-active measures that a company can undertake in recognition of this potential risk.”

  For the fine detail on his recommendations and advice, please see SEC.gov | Cybersecurity: Meeting the Emerging Challenge.

  Five Forces Remaking Accounting
  An article by Betsy Vereckey posted October 26, 2021, on the MIT Management Sloan School webpage notes that, “for years, the accounting industry has been viewed as a time-honored practice whose core responsibility is to help businesses maintain accurate and timely records of their finances.
  But as a host of emerging technological and societal trends continue to have a bigger effect on the industry, accountants are playing new roles in helping companies track and report their finances.”

  Specifically, says Vereckey, “innovations like artificial intelligence, cryptocurrencies, and regulatory technology (“regtech”) are changing the future of accounting. At the same time, practitioners are increasingly being asked to price intangibles such as a company’s brand, technology, human capital, and culture.”

  And then there’s climate change, “a challenge big enough to potentially alter the fundamental nature of the practice, as more and more companies begin measuring factors related to environmental, social, and governance (ESG).”

  “For the longest time, the purpose of a company was to provide returns for its equity investors and debt investors,” Vereckey quotes Nemit Shroff, accounting professor at MIT Sloan. “ESG is saying that the purpose of a company is broader than just its investors — it's society at large. That means that the measurement has to in some sense reflect that, and that's a huge fundamental change.”

  The one constant amid much change: Knowing exactly what to measure will be essential to making progress. “Rewards [for companies] are going to be greater in instances where you can measure the company’s performance,” Shroff said.

  The article then goes on to describe in detail the five areas where accountants are stepping up to that challenge: 5 forces remaking accounting | MIT Sloan.

• The Shorter Work Week Really Worked in Iceland
  Virginia Lau and Ragnhildur Sigurdardottir, of Bloomberg News, recently reported that, even as the COVID-19 pandemic forced companies around the world to reimagine the workplace, researchers in Iceland were already conducting two trials of a shorter work week that involved about 2,500 workers – more than one per cent of the country’s working population. They found that the experiment was an “overwhelming success” – workers were able to work less, get paid the same, while maintaining productivity and improving personal well-being.

  The authors point out that the Iceland research has been one of the few large, formal studies on the subject. “So how did participants pull it off and what lessons do they have for the rest of the world? Bloomberg News interviewed four Icelanders, who described some of the initial problems that accompanied changed schedules, yet they were helped by their organizations which took concerted steps like introducing formal training programs on time-management to teach them how to reduce their hours while maintaining productivity.”

  The trials also worked, Lau and Sigurdardottir added, “because both employees and employers were flexible, willing to experiment and make changes when something didn’t work. In some cases, employers had to add a few hours back after cutting them too much. Iceland did the trials partly because people were reporting relatively long working hours, averaging 44.4 hours per week — the third highest of Eurostat countries in 2018.”

  Participants in the Iceland study reduced their hours by three to five hours per week without losing pay. While the shorter work hours have so far largely been adopted in Iceland’s public sector, workers and managers used simple techniques to maintain productivity while cutting back on time in the office.

  If you are looking for better ways to balance work and life, find tips from four Icelanders at The shorter work week really worked in Iceland. Here’s how - BNN Bloomberg.

  Cybercrime Is the Bandit Canadian Businesses Must Thwart
  The October 2021 edition of the FEI Canada Finance and Accounting Review (F.A.R.) contains an IBM sponsored article that says that, according to a recent IBM study on the cost of a data breach, “the increased vulnerability to cybercrime has hit Canadian companies hard, costing them $6.75-million per incident on average – a 20 per cent increase over 2020 and an all-time high for Canada.

  Security incidents are now costlier and more difficult to contain, the article points out, “due in part to drastic operational shifts during the pandemic. As businesses were forced to quickly adapt their technology approaches last year, from remote work to cloud migration, the report findings suggest that security may have lagged behind these rapid IT changes, hindering organizations’ ability to respond to data breaches.”

  The study also found that the greatest vulnerabilities are created by remote workers, many of whom were thrust into unstable work environments at the onset of the pandemic. “Stolen user credentials are the main entry points by attackers targeting organizations and, with 74 per cent of Canadians admitting they reuse passwords across accounts, compromised credentials can cause a spiral effect of malicious breaches, creating a compounding risk for businesses. In Canada, the financial industry was hardest hit by the breaches, costing those companies the most, followed by businesses in the tech and industrial industries.”

  Avoiding the cybercrime financial hit many are experiencing takes proactive preparation and a cohesive approach, the article says. “Modernized technology through AI and encryption, in addition to employee training, were the top mitigating factors shown to reduce the cost of a breach — saving Canadian companies who used these tools around $1.5-million, compared to those that didn’t.” Ultimately, however, the article advises that all of these approaches must be used conjointly with a well-executed hybrid cloud model.

  For well-articulated guiding principles to help design security for the hybrid cloud era, go to E-Newsletters | FEI Canada.

