XBRL and Accounting
Standards:
A Canadian Perspective
Paul Cherry
Chair
Accounting Standards Board
Canada’s Decision to Adopt IFRS
 Improve access to capital
 Reduce cost of capital
 Make Canada more attractive to foreign
investors and foreign businesses
 Facilitate financial reporting
External reporting
 Internal reporting

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Canada’s IFRS Implementation Plan
 Canadian standards to be same as IFRS
 No endorsement or carve-out mechanism
 Consider “unique” Canadian circumstances
 Mandatory only for “publicly accountable”
enterprises
 Target date: January 1, 2011

Date to be confirmed by March 31/08
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Benefits of Being “Same as IFRS”
 Transparency:
 Marketplace cannot evaluate degrees of
similarity
 Avoids conflicting national subsets of IFRS
 Avoids costly reconciliations
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Interaction of XBRL and IFRSs
 Framework for disclosure

Avoiding information dumps


What is disclosed
How it is disclosed
 Comprehensive, cohesive classification
scheme

Balance sheet, income statement, cash flows

Classified as operating, investing or financing
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Some Risks Posed by XBRL
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Risk # 1: Investors Ignore Important
“Qualitative” Disclosures
 “Investors want current value information
Current value information often is very
subjective
 Dilemma: relevance vs reliability

 “Qualitative disclosures provide context

Necessary for a proper understanding
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Risk # 2: Investors Don’t Know Extent of
Testing/Verification of Information
 Procedures & controls over completeness
and accuracy
By management
 Involvement , if any, by auditors

 Varies widely
 By type of document within a jurisdiction
 From one jurisdiction to another
 Differences are not transparent to investors
 Canadian Capital Markets Leadership Task
Force Discussion Paper
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Risk #3: Investors Don’t Look Beyond
the Financial Statements
 Other sources are important

Management commentary or MD&A
 IASB project is struggling
 XBRL lagging?
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Risk #4: XBRL and IFRSs Exceed
Available Resources
 “Standards overload” is a widespread
complaint
Accounting standards
 Auditing standards
 Independence rules
 Auditor oversight/inspection
 Securities regulation
 Basel II capital requirements, etc

 Certification brings additional concerns
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In Conclusion…..
 Avoid indiscriminate “data dumps”
 Qualitative, as well as quantitative,
disclosures are important
 Some areas for attention:
Management commentary (MD&A)
 Minimum procedure/controls over reliability
and completeness of financial information
 Encourage XBRL tagging of MC/MD&A

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