AcSB releases exposure draft of reporting standards for private enterprises

On April 29th the Accounting Standards Board (AcSB) released the long-awaited exposure draft of the new GAAP framework for private enterprises. Click here for the exposure draft.

We´ve been following this issue for a long time in Inside Internal Control, so some background information is in order. The transition to International Financial Reporting Standards (IFRS), although available to all organizations, is really only mandatory for publicly-accountable enterprises (PAEs). And the issue of what to do about financial statement reporting standards for private companies and not-for-profit organizations (non publicly-accountable enterprises or NPAEs) has been the source of a great deal of debate in the business and accounting community since the 1990s.

As reported in Volume 1, Issue 7, after extensive consultation the AcSB opted last year to develop a separate "made in Canada" private enterprise GAAP framework, based on the existing CICA Handbook - Accounting that would be available to all private enterprises, regardless of size. Since that time the AcSB has been going through the Handbook, determining which sections can be left as is, which are not relevant to private enterprises and can be removed, and which need to be changed.

The AcSB is requesting comments on the exposure draft by the end of July. It expects that the proposed standards will be effective for annual financial statements relating to fiscal years beginning on or after January 1, 2011. Early adoption will be permitted.

The exposure draft also includes section 1500, First-time Adoption, which sets out transitional provisions for adoption of the proposed standards.

The current version of the CICA Handbook will cease to exist in its current form, likely by the end of 2011.

The AcSB will review the overall effectiveness of the proposed standards for private enterprises and reassess the strategy for this sector after the standards have been in place for approximately five years.

For a more in-depth article from CA magazine about the private enterprise standards, click here.

You can be sure that any changes required to chapter 7 - Accounting and Reporting in Volume I of Finance & Accounting PolicyPro (FAPP) will be included in upcoming update releases.

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New Not-for-Profit Corporations Act back on track

As discussed in Volume 1, Issue 5, there´s been a new version of a federal Not-for-Profit Corporations Act in the pipeline for some time. The amending legislation was tabled in December 2008, but died when Parliament prorogued. But it´s back on the agenda: after meetings on March 12 and March 31 with various sector representatives, the Standing Committee on Industry, Science and Technology has made some small changes and an amended version of Bill C-4, An Act respecting not-for-profit corporations and certain other corporations was reported to the House of Commons on April 23rd. More than 18,000 federal not-for-profit corporations will be affected by the new Act.

To recap, the new legislation:

• Streamlines the incorporation process by eliminating the current "letters patent" system and replacing it with an "as of right" system. Incorporation will be granted upon the filing of specified forms and the payment of a fee without the need for Ministerial review
• Improves financial accountability by creating different levels of accountability depending on an organization´s revenue and whether or not it solicits public donations or government funding. Organizations with high revenue will require an audit, while not-for-profits with low revenue can opt for a review engagement. All not-for-profits will be required to make their financial statements available to members, directors and officers
• Clarifies board member responsibilities by defining the standards of care that board members and directors must meet. When this standard is met, they will be protected from liability
• Enhances members´ rights and access to information, by giving them the power to access corporate reports, including financial statements, and membership lists. They also will be able to launch a suit if they believe that the directors or officers of the organization have acted improperly
• Allows streamlined transition to the new Act. Organizations currently incorporated under the Canada Corporations Act will have three years to apply for corporate status under the new Act, and there will be no fee for this process.

For an informative paper on the revised Act by Jane Burke-Robertson, B.Soc.Sci., LL.B. (Counsel) of Carters Professional Corporation, a full-service law firm with a focus on charities and not-for-profit organizations, click here.

Not-for-Profit PolicyPro (NPPP), includes chapters on Governance, Corporate Administration, Financial Management, Advocacy and Public Policy and Human Resources, and contains more than 25 ready-to-use policies and 50 helpful procedures. For more information on NPPP, click here.

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Wireless devices and the protection of personal health information

There´s a technological revolution going on in in-home management of chronic health conditions like hypertension and diabetes. In one scenario, a senior suffering from hypertension uses a wireless, Bluetooth-enabled device to measure blood pressure, which sends the information to a Blackberry, which sends the information to a health-care provider who interprets the data and can take appropriate action if needed, communicating directly with the client through the Blackberry.

As slick as the technology is, there´s a problem - throughout this communication chain, the information being transmitted is personal health information (PHI) that is governed by privacy laws like Ontario´s Personal Health Information Protection Act, 2004 (PHIPA). PHIPA requires health information custodians to take reasonable steps to ensure that PHI in their custody or control is protected against theft, loss and unauthorized use or disclosure and to ensure that the records containing the information are protected against unauthorized copying, modification or disposal.

But it´s a problem with technological solutions, including secure encryption of wireless data, and the ability to wipe data from a wireless device remotely, in case it´s lost or stolen. This story is told in a recent paper from the office of Ontario's Privacy Commissioner that offers advice on privacy best practices for home care organizations when integrating wireless handheld technologies to enhance the efficiency and effectiveness of home care services. For a link to the paper, click here.

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Controversial new anti-spam Bill tabled

The Electronic Commerce Protection Act (ECPA) received second reading in the House of Commons on May 8th. Although the intention of ECPA is to control spam to help prevent identity theft, phishing and spyware, the Bill in its current form may also affect legitimate businesses´ ability to market their products and deliver application upgrades and patches to their customers.

For a review of this controversial legislation from Barry B. Sookman, Charles S. Morgan and Matthew D. Peters of McCarthy Tétrault, click here.

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Google Street View comes to Canada

In Volume2, Issue 9 of the PolicyPro Bulletin, the predecessor of Inside Internal Control, we talked about the Privacy Commissioner of Canada´s objection to Google Street View, based on the fact that individuals could be identified in the images without their consent, a clear violation of privacy rights.

Now, however, Google has developed an algorithm to automatically blur the faces of any individuals and licence plates in the images and is beginning to photograph Canadian locations, with the reluctant acquiescence of the Privacy Commission. For a story on CBC.ca, click here.

Although most of the Street View cameras are mounted on cars, Wired.com reports that out-of-way locales are being photographed in another way. Click here for more information.

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Competition Bureau issues guidelines

We´ve discussed the new Competition Act in both Vol 2, Issue 1 and Issue 3 of Inside Internal Control. Although the changes to the Act have been significant, they have been enacted "below the radar" because they were attached to the 2009 Budget bill, not a separate piece of enabling legislation.

Now the Competition Bureau has released draft guidelines with regard to consumer rebate promotions and its final bulletin on pyramid selling schemes.

Changes related to the new Competition Act will be included in update releases for Finance & Accounting PolicyPro (FAPP) later this year.

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About Inside Internal Control

Editor: Colin Braithwaite, Managing Editor, PolicyPro.

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