  The Time Has Come for Firms to Cull Clients
  Firm leaders can employ all sorts of capacity-building strategies including outsourcing, offshoring, hiring non-CPAs for service delivery roles, hiring outside your geography, implementing efficiency-building technologies, and more. According to an article written by Jennifer Wilson in the October 18, 2021 online issue of the Journal of Accountancy, “these strategies work, but they take time and resources to plan and implement — and everyone today is short on both.”

  There is one strategy that firms can implement immediately to significantly improve capacity before the next busy season, Wilson suggests. “This idea is one we've talked about for decades, but only the bravest and most committed have ever followed through. The idea? Right-sizing your firm's client base. This should be the top priority for accounting firms this fall.” Here are her six reasons:

  Your people are tired of feeling overwhelmed. They are worried that the turnover you're experiencing will make the next busy season worse than the last one. If you're like many firms, you don't have the right headcount for your current client load, and you'll risk burning out your best and brightest if you don't make an immediate shift.
  
  The 80/20 rule indicates you have cuttable clients. In most firms we analyze, 80% of a firm's revenues are generated by 20% of their clients, and the other 80% of the clients make up 20% of the revenue. The cost to set these clients up in your systems, deliver services to them, and then bill and collect from them can outstrip the revenue they produce on an individual basis. Serving clients that don't fit any longer does not serve them or you.
  
  Your people have clients they don't want to work with. These clients may be mean, be disorganized, feel risky, have an unappealing environment to visit, fail to value your services, or pay slowly or not at all. They are the D-level clients you know you shouldn't serve.
  
  We have entered a seller's market for services. Firms don't have the capacity to take more work in certain areas. When demand is up and supply is down, fees go up. This is a perfect time to downsize your client base to let go of those unwilling to pay your fees, or who meet some of the other criteria outlined above.
  
  You can achieve bigger growth with a smaller client roster. When you increase capacity, you'll have time to implement other capacity expansion ideas. This will give you increased room to grow your business in areas that appeal to you and your team.
  You can bring real hope to your talent. When you cull clients and increase capacity, your people will see that you're serious about changing your underlying business model to improve everyone's quality of life.

  How to actually implement such a strategy? Please check out Time has come for firms to cull clients - Journal of Accountancy news.

• 5 Tips for Maintaining Audit Quality Today and in the Future
  In an October 13, 2021 article in the Journal of Accountancy online, Ken Tysiac reports on a webcast sponsored by the Center for Audit Quality (CAQ) and the US Chamber of Commerce. With the pandemic still posing risks and the 20th anniversary of the Sarbanes-Oxley Act (SOX) approaching next year, experts shared insights on what will drive audit quality in the future.

  Strong, coordinated regulatory standards and independent oversight will continue to inspire confidence in audit quality in the future, said Kelly Grier, CPA, US chair and managing partner and Americas managing partner for EY, as well as chair of the board of governors for the CAQ. She said leaders need to continue promoting the values of independence, professional skepticism, and personal integrity.

  Wes Bricker, CPA, PwC's vice chair–US Trust Solutions co-leader, said one of SOX's important accomplishments was to reinforce the importance of tone at the top and culture by reinforcing the roles of the audit committee and management, and requiring certifications on the accuracy of financial reports and the effectiveness of the control system. The rise of remote work during the pandemic has important ramifications for leadership and culture, Bricker added.

  "The ability to challenge, the ability to understand different dimensions of effectiveness, to assess risk and design the right test, all of that comes together in the context of communication and culture within the audit firm and communication with the audit committee that's engaged the audit firm," he said. "And I do think that's an area for us to continue to focus on as we move forward."

  As most know by now, technology continues to provide auditors with opportunities to improve their work. For example, auditors are using technology to analyze entire sets of data rather than relying on sampling in their testing. "It's a little bit like when the tide goes out, you see everything on the ocean floor," Bricker said. "You can see everything on the ocean floor, perhaps, by sampling. And that's a relevant technique. But if you can take all the water out or identify all the transactions in your system, you can not only better identify risk … but you can also better understand the contours. What's the nature of the activity? What should we focus on? What should we be communicating about?"

  For a lot more on what the panelists had to say, see 5 tips for maintaining audit quality today and in the future - Journal of Accountancy news (journalofaccountancy.com).

  Leaning Into Transfer Pricing Transformation Helps Manage Tax Risk
  An October 4, 2021 piece posted by Jeffrey Michalak, EY Global International Tax and Transaction Services Leader on the EY Global webpage, says that The 2021 EY International Tax and Transfer Pricing Survey found that agility can help businesses prepare for rising uncertainty and controversy.

  According to the survey, there are many challenges facing transfer pricing (TP) professionals, Below the surface, the interactions between four key megatrends are driving what is likely to become an era of nearly constant change in TP strategy and operations.
  The survey says that the four forces are:
  • Global tax reform.
  • Global supply chain reconfiguration.
  • The rise of controversy and changes in enforcement behavior.
  • Digital transformation.

