Planning
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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 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 – roadmap 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 IFRS Advisory Groups Conceptual Framework 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 information www.acsbcanada.org ian.hague@cica.ca karen.mccardle@cica.ca
