Where business is concerned the world is becoming a smaller place.
Trade boundaries are disappearing, and many companies have subsidiaries around the world. Multi-national corporations need a standardized way to put together their consolidated financial statements, and International Financial Reporting Standards (IFRS) have been designed to meet that need.
The introduction of International Financial Reporting Standards (IFRS) is affecting 7,000 companies in the European Union, 15,000 companies on US stock exchanges, as well as companies in Australia, New Zealand, Russia, South Africa, and China.
In Canada, The Canadian Accounting Standards Board has set January 1, 2011, as the date that IFRS will replace GAAP as the basis for preparing financial statements. Although IFRS applies to “publicly accountable enterprises” (companies that hold fiduciary assets, such as companies traded on Canadian stock exchanges, insurance companies, Crown corporations, credit unions, cooperatives, and regulated public utilities), these changes will ultimately affect everyone.
The stated purpose of IFRS is to measure a company’s ability to generate cash, including the timing and certainty of cash generation. Four qualitative characteristics serve as guidelines for preparing IFRS based financial statements. These are clarity, relevance, reliability, and comparability. IFRS support trade-offs between these characteristics in arriving at a “true and fair” presentation of the company’s financial condition.
The benefits of IFRS include standardized financial statements that are easier to understand and compare. This will result in a freer flow of capital through financial markets. As well, IFRS will make it easier for companies to be listed on foreign stock exchanges.
Accounting professional need to become familiar with exactly what these new standards consist of, and what these changes mean for Canadian companies.
Updated December 2009.
If you would like to learn more, Mike Morley will be teaching a special IFRS Bootcamp in Toronto on January 20th. and 21st. 2009. There is a special offer for TheGAAP.net readers to attend these bootcamps. Please click here for more details.
Instructor Profile
Mike Morley is a Certified Public Accountant and a recognized authority in the field of finance with more than 25 years experience.
An entertaining and informative speaker and trainer, Mike is the author of:
- “IFRS Simplified” which provides a jump start for accountants and finance executives who want to quickly and easily get up to date on IFRS.
- “Sarbanes-Oxley Simplified” which is an easy-to-read explanation of the requirements of the U.S. legislation that makes CEO's & CFO's personally responsible for the accuracy of their company's financial statements.
- “Credit for Canadians” which explains how the Canadian consumer credit industry works.
- “Financial Statement Analysis Simplified” which translates the accounting language of financial statements into clear, easy-to-understand terms that anyone who needs to make well-informed financial decisions quickly will appreciate.