  The survey found that shifting government policies and a more robust enforcement posture are driving TP risk: 65% of survey respondents say they expect the number of TP audits to rise in the next three years, and 78% identify tax risk management as the most important factor driving changes to their TP model, processes and governance.

  Addressing change of this magnitude, says Michalak, “is a major ambition for most businesses participating in the latest survey, as 62% of them say they have fewer than 11 people dedicated to handling TP matters. Yet, 61% of them say they will likely act to modify their organization’s approach to TP plus their operations, compliance and documentation within the next two years.”

  “We see major forces combining that are going to impact transfer pricing in very real, immediate and significant ways,” notes Tracee Fultz, EY Global Transfer Pricing Leader. “Businesses know they have to make this function more agile, adaptable and resilient so that they can avoid the wave of uncertainty and controversy that may follow – and be in a better position to manage disputes that do arise.”

  For the full results of the survey, visit EY at How leaning into transfer pricing transformation helps manage tax risk | EY - Netherlands.

  4 Changes That Will Stick with Accounting Long After the Pandemic Is Over
  Justin Hath writes in the October 12, 2021 issue of accounting TODAY that not only did COVID-19 prompt CPA firms to work to help their clients survive economic challenges, but they were fighting their own battles as well. According to one survey Hath cited, “approximately 90% of CPA firms reported concerns for their company, ranging from health to finances and operations. Despite the challenges, firms also reported facing the challenges with innovations like using cloud technology and innovation.” In short, says Hatch, “the accounting industry was forced by COVID-19 to evolve almost overnight, and not all of the changes that occurred will be going away. Here are some of the adaptations that will be part of the industry going forward.”

  Hath points out that CPAs have learned to adapt quickly to changes in their work, whether it be major financial programs like the Paycheck Protection Program or adjusting the way they work with clients. “Clients have come to expect continually up-to-date information from their CPA anytime they need it, and there will be no going back. Customers will expect their accountants to be able to come up with solutions at the drop of a hat, whether or not there is an international crisis.”

  A lack of in-person interaction could be detrimental for some, Hath notes, “but, for CPAs, it may have actually been a boon. Trying to work remotely with clients forced CPAs to communicate more effectively. Cloud-based dashboards, video conference calls, chatting online, and sending frequent emails are the norm now, whereas both CPAs and clients may have been reluctant to give them a try before.”

  Hath also points out that COVID-19 brought about a sudden adjustment as workers moved from conference rooms to living rooms. “Though many businesses, including CPA firms, later began bringing workers back, the office landscape has likely changed for good. CPAs and clients alike learned to work with each other from a distance, and that will add a level of flexibility going forward that will benefit everyone.”

  According to Hath, “many of the changes brought on by COVID-19 were already in motion in the industry, but firms got the extra push they needed to move forward. Businesses have been seeking more advisory services from their CPAs for years, and many firms have begun to expand their offerings. The pandemic, and the severe economic impact it had across industries, helped move the transition along.”

  CPAs have fought alongside their clients through the COVID-19 pandemic, Hath concludes, “and their work has been vital to businesses’ success through the crisis. The lessons learned from the pandemic will have a long-lasting impact on the profession as CPAs continue to adapt and grow for the benefit of their clients.”

  For more, see 4 changes that will stick with accounting long after the pandemic is over | Accounting Today

• CPA Firms Lay Out Top Issues In 2021 And Beyond

  An October 7, 2021 article written by Mark Friedlich describes the findings of a recent AICPA survey on the top issues CPA firms say they face in 2021 and over the next five years.

  Finding and retaining talent: Friedlich says that three trends that have escalated during the last 18 months have resulted in employers in most industries facing greater difficulty in finding and retaining talent. "The substantial increase in staff working from home, the so-called 'great resignation' and the increase in retirement of baby boomers have all contributed mightily to all but the smallest CPA firms." 

  Keeping up with tax law and regulatory changes and COVID relief programs: Staying current on the continual and ever-increasing complexity of tax law and regulatory changes, including COVID relief programs, was among the top three issues faced by firms of all sizes. 

  Emerging technologies and managing a hybrid workforce: Emerging technologies surfaced as a top issue for every category of CPA firm over the next five years. Managing a hybrid workforce (remote and in-person), was No. 2 for firms. Emerging technologies have changed the way firms do business. This trend is expected to increase at an even more rapid pace over the next five years.

  Friedlich quotes Lisa Simpson, vice president of firm services at the AICPA, as saying that “Finding the right people with the right skills who are comfortable with these developing technologies will help firms adapt to changing client needs. Clients want more from their CPA than just the historical data. They want insights into trends and underlying data. 

  Friedlich concludes that "The need for acquiring and retaining talent, keeping up to date with legal and regulatory changes and adopting emerging technologies will only become more important and more challenging in the years ahead."

  For the details, check out CPA firms lay out top issues in 2021 and beyond | Accounting Today.

