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IFRS Implementation

In 2011, all publicly accountable enterprises ("PAEs") are going to be changing their accounting framework from Canadian generally accepted accounting principles ("Canadian GAAP") to International Financial Reporting Standards ("IFRS"). PAEs will have to prepare their financial statements in accordance with IFRS for interim and annual financial statements beginning on or after January 1, 2011. The Canadian Securities Administrators recently released CSA Staff Notice 52-320, which outlines the disclosure requirements relating to each financial reporting period in the three years leading up to the IFRS changeover. Organizations will be required with December 31st year ends will therefore be required to disclose elements of their plan and the effects IFRS will have on their financial statements and operations starting in the December 31, 2008 MD&A.

This is not just adopting a new accounting policy. IFRS is a completely new accounting framework. Since one year comparatives will be required, organizations will need to be ready for IFRS in 2009 in order to capture the information and data in 2010. Since Canadian GAAP financial statements will still need to be prepared in 2010, organizations will have to prepare two sets of financial statements in 2010; one set under Canadian GAAP and the other under IFRS.

Converting to IFRS is a fundamental accounting change for PAEs that may require significant time and resources to complete.

The general plan is for Canada to adopt IFRS without modification to avoid creating Canadian IFRS standards which would defeat the purpose of global convergence and creating one set of high-quality accounting standards. In a few instances, this approach will lead to Canada abandoning a Canadian standard to adopt a less refined and older IFRS standard. This could result in two changes; one in 2011 when we adopt the IFRS standard, and a second change to a revised IFRS standard.

FocusROI has a comprehensive process for guiding your organization through the transition to IFRS that goes beyond identifying the components of financial reporting which will be impacted to address your accounting systems and processes that will be affected in the IFRS transition. The main elements of a transition are outlined in the chart below: