IFRS Update
Ian P.N. Hague, CA
Principal, Accounting Standards
Own views – not those of AcSB or other staff
Agenda
• AcSB IFRS Strategy
• IFRSs – Tackling the transition
• Helpful resources
• Private Cos & NFPOs
• Closing & questions
2
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
3
When is adoption required?
Opening
balance
sheet
Interim
F/S
IFRS
Reporting
date
8 months
Jan. 1,
2008
Preparatory
period
Jan. 1,
2010
Cdn. GAAP & IFRS
Jan. 1,
2011
Dec. 31,
2011
4
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 PAE’s); 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
5
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
6
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
Comments
• XBRL
were due by
April 20, 2009
• Education & training
• Application experience
7
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
8
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
9
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
10
Agenda
• AcSB IFRS Strategy
• IFRSs – Tackling the Transition
• Helpful resources
• Private Cos & NFPOs
• Closing & questions
11
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
12
Planning –
Changing Standards
• Today’s IASB project is tomorrow’s 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?
13
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
14
IFRS Adoption at
changeover
• Many similarities between IFRSs & Cdn GAAP
• BUT: Also some major differences
• Revaluations
• Impairment
• Securitization
• Devil is in the details!
15
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?
16
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
17
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 P&L – no adjustment
• FV not through P&L – mkt price at the end of the period
• Effective 2010?
18
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
19
Economic environment
• Issued guidance on ABCP
• Issued guidance on FV in Inactive Markets
• Issued amendments to reclassfcn of fin’cl assets
• Amended 3862 re FV & Liquidity disclosures
• Considering Consolidations and Derecognition
• Comprehensive Financial Instruments project
20
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
21
IASB isolated changes
Isolated changes
• Related Party Disclosures
• Discontinued Operations
• Group Cash-settled Shared-based Payment
• First-time Adoption
22
IFRS 1 choices
New Canadian proposals
• Full cost oil and gas
• Rate-regulation
• Assessments when prior accounting same as IFRSs - Leases
23
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?
24
IASB Projects in longer term
• Reducing complexity in financial instruments
• Extractive activities
• Common control transactions
• Government grants
• Intangible assets
• Conceptual framework
25
Agenda
• AcSB IFRS Strategy
• IFRSs – Tackling the Transition
• Helpful resources
• Private Co’s and NFPO’s
• Closing & questions
26
IFRS resources
• IASB web site – www.iasb.org
• IFRSs: Knotia, Omnibus ED, CAAA, IASB web site
• AcSB web site – www.acsbcanada.org
• What’s changing when?
• Canada/IFRS GAAP Comparisons – two levels
• AcSB’s IAC Meeting Notes, Bulletins, etc.
• CICA – 20 Qns for Audit Committees
- MD&A Guidance
• Major firms – Newsletters, webcasts, publications, illustrative F/S,
syllabi, case studies, training materials, etc. etc.
27
Agenda
• AcSB IFRS Strategy
• IFRSs – Tackling the Transition
• Helpful resources
• Private Co’s and NFPO’s
• Closing & questions
28
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
29
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
30
Questions/comments?
?
ian.hague@cica.ca
31