  KPMG Launches Multi-Year Program to Accelerate Global Solutions for ESG Issues

  In a recent press release, KPMG International announced that, as part of its ongoing multi-billion-dollar investment program, it plans to spend more than US$1.5 billion over the next three years specifically to focus on the Environmental, Social and Governance (ESG) change agenda. The ESG strategy is designed to support KPMG firms’ clients in making a positive difference. Importantly, this strategy is underpinned by KPMG’s recognition of its responsibility to improve its impact on the world and the ESG commitments outlined in KPMG: Our Impact Plan.

  The collective investment will focus on training and expanding KPMG’s global workforce, harnessing data, accelerating the development of new technologies, and driving action through partnerships, alliances and advocacy. The key to the transformation will be embedding ESG in the organization and client solutions to drive measurable change.

  The new global ESG strategy focuses on five priority areas: 

  Solutions: Five newly dedicated Hubs are to be established to provide world-class expertise and solutions on key ESG issues.

  Talent: ESG training will be provided to all of the KPMG organization’s 227,000 people to ensure that everyone is empowered to be an agent of positive change. As part of this training, KPMG is working with two leading global academic institutions, University of Cambridge Judge Business School and NYU Stern Executive Education:

  Supporting developing nations: KPMG will launch KPMG Emerging Markets Accelerators for developing nations in the Eastern Mediterranean, Africa, Asia Pacific and Latin America, with the goal ensuring that areas of the world lacking expertise and resources will have a trusted advisor to support their economic and social development in line with the UN Sustainable Development Goals.

  Collaborations and alliances: KPMG recognizes that the world’s issues will not be solved by any one organization alone, which is why the global organization is building on its collaboration with external organizations including UNESCO, Enactus and the Global Reporting Initiative. Through alliances with Google Cloud, Microsoft, Salesforce and ServiceNow, KPMG is co-creating new tools and solutions that will provide critical insights based on data that clients can use to map their ESG journeys and implement vital changes to meet their commitments.

  Listening and taking action: To help support the engagement pillar of its global ESG strategy, KPMG is also launching a new campaign called "Voices for a Sustainable Future," offering a platform to amplify the views of established and new thinkers, giving voice to critical issues — from climate change to gender and race equality."

  How you grow matters," says Thomas, "and what worked for us and other businesses in the past will not work in the future. The world faces crises on multiple fronts, which is why we’re putting the Environmental, Social and Governance agenda at the heart of everything we do."

  For more on KPMG's plans, see KPMG program accelerates solutions for ESG issues - KPMG Global (home.kpmg).

  Burnout: Are You Vulnerable and How Can You Prevent It?

  Oliver Rowe says in an October 8, 2021artticle in FM Financial Management that "burnout" has become a critical issue for businesses and their leaders. He quotes author, executive coach and clinical psychologist Mike Drayton as saying that "it undermines effectiveness — people are not very innovative when they are burnt out, and sustainability is an issue as people leave and go off sick for three or four months. You lose a lot of value as burnout attacks intellectual capital." 

  So, who's vulnerable? According to the article, it's people who are highly conscientious and areperfectionists; those with high introversion, especially introverted high achievers; people who hate conflict; those who over-identify with their job role; and folks with high idealism, perhaps with unrealistic expectations.

  Drayton described burnout as "a systemic issue" that arises from chronic workplace stress that is poorly managed, rather than a reflection of personal weakness. Unfortunately, it can lead to depression, and people can become apathetic, exhausted, and anxious and have a sense of hopelessness and helplessness.

  What to do? Drayton suggests five ways to avoid burnout, especially when working remotely:

  Develop a disciplined way of managing your day. Put in place clear boundaries and have a proper start and finish time for your schedule. It is critical to switch off at the end of the day.

  Block out time in your calendar for certain tasks. This is preferable to the to-do list, which can be overwhelming and never achieved.

  Take regular breaks and minimize work interruptions. The most effective way of working is in short intense bursts of communication, followed by longer periods of deep work.

  Take on volunteer work. As well as developing new skills and broadening your network, working as a volunteer outside the workplace can help anti-burnout efforts. 

  Increase your resilience. There are many ways to do this, including finding the meaning, purpose and value in your work, which increases resilience and minimizes the probability of burnout.

  For the fine details, read Burnout: Are you vulnerable and how can you prevent it? (fm-magazine.com).

• What Is Ethical Intelligence and How Does It Benefit Workplaces?
  
  A September 30, 2021 article in INTHEBLACK, the magazine of CPA Australia, points out that ethical intelligence is the personal code that dictates how we work and the ability to make ethical decisions when faced with moral challenges. Author Megan Breen says that “on any given day, we make ethical decisions in our workplace, often without consciously thinking about them. For example, is our relationship with our staff and colleagues nurturing or exploitative? Are we misusing company time? Are we being entirely honest and open in every situation?”

Breen quotes  Bruce Weinstein, a US-based ethicist, as arguing that ethical intelligence is grounded in five key principles that need to be embedded across an organization: do no harm, make things better, respect others, be fair, and care. It comes down to asking yourself whether something is “the right thing to do,” he adds.

The first step is to promote your values to the world and within your organization, Weinstein says. The next step is to “hire for character,” which means embedding references to your values in the job description. Then you need to ask questions that are character focused in job interviews.

“Ask a candidate about a time when they had to tell an uncomfortable truth to someone at work, for example. That would reveal two crucial qualities of high character employees – courage and honesty.”

Second, advises Weistein, “there is an implication that the first question we should ask before we do anything is ‘is it legal?’ Well, that is the first question, but it’s not the last question, because there are plenty of things that are legal to do that are unethical or ethically questionable. The question the ethically intelligent CPA should ultimately ask is, ‘Is this the right thing to do?’”

“Accountants do tend to stick to the law, “Weinstein says, “but ethical behaviour takes a further step, and that’s the step people will need to be looking at.” 

For more, check out What is ethical intelligence and how does it benefit workplaces? | INTHEBLACK.

How CEOs Can Incorporate Resilience in their Infrastructure Plans
Portia Crowe, writing in the September 21, 2021 issue of FM Financial Management, says that when the pandemic hit, “many organizations reacted quickly and found ways to adjust to new realities in the short term. To enable social distancing, a common solution was to switch to remote work or break up employees' schedules into shifts.”

But, adds Crowe, these strategies and similar quick-fix approaches may not be sustainable over the long term. “Rather, organizations must transition to longer-lasting resilience. When it comes to workspaces, finance professionals must find ways to invest in more resilient physical infrastructure, which will ultimately support resilience in the workforce as well.”

Crowe believes that, for CFOs, “an important part of securing more resilient infrastructure is investing in adaptability. That will mean adjusting capital investment plans and setting aside resources to transform a space when need be. That way, they can be prepared for future situations where the existing infrastructure suddenly stops working well.”

In traditional office buildings, for example, says Crowe, many workers now prefer individual offices rather than open-plan layouts. Meanwhile, in manufacturing spaces, assembly lines will need to be adapted to allow for physical distancing. She notes that Darren Comber, CEO of global architecture and design firm Scott Brownrigg, predicts that offices will become more like university campuses, where people come together to create and exchange ideas, before returning home to do focused work.

Crowe explains that, according to the architecture firm Gensler, key themes in design now are health and wellness, equity, and sustainability. Genzler designed a model workplace of the future in San Jose, California, comprising low, horizontal buildings allowing for multiple entry and exit points to reduce congestion, and encompassing large open spaces filled with natural daylight. Other important health and safety features included touchless technology and air filtration.

To enhance resilience, she adds, “Gensler recommends designing mudrooms and multipurpose entries, where people can clean off before entering the workplace; corridors with large circulation paths and ‘programmed’ areas to create separation; hybrid office-cubicles (‘officles’) to allow for semiprivate workspace while still enabling small meetings in an open, touchless environment; gender-neutral restrooms to simplify cleaning for maintenance staff; and separate entrances and exits, at least for the near term, which could be adapted down the road.”

For many more ideas on building resilience in the new environment, see How CFOs can incorporate resilience in their infrastructure plans (fm-magazine.com).

This topic is explored more thoroughly at ESG Targets Gain Foothold in Exec Comp Plans - CFO.

Accountants Face Challenges with ESG Reporting
A new survey from Financial Executives International, carried out by their Financial Education and Research Foundation, which polled 53 chief accounting officers and controllers from some of the largest U.S. companies, found that 53% of the respondents indicated they had not yet started to integrate ESG reporting with their financial reporting, while 43% said they had only just started to do so.

An article by Michael Cohn, and published in accountingTODAY September 24, 2021, noted that, according to the FEI survey, “Data is the biggest single challenge to ESG reporting, with questions related to collection, collation, analysis and control among the biggest ESG-related data questions. The plethora of competing standards and frameworks is also a big challenge, with 85% of companies using multiple ESG reporting frameworks. Finance professionals reported they had a hard time hearing through all the noise and providing relevant, concise ESG metrics in telling their organization’s ESG story.”

The finance team’s involvement in ESG reporting is still in its early stages, Cohn writes, but 53% of the FEI members surveyed said they participate in broad “reporting oversight” of ESG. “Our members always seek to take a mindful approach to all financial leadership initiatives,” said FEI and FERF president and CEO Andrej Suskavcevic in a statement quoted by Cohn. “Inarguably, they are hearing more calls for high-quality levels of ESG integration into financial reporting. While there are still many questions surrounding exact guidance, our report is designed to help them understand what their peers are considering so they can incorporate this information into their own efforts. We see this report as a useful tool to help all financial professionals deliver high-quality financial reporting.”

For more on the report and where to access it, see Accountants face challenges with ESG reporting | Accounting Today.

