Are you late for a very important date:Suggested answers

Based upon the recent CFERF Executive Research Report “IFRS Readiness in Canada” there are a significant number of executives in “publicly accountable enterprises” who were unfamiliar with IFRS, its content and the many conversion issues. The report concludes that many companies in Canada are simply not prepared for IFRS conversion. The Executive Research Report is a free download at. http://www.feicanada.org/files/CFERF%20IFRS%20FINAL%20REPORT.pdf
It is true that the research for the Paper was done in the first quarter so the state of play may be different now. Let’s hope so.


Of course you are probably aware that the CICA has mandated the adoption of IFRS for “publicly accountable” enterprises for years beginning on or after January 1, 2011. Incidentally, “publicly accountable” is a defined term and I shall come back to that in future postings.. For those with calendar year ends the first IFRS financials will be in the first quarter that will end on March 31, 2011.(Take a close look at IFRS 1 for the many issues that will arise on initial implementation – you will need to be prepared early). The implementation date seems far off but to see it that way is to be looking at a telescope backwards. Objects in the mirror seem further away than they actually are -. drive with caution!

The importance of a detailed implementation plan covering all matters and the activities to be performed during each step cannot be over-emphasized. Actually the plan will be more like a rolling forecast than a budget. There will likely be pitfalls along the way. The accounting world will not go into a frozen state until 2011. As well, when we look in earnest it is virtually certain we will find those darned devils in the details. So let’s find them sooner rather than later!

As they say in those annoying Infomercials – “And that’s not all”

Some of you might have wondered about the significance of the 2008 dates posed by the White Rabbit in my last posting. Did I put them in as a red herring? The answer is a firm “No”’.

The Canadian Securities Administrators (CSA) have issued a very important release on providing disclosures in the Management Discussion and Analysis about the progress of IFRS at every reporting period (that’s right, including interim periods). CSA Staff Notice 52-320 “Disclosure of Expected Changes in Accounting Policies Relating to Changeover to International Financial Reporting Standards”.. It is freely downloadable and can be accessed through the CICA site under Canadian Developments. http://www.cica.ca/index.cfm?ci_id=39166&la_id=1
The release covers the period between now and the period to when IFRS is first adopted. Although the Staff Notice relates to the MD&A , issuers are urged to consider “whether additional disclosure beyond MD&A might contribute to informing investors about how the issuer expects it will be affected by the changeover to IFRS”

The document calls for quantification of the effects on the financial statements of adopting IFRS.. Expectations increase as we approach the conversion date. More detailed quantification will be expected in the year preceding the change. The document also calls for ongoing disclosure of the status of the IFRS implementation plan itself over the period to IFRS adoption.. It seems that the CSA are expecting a discussion of the IFRS plan with some granularity.

Although discussion of the implementation plan ( referred to as the IFRS changeover Plan) is not required immediately, one is sure that the Securities Administrators, and many others, might like to see the disclosure earlier rather than later, in 2008 interim filings. In any event “no later than in its annual MD&A beginning three years before an issuer’s changeover date, the issuer should discuss the status of key elements and timing of its changeover plan”.(For calendar year filers that would be for the year ended December 31, 2008).

Obviously this is a document that is required reading. Discussions should commence soon (if they have not already) with your various professional advisors, both internal and external. What will the plan be to meet these disclosure expectations?

I would really like to hear comments on this release and the challenges you expect and are having currently.. More devils in the details?

Well what is the answer to the question posed by the White Rabbit in my last posting - “Are you late for a very important date? You may or may not be on time for all the dates mentioned and many more (by reference to your IFRS Changeover Plan). I leave this for you to assess in the privacy of your offices and boardrooms. CSA Staff Notice 52-320 is certainly a wake up call. There is precious little time left.