Sun Life 2015 Annual Report Download - page 89

In July 2014, the final version of IFRS 9 Financial Instruments (“IFRS 9”) was issued, which replaces IAS 39 Financial Instruments:
Recognition and Measurement. IFRS 9 includes guidance on the classification and measurement of financial instruments, impairment
of financial assets, and hedge accounting. Financial asset classification is based on the cash flow characteristics and the business
model in which an asset is held. The classification determines how a financial instrument is accounted for and measured. IFRS 9 also
introduces an impairment model for financial instruments not measured at fair value through profit or loss that requires recognition of
expected losses at initial recognition of a financial instrument and the recognition of full lifetime expected losses if certain criteria are
met. In addition, a new model for hedge accounting was introduced to achieve better alignment with risk management activities. IFRS 9
is effective for annual periods beginning on or after January 1, 2018, to be applied retrospectively, or on a modified retrospective basis.
In December 2015, the IASB published an exposure draft that proposes amendments to IFRS 4 Insurance Contracts (“IFRS 4”), which
will allow insurance entities to be temporarily exempt from applying IFRS 9 if certain conditions are met. The IASB is currently
developing a standard that will replace IFRS 4 and the proposed amendments will provide an option for certain insurers to be
temporarily exempt from applying IFRS 9 until the earlier of the effective date of the replacement standard for IFRS 4 and 2021. We are
currently assessing the impact the adoption of these standards will have on our Consolidated Financial Statements.
In September 2014, Sale or Contribution of Assets between an Investor and its Associate or Joint Venture was issued, which amends
IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures. These amendments provide
guidance on the accounting for a sale or contribution of assets or businesses between an investor and its associate or joint venture. In
December 2015, the IASB deferred the effective date of these amendments indefinitely pending the outcome of its research project on
the equity method of accounting.
In January 2016, IFRS 16 Leases (“IFRS 16”) was issued, which replaces IAS 17 Leases, and related interpretations. IFRS 16 sets out
the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. For lessees,
IFRS 16 removes the classification of leases as either operating or financing and requires that all leases be recognized on the
statement of financial position, with certain exemptions that include leases of 12 months or less. The accounting for lessors is
substantially unchanged. The standard is effective for annual periods beginning on or after January 1, 2019, to be applied
retrospectively, or on a modified retrospective basis. We are currently assessing the impact the adoption of this standard will have on
our Consolidated Financial Statements.
In January 2016, IASB issued narrow-scope amendments to IAS 12 Income Taxes. The amendments clarify how to account for
deferred tax assets related to unrealized losses on debt instruments measured at fair value. The amendments are effective for annual
periods beginning on or after January 1, 2017. The amendments are to be applied retrospectively, with certain relief available upon
transition. We are currently assessing the impact the adoption of these amendments will have on our Consolidated Financial
Statements.
In January 2016, Disclosure Initiative (Amendments to IAS 7) was issued, which amends IAS 7 Statement of Cash Flows. The
amendments require entities to provide disclosure that enables users of financial statements to evaluate changes in liabilities arising
from financing activities, including both changes arising from cash flows and non-cash changes. The amendments are effective for
annual periods beginning on or after January 1, 2017, to be applied prospectively. We are currently assessing the impact the adoption
of these amendments will have on our Consolidated Financial Statements.
Future Accounting Changes
In June 2013, the IASB issued its second exposure draft on Insurance Contracts, the replacement standard for IFRS 4. The IASB
continued its deliberations on the comments received on this exposure draft during 2015 and we continue to monitor the developments
related to this new standard. The IASB expects to complete its deliberations in 2016 and issue a final standard later that year. Although
a specific effective date has not been proposed, the IASB expects the standard to be effective approximately three years after the
issuance of a final standard, and not before 2020.
Disclosure Controls and Procedures
The Company has established disclosure controls and procedures that are designed to provide reasonable assurance that all relevant
information is gathered and reported to senior management, including the Company’s President and CEO, Executive Vice-President
and CFO, and Executive Vice-President, Chief Legal Officer and Public Affairs, on a timely basis so that appropriate decisions can be
made regarding public disclosure.
An evaluation of the effectiveness of our disclosure controls and procedures, as defined under rules adopted by the Canadian
securities regulatory authorities and the SEC, as of December 31, 2015, was carried out under the supervision of and with the
participation of the Company’s management, including the CEO and the CFO. Based on our evaluation, the CEO and the CFO
concluded that the design and operation of these disclosure controls and procedures were effective as of December 31, 2015.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable
assurance regarding the reliability of our financial reporting and the preparation of our financial statements in accordance with IFRS.
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis.
Projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that
the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
We conducted an assessment of the effectiveness of our internal control over financial reporting, as of December 31, 2015, based on
the framework and criteria established in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on that assessment, we have concluded that our internal control over financial
reporting was effective as of December 31, 2015.
Management’s Discussion and Analysis Sun Life Financial Inc. Annual Report 2015 87