In the public interest: AcSOC's role in the standard-setting process

AcSOC plays a critical role on behalf of the public in overseeing the standard-setting process of the boards.

Financial reporting standards are developed with a view to informed decision-making and accountability by providing high-quality information about financial and organizational performance. The establishment of such standards is seen to be in the public interest. But how can Canadians have confidence that the standards are, in fact, being developed in a manner that serves this public interest?

The standard-setting system in Canada incorporates very important safeguards to fulfill this need, starting with the due process that must be followed by the Accounting Standards Board (AcSB) and the Public Sector Accounting Board (PSAB). These two boards are independent from those who prepare and audit the financial reports issued by private and public sector entities in Canada.

How is this independence protected? Who oversees whether these two boards are carrying out their responsibilities?
The Accounting Standards Oversight Council (AcSOC) is a self-perpetuating body that oversees and provides input to the activities of the two standard-setting boards. AcSOC maintains its independence by appointing its own members and ensures the independence of the two boards by appointing board members. They oversee the activities of the boards by approving their terms of reference, monitoring and evaluating the performance of the boards, and determining whether the boards have developed appropriate operating procedures, including due process procedures. AcSOC also attempts to ensure that the boards have adequate resources to carry out their missions.

How does AcSOC oversee and provide input to the activities of the boards?
Through its members. AcSOC has up to 25 volunteer members who are in senior positions and come from a variety of professional backgrounds, including accounting and auditing, law, finance, taxation, regulation and the nonprofit sector. Members are from different geographical locations across Canada and many are bilingual. This helps to ensure that a variety of perspectives are shared with the AcSB and PSAB.

Through its process. AcSOC meets three times a year when the AcSB and PSAB report on their activities and their plans and actions relative to their strategies and objectives. This includes reporting on their compliance with their approved due process procedures. These stringent procedures ensure that there is a meaningful opportunity for stakeholders to raise issues with proposals prior to a standard being approved, and that the boards have considered and responded appropriately to issues raised. This helps to maintain the objectivity and quality of the boards’ final output.

By listening to you. An important aspect of AcSOC’s role is to ensure that the views of the preparers, auditors, users of financial statements and other stakeholders, as well as other relevant information, are taken into account in the standard-setting process. This is why AcSOC’s meetings are held publicly and why AcSOC often hears presentations from interested people and groups.

AcSOC also reports to the public after each meeting and annually on its activities and the discharge of its responsibilities. It should be noted that the authority to set financial reporting standards rests with the two boards; AcSOC does not have the authority to set or amend standards. However, AcSOC tries to ensure that stakeholders’ views are heard and understood by the boards during the standard-setting process. To this end, AcSOC encourages stakeholders to attend its meetings and to express their views to AcSOC, either informally or by making a presentation to AcSOC.

AcSOC plays a critical role on behalf of the public in overseeing the standard-setting process of the boards. Stakeholders should recognize and appreciate the important role that AcSOC plays in Canadian financial reporting.