Adopting International Financial Reporting Standards in Canada

Adopting International Financial Reporting Standards in Canada

The views expressed in this presentation are those of the presenters, and not necessarily those of the AcSB or other staff

Agenda

The AcSB’s strategic plan

Planning for IFRS

IFRS versus Canadian GAAP

AcSB Strategic Plan

Fundamental changes in direction Strategy last formulated in 1996-1998 -changing

needs in changing times Motivated by changes in the financial reporting

environment Effects of Enron et al Experiences with US GAAP in Canada IASB and acceptance of IFRSs globally IASB and FASB working closely together – road-map

AcSB Strategic Plan

Adopt IFRS as Canadian GAAP for

publicly accountable enterprises following

a transitional period

Private companies and Not for Profit

Organizations

Agenda

The AcSB’s strategic plan

Planning for IFRS

IFRS versus Canadian GAAP

Planning for IFRS

Who does the plan affect?

When does the plan take effect?

The transition period

Planning

Who does the plan affect?

Publicly Accountable Enterprises (PAE’s) Public companies and some other relatively

large or diverse classes of financial statement users

Non-PAE’s may choose

Not for Profit Organizations

When does the plan take effect?

One time AND Phased-in approach

Joint convergence projects

Omnibus exposure draft

Change-over timing

Progress review – complete by March 31, 2008

Transition Period

Global Convergence projects – AcSB will adopt

converged standards

2006 – Accounting Changes

2007 – Business Combinations, Earnings Per

Share

2008 – Income Taxes, Joint Ventures

Transition Period

Canadian only projects – AcSB may adopt

some IFRS early when it provides a better

solution - Inventories

IASB only projects – AcSB may adopt at the

same time if a conflict with U.S. GAAP is not

created – Financial Instruments–Disclosure

Transition Period

Canada and U.S. GAAP – changes by FASB

only on standards with a high degree of

similarity to Canadian GAAP (case-by-case)

Variable Interest Entities and QSPEs

Factors – enhancement versus lifespan

Planning - Right now

Start gaining IFRS knowledge now Attending presentations

Internet learning modules, illustrative financial statements, newsletters, webcasts

AcSB’s comparisons of IFRS to Canadian GAAP

IFRS on Knotia

AcSB – ‘Implementation Plan for Incorporating IFRSs into Canadian GAAP’

Planning

Appendix B of the AcSB’s Implementation Plan can help

Five categories Convergence before changeover Project in process at changeover IFRS adoption at changeover No Canadian counterpart No comparable IFRS

Planning

Train key personnel

Assess changes to data collection required and the impact on systems needed – embedding!!!

Educate users of your statements on the anticipated affects – profit sharing employees, audit committees, investors and anyone providing financing

Learn from experiences of others

Planning

Prepare your enterprise’s implementation plan

Appoint your implementation team

Board of Directors / Audit Committee involvement at

the beginning

Assess the effect of IFRSs on your company

Planning – Your Future

Monitor IASB’s Documents Issued for Comment

and respond directly to the IASB – these

documents are your future!!!!!

Convergence projects in process

Fair value measurement

Financial statement presentation

Liabilities and equity

Leases

Convergence projects in process

Revenue recognition

Financial instruments

Derecognition

Intangible assets

Participating in global convergence Comment on IASB proposals Participate in international projects

Conceptual Framework IFRS Advisory Groups

Leases, Small- and Medium-sized Entities Undertake research

Measurement Objectives – Initial Measurement Disclosure Framework Extractive Activities

Agenda

The AcSB’s strategic plan

Planning for IFRS

IFRS versus Canadian GAAP

Similarities to Canadian GAAP

Structure and content of financial statements

Conceptual framework

Many similarities of approach and specific

content

More ability for revaluation in IFRSs

Differences to Canadian GAAP

Differences on which a global or other

project is currently converging the

standard

Differences on which no project is

anticipated prior to ‘changeover’

Differences to Canadian GAAP

Differences – project in process

Impairment Two incompatible models N. America – undiscounted cash flows, other than

temporary impairment, no reversals IFRS – discounted cash flows, faster write-down,

reversals

Differences to Canadian GAAP

Differences – project in process

Business combinations

Consolidations

Special purpose entities (VIE’S)

Differences to Canadian GAAP

Differences – project in process

Employee future benefits

Income taxes

Earnings per share

Differences to Canadian GAAP

Differences – project in process

Segment reporting

Inventories

Insurance contracts

Differential Reporting Options/SMEs

Differences to Canadian GAAP

Differences – no convergence project

For example:

Transfer of receivables/securitization

Non-financial liabilities

Debt breach at year end

First-time Adoption

Exceptions on applying new basis of

accounting

Prohibits retrospective application when

judgment with benefit of hindsight

Transitional disclosures

Only applies on full adoption of IFRSs

Further informationwww.acsbcanada.org

ian.hague@cica.cakaren.mccardle@cica.ca

Further informationwww.acsbcanada.org

ian.hague@cica.cakaren.mccardle@cica.ca