IFRS Update Ian P.N. Hague, CA Principal, Accounting Standards Own views

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IFRS Update Ian P.N. Hague, CAPrincipal,
Accounting StandardsOwn views not those of
AcSB or other staff
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Agenda

• AcSB IFRS Strategy
• IFRSs Tackling the transition
• Helpful resources
• Private Cos NFPOs
• Closing questions

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All systems go for 2011 adoption

• Balance of factors
• Five years lead-time
• Date certain
• Relatively stable platform of IFRSs
• Limited period of C-GAAP falling behind
• Desire to drop IFRS-US reconciliation
• Desire for common global reporting
• EU Equivalence
• Many enterprises in advanced stages of preparation

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When is adoption required?
IFRS Reporting date
Opening balance sheet
Interim F/S
?8 months?
Jan. 1, 2008
Jan. 1, 2010
Dec. 31, 2011
Jan. 1, 2011
Preparatory period
Cdn. GAAP IFRS
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Who does this apply to?

• Publicly Accountable Enterprise
• Issued, or is in the process of issuing, debt or
  equity instruments that are or will be
  outstanding and traded in a public market (i.e.
  all public companies are PAEs) or
• Holds assets in a fiduciary capacity for a broad
  group of outsiders as one of its primary
  businesses, (i.e. others with large or diverse
  groups of users, such as a bank, insurance
  entity, securities broker/dealer, credit union,
  mutual fund or investment banking entity).
• Also, Public Sector GBE/GBTO (see ITC)
• NOT required for NFPOs
• Others may choose to adopt IFRSs

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International developments

• Global acceptance of IFRSs (100 countries)
• IASB and FASB working closely together
• Elimination of IFRS/US GAAP reconciliation
• Single set of high quality standards
  Memorandum of Understanding
• Agreed upon standards by June 2011

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SEC Roadmap

• US Filers to adopt IFRSs in 2014-16?
• Decision for roadmap 2009?
• Decision for 2014-16 - 2011
• Largest international issuers choose to adopt as
  early as 2009
• 20 largest in industry globally
• IFRSs used most often in that industry
• Will consider
• MoU
• Accountability funding of IASCF
• XBRL
• Education training
• Application experience

Comments were due by April 20, 2009
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Canadian Securities Administrators

• Preparing investors for the transition
  disclosures
• Grooming Disclosures CSA Staff Notice 52 -
  320
• 2008 Annual (interim if available)
• 2009 2010 Annual and Interim
• Guidance also available from CICA
• Early adoption - Staff Notice 52 - 321

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What does it mean to adopt IFRSs?

• PAEs adopt IFRSs without modification as Canadian
  GAAP all Canadian GAAP falls away (for PAEs)
• Interpretations by IFRIC only
• Focus of attention becomes on IASB in London

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Benefits to Canada

• Access to foreign markets
• Lower cost of capital familiar standards
• Continued principles-based standards less
  complexity
• Efficiencies for international companies
• BUT It will take work to get there

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Agenda

• AcSB IFRS Strategy
• IFRSs Tackling the Transition
• Helpful resources
• Private Cos NFPOs
• Closing questions

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Implications for educators

• A changing world
• Opportunity to refresh course content
• Teach fundamental concepts
• Introduce international perspectives into
  curricula
• Broaden students minds beyond standards
  compliance
• Research opportunities
• Demand for comprehensive training

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Planning Changing Standards

• Todays IASB project is tomorrows Canadian GAAP
  for Publicly Accountable Enterprises
• Therefore students need to focus on what will be
  in place in the future, not solely on what is in
  place today
• So, what is changing and what is stable?

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Majority of IFRSs remain unchanged through 2011

• Inventories
• Accounting Policies Accounting Changes
• Events after the Balance Sheet Date
• Property Plant Equipment
• Government Grants
• Foreign Currency
• Borrowing Costs

• Associates
• Hyperinflation
• Interim Reporting
• Impairment?
• Intangible Assets
• Investment Property
• Agriculture
• Business Combinations
• Extractive Activities
• Segments

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IFRS Adoption at changeover

• Many similarities between IFRSs Cdn GAAP
• BUT Also some major differences
• Revaluations
• Impairment
• Securitization
• Devil is in the details!

