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IFRS Changeover

Moving to IFRS

The deadline for International Financial Reporting Standards (IFRS) conversion is fast approaching, but are you prepared? Time is ticking and many Canadian businesses may not expect the magnitude of work, risk, and complexity involved in the changeover.

What you need to know

Effective January 1, 2011, all publicly accountable enterprises (PAE's) in Canada will convert from Canadian General Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS), a standard that is also adopted and mandated in over 100 other countries around the world. The conversion from GAAP to IFRS will be mandatory for all PAE's in Canada by the end of the 2011 fiscal year.

Many companies have already committed to preparing for changes applicable to the IFRS standards by mapping out all their financial statement components and drafting IFRS ready financial statements. Ideally, most businesses should have their IFRS financial statements ready a year early in order to meet the requirement for comparable year-over-year data when the changeover comes into effect in 2011. Even though the IFRS's do share similarities with GAAP, there are a multitude of measurement and calculation differences that add to the complexity of this migration. For example, asset de-recognition will have a significant effect on a financial institution's balance sheet for any that participate in securitization activities. To help you better prepare for your migration, here is a guideline to help measure your milestones in the IFRS implementation:

The timeline presented is intended to provide a brief overview of what your organization should be prepared for and how to prioritize. However, to better define a schedule more appropriate for your business, consult an IFRS professional to assist you in fulfilling your organization's needs.

Planning ahead is key in managing such a substantial change for your business. Even well after the IFRS conversion, there may be significant impacts on management reporting, tax reporting, and information technology. Change management and personnel training will be an important task to prioritize in the schedule.

How your business will benefit

Adopting IFRS will bring understandable and enforceable global accounting standards and practices that will provide a new way of producing more transparent reports for Canadian businesses. Moving to a more globally accepted reporting standard will enable many Canadian PAE's to enhance their transparency and comparability with other businesses following the same standard. This comparability will add value to companies by presenting consistent and comparable information to analysts, investors and other decision-making stakeholders. It has also been noted by the Accounting Standards Board (AcSB), Canada’s accounting standard setters, that businesses following IFRS will benefit through increased global reach, granting them greater and easier access to international capital markets, funding, and investment opportunities.

How PowellDorian can help

An IFRS conversion initiative will require a preliminary assessment of GAAP and IFRS differences, detailed design of the conversion planning, implementation and testing, and a post implementation review.  In addition, reporting standards will require ongoing monitoring as the standards will continue to undergo continuous improvement and new standards will be developed.  Prior to the January 2011 adoption date, IFRS and their interpretation require substantial investigation to assess the impact on the business, its systems and business processes.  This can be a resource challenge for the company.  The migration can take up significant amount of resources and focus away from your business, and is also one that will require subject-matter experts with in-depth knowledge in accounting practices to ensure a successful conversion.

PowellDorian can help relieve your burden and assist you in overcoming your compliance challenges.  We understand that every business is unique and has a need to respond quickly to compliance changes.  Our professionals have facilitated numerous IFRS implementations for companies spanning over a multitude of industries.  Whether you are short on resources or require professional assistance with your migration, PowellDorian can help you lay the groundwork for your IFRS endeavours.