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Adopting International Financial Reporting Standards in Canada
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 AcSB’s 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 AcSB’s 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 (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
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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 Instruments–Disclosure
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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
AcSB’s 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 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
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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 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
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Planning – Your Future
Monitor IASB’s 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 AcSB’s 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 (VIE’S)
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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.org
[email protected]@cica.ca
Further informationwww.acsbcanada.org
[email protected]@cica.ca