If your company is like many, the IFRS transition work may have taken a back seat to vacations over the summer months. If you are dusting off the project and taking a look at your progress, this article summarizes some of the announcements over the past few months.
Note that publications mentioned are available in the resources section of IFRS in Canada website.
Expected Changes to IFRS
The AcSB has updated the document Which IFRSs Are Expected to Apply for Canadian Changeover in 2011*, which provides information on the IFRS standards that are expected to change over the next few years. This is critical information for your IFRS implementation.
Monitoring the anticipated changes to IFRS is important to ensure the analysis of your accounting policies incorporates the standards that will be effective at the time you adopt IFRS. Even those standards not expected to change until after you adopt IFRS should be taken into account when determining accounting policies; it may be possible to avoid further accounting policy changes shortly after IFRS adoption.
You can also access information on expected changes in the IASB work plan*, which is updated regularly. Be cautious when reviewing the work plan, as some projects are very long-term and not expected to be finalized soon enough after Canada’s transition to be relevant at this stage.
Free IFRS
In a recent policy change, the IASB has made the core IFRS standards available free of charge*. All “unaccompanied” standards effective at January 1, 2009 can be accessed on the IASB website or in the resources section of IFRS in Canada website.
The documents available for free are referred to as “unaccompanied” because they exclude the basis for conclusions and implementation guidance. These can be useful when interpreting and applying the standards, and are available by paid subscription from the CICA or the IASB.
Canadian Securities Administrators
CSA Staff Notice 52-324
In May, the CSA released Staff Notice 52-324* with several proposals relating to the IFRS transition. Further details on these proposals are expected in the fall.
Deadline extension?
The staff notice states that “we are aware of the challenges ... issuers face to meet the filing deadline for their first interim financial statements [under IFRS],” and then indicates that the CSA is considering the possibility of extending filing deadlines for a company’s first interim IFRS financial statements.
There is no reference to the length of the potential extension, but based on public discussions we don’t expect it to exceed 30 days.
During first year of IFRS adoption
The following requirements are proposed for the first year of adoption:
- disclosure of compliance with IAS 34 Interim Financial Reporting in interim financial statements
- inclusion of the IFRS Opening Balance Sheet as at the transition date (Jan 1, 2010, for calendar year ends) in the financial statements for the first interim period reporting under IFRS (Q1 2011 for calendar year ends)
- disclosure (if applicable) of the fact that your auditor has not reviewed the interim IFRS financial statements, including the transition date balance sheet, when filed
Comparative financial information
The notice also proposes the following with respect to certain filings:
- if the financial information required
- in certain offering and continuous disclosure documents straddles the adoption of IFRS, relief may be provided allowing presentation of Canadian GAAP information alongside IFRS information
This proposal would be relevant to various filings, including business acquisition reports, offering documents, and certain parts of the MD&A in which more than one year of comparative information is required.
The proposal would not apply to the one year of comparative IFRS information required in the standard financial statements in the first year of adoption.
Reference to IFRS
The notice proposes that issuers should either refer only to IFRS in the financial statement notes and auditor’s report, or refer to both IFRS and Canadian GAAP.
Therefore, the following are the proposed requirements for fiscal years beginning on or after January 1, 2011:
- annual and interim financial statements must be prepared in accordance with “Canadian GAAP
- for publicly accountable enterprises”
- (the language can be confusing, but
- by 2011 Canadian GAAP for PAEs
- will be IFRS)
- statement of compliance with IFRS must be included in the annual notes, and for interim statements, compliance with IAS 34 Interim Financial Reporting
- auditor’s report must refer to IFRS (reference to Canadian GAAP would be optional) and be in the form specified by Canadian GAAS
CSA Staff Notice 33-314
In July, the CSA released Staff Notice 33-314*, which concludes that all non-SRO registrants will be required to use IFRS regardless of whether the registrant fits the definition of a publicly accountable enterprise.
The notice applies to such registrants as limited market dealers, exchange-contract dealers, investment counsel and portfolio managers, and scholarship plan dealers.
Pension Plans
The July exposure draft Pension Plans* from the AcSB proposes the creation of new standards for general purpose financial statements of a pension plan.
The proposals include:
- the statement of financial position, renamed from “statement of net assets...,” would include net assets and pension obligations
- the pension obligation could be measured as the sponsor’s accrued benefit obligation
- all investment assets and investment liabilities would be measured at fair value (determined in accordance with the yet to be finalized new IFRS financial instruments standards)
- financial statements of pension plans would be prepared on a basis consistent with:
- the IASB’s Framework for the Preparation and Presentation
- of Financial Statements,
- IAS 1 Presentation of Financial Statements,
- IAS 8 Accounting Policies,
- Changes in Accounting Estimates and Errors, and
- IAS 10 Events after the Reporting Period
The final standards for pension plans are expected to be issued in early 2010.
Note that the new standards will apply to the general purpose financial statements of a pension plan. For federally regulated pension plans, OSFI currently requires financial statements of the pension fund as opposed to the pension plan. The financial statements currently required do not include information regarding pension obligations and are not general purpose financial statements.
No word yet from OSFI as to whether there will be a change to their requirements.
2011 Confirmed (again)
In May, the AcSB released a bulletin* reconfirming the 2011 changeover date, stating that “the current financial crisis and the uncertainty in the US are not reasons to delay Canada’s adoption of IFRS.”
IFRS remains mandatory for fiscal periods beginning on or after January 1, 2011, for publicly accountable enterprises (PAEs).
Gordon Heard, CA
Phone (519) 578-9384
The Finance Group
Practical Solutions.
www.FinanceGroup.ca
IFRS · Regulatory Advisory Services
Financial Management Services · Standards Research
Gordon Heard is the Principal Advisor of The Finance Group, an organization which focuses on helping Canadian companies with their IFRS transitions. The Finance Group also publishes the IFRS in Canada eNewsletter and website. (www.IFRSinCanada.com)
* links to the publications mentioned are available in the resources section of our IFRS website; www.IFRSinCanada.com/resources.html.