Boardroom Climate Competence: Getting Ahead of the Curve
According to a new KPMG publication, the clamor for attention to climate change as a financial risk has become more urgent, and boards of all companies, irrespective of size or industry, need to take note. “The urgency is driven by a confluence of factors, most visible of which are the accelerating physical impacts – manifested in increasingly frequent and severe floods, wildfires, rising sea levels, and droughts – as well as concern by many experts that the window for preventing more dire long-term consequences is rapidly closing. Investors are keenly interested in understanding whether boards have the knowledge and processes to oversee management’s navigation of climate-associated financial risks and to provide informed, proactive guidance as stewards of long-term value.”

Other stakeholders, says the introduction to the publication, including employees, customers, and communities, “are voting with their wallets and their feet against companies they perceive as contributing to the problem. And spurred by increasing public demand, both U.S. and international regulatory bodies are working to drive change.”

According to KPMG, “The COVID-19 pandemic has demonstrated that boards that are informed, communicative, and bold in their leadership can guide their companies to not only weather the storm but also grow stronger and more competitive. The tectonic shifts in the business landscape driven by climate will demand similar board skills. With current and longer-term climate realities in mind, boards can guide their companies to adapt, mitigate risk, and uncover new opportunities for value creation.”

But with such a complex topic, where should boards start? Boardroom Climate Competence: Getting Ahead of the Curve, coauthored by the KPMG Board Leadership Center (BLC) and Plan C Advisors, addresses six climate-related areas that are critical to board oversight. It presents a framework for board oversight, as well as insights from current board directors and business leaders in a range of industries. “We hope that this paper is useful in framing your board’s guidance and oversight – for the good of your companies and all stakeholders.”

To get a copy of the report, head to Boardroom climate competence: Getting ahead of the curve (kpmg.us).

Canadian Securities Regulators Outline Expectations for Advertising and Marketing by Crypto Trading Platforms
In a press release dated September 23, 2021, the Canadian Securities Administrators (CSA) and Investment Industry Regulatory Organization of Canada (IIROC) said it has published guidance to help crypto trading platforms understand and comply with requirements under securities law and IIROC rules for advertising, marketing and social media use.

According to the press release, securities regulators have noticed a recent increase in advertising and marketing by crypto trading platforms. “In several cases, CSA and IIROC staff have observed statements in crypto trading platforms’ advertising and marketing materials that could mislead investors. Staff are also concerned about crypto trading platforms’ use of gambling-style promotions that may encourage excessive and risky trading by retail investors.”

Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers, pointed out that “misleading advertisements and improper marketing strategies may encourage investors to take on risks they would normally avoid, and not respecting the requirements under securities law and IIROC rules may raise concerns about a crypto trading platform’s fitness for registration.”

The new guidance is intended for registered crypto trading platforms, platforms that have or will be applying for registration and other registrants that may be considering establishing a platform as a new business line. The publication includes examples of misleading statements in advertising and marketing materials, and outlines the concerns of CSA and IIROC staff over the use of improper gambling-style contests, promotions and schemes. Additionally, the guidance outlines regulators’ compliance and supervisory expectations for firms using social media.

“Crypto trading platforms should consider their advertising and marketing strategies in the context of their obligations to treat clients fairly and honestly,” said Andrew J. Kriegler, IIROC President and CEO. “IIROC will continue to work closely with the CSA to ensure investors are protected.”

The new guidance can be found on CSA members’ websites and on IIROC’s website.

Clients’ Expectations of Accountants Are Evolving
Derrick Lilly, communications director for the Illinois CPA Society, writes in the September 13, 2021, edition of accountingWEB that a recent report, which surveyed more than 3,200 accountants around the globe, found that 82% of respondents said that their clients’ expectations have widened to include the provision of business advice. “Simply put,” says Lilly, “the days of CPAs thriving simply as trusted number crunchers are over. The Illinois Society says companies and clients will need and expect their CPAs to proactively provide strategic guidance and insights in all areas of their business based on their unique needs and goals.”

Many CPAs argue that they provide these types of insights now, but Lilly suggests that they consider this: “According to a survey of accountants and business professionals across the nation, the top challenges for business leaders include planning for growth and expansion, getting expert financial insights, maximizing cash flow, minimizing overhead costs, staying in compliance, finding time to focus on accounting and financial matters and maximizing profit margins. However, less than 40% of the business leaders interviewed reported that their accounting firms had ever conducted an assessment of their organizations and offered tailored recommendations to them.”

According to Lilly, “The takeaway is that CPAs have almost unlimited access to company and client data at their fingertips, and they must use it, interpret it and communicate its value to stakeholders if they’re going to be the most trusted and strategic advisors of tomorrow. As Illinois CPA Society President and CEO Todd Shapiro advises, ‘It’s time to get in the driver’s seat, take the wheel and steer companies and clients toward greater profitability and wealth.’”

For more, go to How Clients' Expectations of CPAs are Evolving (accountingweb.com).

The Bot Revolution: Chatbots in Automation
A July article on RSM’s global webpage, written by Paul Herring, Global Chief Innovation Officer, says that a growing application in the world of automation is the use of chatbots. “With myriad uses,” he says, “chatbots have the potential to save organizations considerable financial and human resources. This new army of digital workers have become critical to ambitious, growth focused businesses as they look at how they can incorporate chatbot technology into their own strategic models.”

Herring points out that a chatbot is a type of software application that enables online conversation in place of a live human discussion. “The idea behind the concept has existed as far back as 1950, with Alan Turing’s proposed Turing Test for testing the ability of a computer program to impersonate a human. The modern application of this concept has since been used to help streamline interactions between humans and information systems. Chatbots can be used to aid with customer support, human resources and many other services. In the ever growing digitally connected world, the use of chatbots has proven to be useful for many organizations in providing relief in time consuming, mundane tasks. At the highest level, there are typically three types of chatbot that consumers are likely to see today.”

Rules-based chatbots are “simple chatbots that follow pre-determined rules using a graphical user interface that has paths built on a decision tree. This is a similar process to a flowchart with varying degrees of complexity that enable an outcome to be reached through input from the user.”

AI chatbots “use data to build a comprehensive understanding of the type of questions people ask. The chatbot then analyses this data in a learning period to determine the correct questions and finally uses machine learning to develop contextual understanding to continually get better at answering these questions in the future.”

Live chatbots “are among the most simplistic in application and are most often used by sales and support teams to answer questions in real-time. Adding natural language processing to the chatbot, allows for smarter interpretation of the user’s spoken or typed question, taking us one step closer to mimicking a human-to-human conversation with multiple exchanges, each dynamically building on the one before. This new area goes way beyond the navigation through a pre-scripted set of responses.”

For more on their benefits and applications, see The bot revolution: Chatbots in automation | RSM Global.

Leading Under Pressure
A blog posted by Theodore Kinni in strategy + business September14, 2021, points out that, whether it arrives in the guise of a burning platform or a project deadline, a strategic goal or a performance target, a high-stakes deal or an aggressive competitor, pressure can help leaders attain new heights of performance and achievement. Unfortunately, it can also overwhelm a leader and result in missteps that torpedo companies and careers.

According to Kinni, “being connected to the importance of whatever you are doing inspires and directs action.” He quotes Dane Jensen, author of the book The Power of Pressure, who contends that, during peak pressure moments, say, a corporate crisis, “importance can ratchet up to a level that is not healthy and is not a performance enhancer. It is actually something that is a real derailer.”

How do you manage importance during these peak pressure moments? The secret is to understand that how you perceive the stakes in any given situation can be controlled. “When you get into peak pressure moments, all you can think about is how important [the stakes are], what you might gain, what you might lose,” said Jensen. “Somewhat counterintuitively, as you approach peak pressure moments, your job shifts from pulling importance close to making sure that you are not carrying it with you into the moment.”

Kinni’s article offers a four-step technique for defusing the stakes in peak pressure moments:

Ask yourself what’s not at stake. “What are the things that are going to be there regardless of how the presentation to the board goes?”

Avoid the anxiety spiral. Seek evidence for the stakes you associate with a challenge, being objective by asking yourself how you would view someone who didn’t succeed in meeting that challenge, and, if you’re still unsure whether a stake is real, giving yourself the benefit of the doubt.

Let go of ego-driven stakes.  According to Jensen, you only need to own how you acquit yourself. All the other stuff – a share price, revenue, profits – are only partly within your control. If it’s only important to your ego, let it go before peak pressure moments.

 Gauge what is truly urgent. Manufactured urgency distracts from performance in peak pressure moments. If the situation suggest that a peak pressure moment just feels urgent and could be better dealt with at a later time, give yourself a break and postpone it.

For the fine details, consult Leading under pressure (strategy-business.com).

Climate Change Information and the 2021 Reporting Cycle
September 7, 2021, the International Federation of Accountants (IFAC) released a statement that said among other things, “Given the current significant attention paid to the impact of climate risk on society and financial stability, many companies and investors are more closely scrutinizing the potential material impacts of climate change on companies in the context of a 2-degree Celsius or lower (ideally 1.5-degree Celsius) global temperature rise scenario. This is the basis of the international Paris Agreement. Companies that have set net-zero emissions targets to meet the Paris Agreement, which is the case for at least one-fifth of the world’s 2,000 biggest listed companies, will now be establishing targeted strategies and short- and medium-term targets to decarbonize their business models and reduce emissions. If these actions result in material financial implications, they will need to be reflected in a company’s financial reporting.”

In this current environment, says the statement, professional accountants will need to keep in mind two important points:
• “First, despite the issuance of various guidance and educational materials by standard-setters (described below), professional standards have not changed for the 2021 reporting cycle as they relate to the reporting and assurance of climate and sustainability information.
• “Second, materiality in financial reporting remains an entity level decision and the development of accounting estimates is specific to a company’s facts and circumstances and reporting requirements. Climate-related matters will not be financially material to all companies. In addition, alignment with scenarios consistent with the Paris Agreement, or the UN’s Sustainable Development Goals, is not a requirement under either IFRS or US GAAP.”

