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Adopting International Financial Reporting Standards in Canada

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Title: Adopting International Financial Reporting Standards in Canada


1
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

2
Agenda
  • The AcSBs strategic plan
  • Planning for IFRS
  • IFRS versus Canadian GAAP

3
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

4
AcSB Strategic Plan
  • Adopt IFRS as Canadian GAAP for publicly
    accountable enterprises following a transitional
    period
  • Private companies and Not for Profit
    Organizations

5
Agenda
  • The AcSBs strategic plan
  • Planning for IFRS
  • IFRS versus Canadian GAAP

6
Planning for IFRS
  • Who does the plan affect?
  • When does the plan take effect?
  • The transition period
  • Planning

7
Who does the plan affect?
  • Publicly Accountable Enterprises (PAEs)
  • Public companies and some other relatively large
    or diverse classes of financial statement users
  • Non-PAEs may choose
  • Not for Profit Organizations

8
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

9
Transition Period
  • Global Convergence projects AcSB will adopt
    converged standards
  • 2006 Accounting Changes
  • 2007 Business Combinations, Earnings Per Share
  • 2008 Income Taxes, Joint Ventures

10
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 InstrumentsDisclosure

11
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

12
Planning - Right now
  • Start gaining IFRS knowledge now
  • Attending presentations
  • Internet learning modules, illustrative financial
    statements, newsletters, webcasts
  • AcSBs comparisons of IFRS to Canadian GAAP
  • IFRS on Knotia
  • AcSB Implementation Plan for Incorporating
    IFRSs into Canadian GAAP

13
Planning
  • Appendix B of the AcSBs Implementation Plan can
    help
  • Five categories
  • Convergence before changeover
  • Project in process at changeover
  • IFRS adoption at changeover
  • No Canadian counterpart
  • No comparable IFRS

14
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

15
Planning
  • Prepare your enterprises implementation plan
  • Appoint your implementation team
  • Board of Directors / Audit Committee involvement
    at the beginning
  • Assess the effect of IFRSs on your company

16
Planning Your Future
  • Monitor IASBs Documents Issued for Comment and
    respond directly to the IASB these documents
    are your future!!!!!

17
Convergence projects in process
  • Fair value measurement
  • Financial statement presentation
  • Liabilities and equity
  • Leases

18
Convergence projects in process
  • Revenue recognition
  • Financial instruments
  • Derecognition
  • Intangible assets

19
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

20
Agenda
  • The AcSBs strategic plan
  • Planning for IFRS
  • IFRS versus Canadian GAAP

21
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

22
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

23
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

24
Differences to Canadian GAAP
  • Differences project in process
  • Business combinations
  • Consolidations
  • Special purpose entities (VIES)

25
Differences to Canadian GAAP
  • Differences project in process
  • Employee future benefits
  • Income taxes
  • Earnings per share

26
Differences to Canadian GAAP
  • Differences project in process
  • Segment reporting
  • Inventories
  • Insurance contracts
  • Differential Reporting Options/SMEs

27
Differences to Canadian GAAP
  • Differences no convergence project
  • For example
  • Transfer of receivables/securitization
  • Non-financial liabilities
  • Debt breach at year end

28
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

29
Further informationwww.acsbcanada.orgian.hague_at_c
ica.cakaren.mccardle_at_cica.ca
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