Wednesday, February 11, 2009

Update on new site

The new site is active please go over and sign up now.

I posted the first technical post today. It deals with the long and the short of debt classification. This is a follow up from the previous post on this site.

Monday, February 9, 2009

An update - new IFRS site

You may have been wondering what has happened to me? I am working on a new IFRS site and it will be ready very soon.

I have been working very hard on moving this blog to a new site. There are a number of reasons for this but I will not burden you with them here. The site shell is pretty much ready and you can go over and sign up now I suggest you do. As soon as I deem the site to be stable I will go live. You can go over and take a look and sign up for the feed and or an email (a new option). As well, I have tightened up the feeds. Boy, I have learned a lot about blogging since last May!

The new site is at I am calling the site "The IFRS Exorcist" as I have been generally known by that name - my nom de plume. I will discontinue posting on this site after I start on the new site so if you want to continue to follow me you will have to do it on the new site. At this time I have not decided how to handle the nearly 200 posts that sit on this site. I have to be careful as Google penalizes you for duplicate posting. Please stay tuned for the announcement. If you are linking to me please change the link when I announce the move. I advise NOT deleting your subscription to the old feed for the time being. There may be some links that I am not aware of. I plan on telling the admins of the sites I know link to me. If I leave you out do not take it personally. Please let me know. When of the features of the new site is that I will be able to find out who is linking. I can do this for people on Technorati.

Please bear with me during the move it's very like any move - ugly. You always hope that it is for the better.

This is an advance notice there will be plenty of notice during the transition period and it might take several months to ring everybody over. I apologize for the inconvenience but it will be better for everyone.

Please join in the conversation. I need ideas and feedback. I plan on getting into more of the technical devils in future please remember there are probably more questions than answers. We need more public debate. Soon your year ends will be over. It's really time to engage. Yes I know there are a lot of matters on your plate. I ran the Finance Department of a large pension plan and I had a senior position at a major bank. Believe me I know and can empathize! At some point in the very near future you will wake up in the morning and IFRS will be on your top 3 to do items. It may not be there yet but it will be soon.

The long and the short of debt:
Last week I posted a teaser about debt classification under IFRS. It's an important issue. I will be doing a post on the issue at this site. It's a very important IFRS/Canada difference especially if this "credit crisis" thing goes on for a long time. I am finding people are getting gun shy. Nobody seems to be able to forecast even a few weeks ahead and many are in survival mode. Negotiating debt with the bank may be difficult and there could be surprising results if the "i"s an "t"s are not dotted at year end. Don't forget your opening balance sheet . You will not be able to go back and change conditions existing at year end. More later......

Wednesday, February 4, 2009

The SEC IFRS Roadmap

I learned yesterday from the FEI Financial Reporting blog that the SEC has extended the comment date on the proposed IFRS Roadmap to IFRS adoption in the USA. You may recall that comments were previously due on February 19, 2009. The FEI and others asked the SEC for an extension since most companies are involved in year end activities in the most extraordinary period in recent memory. It's tough to stay focused.

The new deadline is April 20, 2009, a sixty day extension.

This is only an extension of the comment period on a very weighty document. There are wide ranging implications that need more study. Even the most ardent IFRS supporter should understand this. Mary Schapiro certainly has a lot on her plate and it must be difficult to decide what to fix next. President Obama must wake up every day with this dilemma. Let's hope he is actually getting his sleep.

There have been several comments submitted already on the Roadmap and these comments are posted on the SEC website. It's an interesting and transparent process.

Please be assured even though there are numerous rumours flying around, there has been no decision in the US on whether IFRS is to be adopted or if so when. That's the subject of the current debate on the Roadmap.

If you are following along in this blog you will know that we are on track in Canada for converting to IFRS effective for fiscal years beginning on or after January 1, 2011. There are many issues involved in implementing this timetable and I will continue to report on them. I will be moving to a new site very shortly to post under my IFRS Exorcist name but I will give you a lot of notice and allow a transition period.

Questions continue to be asked (by companies that have barely started the conversion - yes believe it or not) will there be a deferral of the implementation date of IFRS in Canada? The Accounting Standards Board in Canada continues to confirm that there are no plans to defer the implementation date. Companies are challenged to find funding for the resources to carry out the project.

Last year, about exactly a year ago in fact, the Canadian Financial Executives Research Foundation (CFERF) conducted a study on IFRS preparedness. The results of the study were published last April. (It's a free download). The study was sponsored by Ernst and Young in Canada. CFERF will be conducting a new study of IFRS preparedness very shortly. It will be very interesting to see if the level of preparedness is significantly higher over last year.

I should point out that I am a Trustee (Board Member) of CFERF (the opinions expressed herein are mine alone)

Implementation in Canada is also complicated by the high level of activity at the IASB as the Board and the FASB seek to converge standards in anticipation of adoption of IFRSs in the USA. Companies have to build in potential changes in the Standards into their conversion plans. This of course adds to the work depending on a company's particular situation.

There is a lot of anecdotal evidence of a high degree of lack of IFRS preparedness in Canada especially in the large number of small to medium size "publicly accountable" enterprises. These organizations do not have the staff who are devoted to financial reporting matters exclusively as many of the larger public companies have.

I am looking forward to the empirical data.

Tuesday, February 3, 2009

Debt Renegotiation 1876 Style

Lessons for IFRS reporting from History.

I am a keen student of history and I came across this letter in our local Antique Market the other day. Please right click to read it in a new window.

It's quite interesting and was found in a lawyer's papers. I have deleted the name of the signatory. Nothing really changes, the writer is asking, indeed demanding, an extension of a few "weaks"(his spelling) to pay off the debt. Does a few more weeks make you weaker? And "you should say nothing of" the interest! An interesting approach - take the offensive?

What has this to do with IFRS? Have I gone completely loopy this time do you think?

It's a teaser of course. Debt renegotiation is a very important matter during the "credit crisis". Check out IAS 1 for the classification of debt as short or long term. You may be surprised about how many situations you think can be long term debt classification might have to be classified as short term. Check out !AS 1. Be sure to refer to the latest version and not the version in the Exposure Draft last April. I will discuss the issue later in the week.

Why the fuss over $130? Of course a dollar was worth more, even Canadian dollars in 1876.
It is not easy to do comparatives. I found no information for Canada. However you can get some information on the Measuring Worth Site. If one looks at consumer prices the $130 is a little over $2,500 now (most inflation in the post World War II period). If you look at other measures such as the relative unskilled wage the value of $130 (US dollars) would be about $18,000. I suspect the data would be similar in Canada.

Please read IAS 1 (NOT IFRS1 - there is a big difference) to find out the issues related to year end classification of debt. There are also a lot of other financial statement disclosure matters in that standard also.

Stay tuned. I am also doing a lot of work on moving this blog - please stay tuned. There will be a very concentrated set of articles when that happens.

I hope you enjoyed the retrospective look.

Monday, February 2, 2009

IFRS Exorcist Update

It was a very busy week on the IFRS front last week.

First of all I attended the IQPC Summit in Toronto. There were many high profile speakers speaking about their IFRS experiences. When I am able to catch my breath I will be writing about some of this. However, I will respect the off the record aspect of the presentations. There were some themes though. Later on last Thursday I went as an Observer to the afternoon session of the Canadian Accounting Standards Board Advisory Group. Some interesting stuff there, especially concerning the role of the auditors from now into 2011. I will post about the issue very soon.

I presented a workshop on pension issues and IFRS at the Summit. The issue has not received much airtime. It is interesting that there has been so little written about the subject given the historic meltdown in pension assets. I predict that pension accounting will be as political, if not more political, than the fair value debate in the banking industry. My views on this are essentially do not shoot the messenger. How do you present the facts transparently? There may be cases when it is not appropriate for the accounting head to wave the the regulatory tail. Or is that the other way around? In any case you get my drift I hope. The pension accounting issues need debate and we expect an Exposure Draft from the IASB soon. The proposals in the Discussion Paper on Pension Accounting very much focused on getting away from smoothing for accounting purposes. That is writing off actuarial losses and past service costs for defined benefit plans immediately. Obviously given the long term orientation of pension plans this is not a good place to be for funding. There are few, if any, companies that can afford to make up a deficiency in one gulp. Do we really want to make defined benefit plans go the way of the Dodo? Do employees really want to take on investment risk given the dramatic stock market melt down last year. There are serious policy issues here. I predict active governmental involvement in the pension area. Involvement in the financial reporting aspects has not really started yet. There are hover, quite a few proposals on how to deal with funding issues. Just wait until legislators get a handle on the financial reporting issues!

I am of course available to help present the issues and develop courses in the area. Please take a look at my background on
As I have been telling regular readers here I plan to move the blog to its own site. There are a number of reasons for this and I will explain the rationale in a later post.

Right now like Mary Schapiro, the new Chair (Revision - erroneously referred to as "Chief Accountant"- my apologies of course I knew she is the new Chair) of the SEC, I am taking a deep breath and regrouping when it comes to IFRS. More IFRS to come I promise.

By the way speaking of SEC the comments are due on the IFRS Roadmap proposal very soon. The FEI has asked for an extension for comments and this proposal makes a lot of sense. It comes in the middle of a very difficult year end for most companies.

David Albrecht an accounting professor who publishes a blog called the Summa recently summarized the issues for comment. It's kind of a roadmap to the roadmap. You may now that David is part of the IFRS Resistance movement in the USA. It's all done in good spirits.

A few weeks ago I wrote a post about my IFRS Exorcist identity. I had an indication that someone had taken it as a user name on a site. I do police it. When I tried to sign up on a site I got a message that the name was taken. I wrote to the company to investigate and it took quite a lot of time to investigate. The reason was not that the name was taken it was because it was an unsuitable name it has "sex" in it -IFRSexexorcist you know. You don't want your kids reading about IFRS! Well if you find IFRS sexy you really do need a life!

Tuesday, January 27, 2009

Lessons from the IQPC Summit in Toronto

The IQPC IFRS Summit was on today and continues tomorrow.

I made some interesting notes. There seems to be more than one company that has found lunch and learn sessions a useful tool for training and awareness of IFRS projects. They could even be a way of identifying individuals who have an interest in the project in general.

Another topic that got some traction was how to keep track of the IFRS financial data for the comparative year prior to implementation (2010 for calendar year companies). One person noted that their company would be keeping manual track of the IFRS adjustments. Interestingly one of the presenters said that they would be keeping a "shadow"general ledger. Other presenters and participants indicated a similar approach. Please let us know your thoughts. What are you doing to keep track of your 2010 data.

More thoughts later in the week.

Friday, January 23, 2009

Will the tortoise win over the hare in US IFRS conversion?

There are signs on the horizon that the US changeover to IFRS may be in jeopardy or perhaps slowed down considerably.

I previously reported on the statements of the new SEC Chair about IFRS. The general tenor was to take a deep breath and take a second look. Comments on the SEC IFRS Roadmap are due February 19.

In this vein the FEI in the US has issued a letter to the SEC asking for a 45 day delay in the comment period. The pressures of year end reporting under unusual circumstances are restricting time that can be spent on responding to the important document.

Please read about it in the latest FEI financial reporting article.

My advice to anyone following this issue is not to jump to any conclusions. As I understand people seem to be asking for more breathing room all round. We must await the comments on the proposed IFRS Roadmap. As far as I have seen there has been no official repudiation of the document that was issued for comment under the previous Republican administration. There are reports of differences of opinion in the Obama administration. I will remind everyone that the proposed Roadmap would mandate a phased in approach with a significant review of progress in 2011. Just before the next presidential election. Just when you thought that it was over.

There are some that are saying that a Tortoise approach would be better. The proposed IFRS Roadmap seems a rather slow "hare"to me. What do I know I am a Canadian. You have to build in the requirement in the USA for two years of comparative data so it would be on top of us before we know it.