Accordingly, in preparing their 2021 financial reports in the context of changing expectations about climate-related disclosures, companies must evaluate what some stakeholders would like companies to report and where they would like it reported (in the financial statements versus the “narrative” sections of annual, integrated or sustainability reports, or elsewhere) in the context of what is required/allowed under current professional standards (i.e., financial reporting standards and audit and assurance standards) and regulatory requirements.

Professional accountants in business and in public practice, emphasizes the statement, “have a critical role to play in assisting companies reconcile these different perspectives while complying with existing reporting obligations, regulatory requirements, and their professional responsibilities.”

For much more on this critical topic, and some guidance on what to do, please see Corporate Reporting: Climate Change Information and the 2021 Reporting Cycle | IFAC

Are You Ready for the ESG Revolution?
A PwC publication, released a few months ago, says that it is often heard in today’s boardrooms and C-suites and their virtual equivalents: a mixture of anxiety and enthusiasm about environmental, social, and governance (ESG) issues. “What risks are we sitting on?” leaders (and investors) are asking, as pressure for ESG disclosures mount. “How do we measure and manage them when there are no common standards? Where should we focus, when the list of potential issues is a mile long?” And, critically—which is where the enthusiasm comes in—“As we take a hard look at our business, what opportunities can we identify to solve big problems and create value in new ways?” According to the authors of this piece, Peter Gassmann, Casey Herman and Colm Kelly, the answers to these questions are interrelated, as are the initiatives those answers will motivate: reimagined reporting, strategic reinvention and, ultimately, wholesale business transformation.

The underlying forces at work are well known, say the authors. “Investors, lenders, and rating agencies expect greater visibility of an ever-broader range of nonfinancial metrics to better understand diverse social and environmental risks. Governments’ ambitious, top-down commitments to limit carbon emissions are increasingly backed by new regulations and new taxes. More—much more—can be expected. Activist shareholders, among many other stakeholders, are advocating for net-zero policies and for tighter linkages between ESG targets and executive compensation packages. Socially conscious consumers are more inclined to vote with their wallets, encouraging businesses to reappraise their products and purpose, including their role as employers of diverse, engaged workforces. And the global pandemic has created significant additional momentum for change.”

Against this backdrop, the ESG maturity level of companies varies widely, the authors ay. “When PwC segmented executives responding to a recent survey according to their awareness and prioritization of ESG issues, their personal commitment, and their belief in the potential for business to positively impact society, it became clear that leaders in most organizations (nearly three-quarters) were in the early stages of their ESG journey. A few companies, though, have begun reorienting their business toward a value creation ecosystem that adds environmental sustainability, employee engagement, external partnerships, and broader societal impact to financial imperatives as measures of success. Companies that have earned top ratings on ESG indexes and that also produce solid investor returns include asset managers such as Norges Bank; tech companies such as Adobe, Salesforce, and Microsoft; and consumer-oriented firms such as Procter & Gamble and Best Buy.”

Whatever the starting point for the ESG dialogue, believe Gassmann, Herman and Kelly, the project will result in changes in all dimensions of a business, including strategic decision-making, implementation of the new direction, and reporting of progress and outcomes.

For many intriguing insights, please read The ESG movement: Are you ready for the ESG revolution? (pwc.com).

CAQ Highlights How Climate-Related Risk Considerations Intersect with Audited Financial Statements
A September 9, 2021, press release from the Center for Audit Quality (CAQ), explains that its new publication Audited Financial Statements and Climate-Related Risk Considerations, provides investors and other stakeholders with a foundational understanding of current climate-related reporting and auditing requirements in the U.S. and how they are applied. The CAQ says it is releasing this report “at a pivotal moment for climate-related and other environmental, social and governance (ESG) reporting, as investor and other stakeholder demand for this information continues to increase.”

Currently, says the press release, climate-related risks are considered and assessed by management and auditors during the preparation and auditing of financial statements. “Under current US accounting rules, climate-related risks may have a direct impact on the financial statements, an indirect impact, or in some cases no impact at all. Understanding current financial statement requirements can be a useful starting point for investors and others as they consider how and where to obtain their desired climate-related information to make capital allocation decisions and bridge any information gap that may exist today ahead of future rulemaking by the SEC or others.”

“Investors are increasingly using climate-related information to inform their investment decisions,” said Dennis McGowan, Vice President, Professional Practice at the CAQ. “The current disclosure system is market-driven rather than based on regulatory action, so it is important for investors to both consider what public companies voluntarily report as well as to understand what they are required to report in the financial statements under US GAAP.”
In June, the CAQ led a roundtable discussion with investors, board members, auditors and public companies to discuss the SEC’s request for public input on climate change disclosures, and found that the majority of the participants were supportive of climate disclosure requirements.”

The public company auditing profession is supportive of the SEC’s exploration of climate-related disclosures, added McGowan. “We look forward to ongoing dialogue on this topic as regulators and standard setters assess whether rules and regulations need to be adapted to meet the needs of investors.”

Read the full publication at caq_climate-related-risk-consideration_2021-09.pdf (thecaq.org).