Adopting International Financial Reporting Standards in Canada

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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

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Agenda

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

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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

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AcSB Strategic Plan

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

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Agenda

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

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Planning for IFRS

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

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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

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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

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Transition Period

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

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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

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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

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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

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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

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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

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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

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Planning Your Future

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

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Convergence projects in process

• Fair value measurement
• Financial statement presentation
• Liabilities and equity
• Leases

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Convergence projects in process

• Revenue recognition
• Financial instruments
• Derecognition
• Intangible assets

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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

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Agenda

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

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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

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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

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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

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Differences to Canadian GAAP

• Differences project in process
• Business combinations
• Consolidations
• Special purpose entities (VIES)

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Differences to Canadian GAAP

• Differences project in process
• Employee future benefits
• Income taxes
• Earnings per share

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Differences to Canadian GAAP

• Differences project in process
• Segment reporting
• Inventories
• Insurance contracts
• Differential Reporting Options/SMEs

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Differences to Canadian GAAP

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

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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

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