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How do we get there?

• C-GAAP changes before changeover
• Business combinations IFRS 3/IAS 27 2011 -
  complete
• Earnings per share IAS 33 2010??
• Joint ventures IAS 31 2011
• Economic Environment? 2010/11?

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Business combinations

• IASB/FASB standards finalized
• IASB and FASB not fully converged
• AcSB converged with IASB
• Effective January 1, 2011 with prospective
  application early adoption permitted
• Will significantly change some aspects of
  accounting for business combinations

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Earnings per share

• IASB Exposure Draft issued Comment Deadline
  December 5, 2008
• Simplify and converge IASB and FASB EPS
• Principle - which instruments to be included in
  basic EPS
• Diluted EPS
• FV through PL no adjustment
• FV not through PL mkt price at the end of the
  period
• Effective 2010?

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Joint ventures / arrangements

• IASB Exposure Draft - comment deadline January
  11, 2008 final expected H2 2009
• Eliminates proportionate consolidation for
  jointly controlled enterprises
• Maintains proportionate consolidation for jointly
  controlled assets and jointly controlled
  operations
• Key is how the structure qualifies within the
  definition
• Direct interest in underlying asset p.c.
• Indirect interest in net outcome- equity

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Economic environment

• Issued guidance on ABCP
• Issued guidance on FV in Inactive Markets
• Issued amendments to reclassfcn of fincl assets
• Amended 3862 re FV Liquidity disclosures
• Considering Consolidations and Derecognition
• Comprehensive Financial Instruments project

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IASB changes expected

• Other IASB changes before 2011
• Liabilities 2009
• Management commentary 2010
• Fair value measurement (how not when) 2010
• Income taxes 2010
• Emissions trading 2010
• 2009 probably effective 2011
• 2010 probably effective 2012

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IASB isolated changes

• Isolated changes
• Related Party Disclosures
• Discontinued Operations
• Group Cash-settled Shared-based Payment
• First-time Adoption

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IFRS 1 choices

• New Canadian proposals
• Full cost oil and gas
• Rate-regulation
• Assessments when prior accounting same as IFRSs -
  Leases

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Changes expected in 2011

• Financial statement presentation
• Insurance contracts
• Liabilities equity
• Leases
• Employee benefits
• Revenue recognition
• Likely to be effective in 2013. Might not be
  available for early adoption?

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IASB Projects in longer term

• Reducing complexity in financial instruments
• Extractive activities
• Common control transactions
• Government grants
• Intangible assets
• Conceptual framework

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Agenda

• AcSB IFRS Strategy
• IFRSs Tackling the Transition
• Helpful resources
• Private Cos and NFPOs
• Closing questions

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IFRS resources

• IASB web site www.iasb.org
• IFRSs Knotia, Omnibus ED, CAAA, IASB web site
• AcSB web site www.acsbcanada.org
• Whats changing when?
• Canada/IFRS GAAP Comparisons two levels
• AcSBs IAC Meeting Notes, Bulletins, etc.
• CICA 20 Qns for Audit Committees
• - MDA Guidance
• Major firms Newsletters, webcasts,
  publications, illustrative F/S, syllabi, case
  studies, training materials, etc. etc.

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Agenda

• AcSB IFRS Strategy
• IFRSs Tackling the Transition
• Helpful resources
• Private Cos and NFPOs
• Closing questions

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What about private companies?

• Some might elect to use IFRSs
• For others
• Starting from existing GAAP
• But aspects evolving towards IFRSs
• ED April/May 2009

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Not-for-profit Organizations

• IFRS does not explicitly deal with NFPOs
• Possible strategy
• Allow NFPOs to use either
• IFRS, or
• Private enterprise GAAP, with addition of NFPO
  guidance?
• ITC December 2008

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Questions/comments?

• ?
• ian.hague_at_cica.ca