Friday, November 21, 2008

Grooming disclosures for IFRS Conversion

How are you doing with developing your IFRS "grooming disclosures"?

Do not be late for your very important dates.

Yes I know, any excuse she has for using the cute White Rabbit from Alice in Wonderland.

This is yet another reminder that the CSA issued requirements for MD&A disclosures about IFRS conversions. These disclosures will be required starting for December 31 2008 year ends and have been voluntary for 2008 interims. You might also be aware that the OSFI, the Canadian regulator of financial institutions has also issued a letter setting out expectations on this matter, in some detail. There is some good content here on the level of content in the disclosures and it is a good reference even if you are not in or involved with a FRFI (federally regulated financial institution). You should note that the expectation is that the extent of the disclosure will be increased the closer we get to the 2011 implementation date. The regulators will be looking for progress and if this is not evident from the disclosures it will be taken as a "red flag" - needing follow up, discussion and remediation, if necessary.

The CICA Canadian Performance Reporting Board has recently issued a publication entitled Pre-2011 Communications about IFRS Conversions. The report can be download for free. The guide provides a number of best-practices for pre-2011communications about conversion to IFRSs.

This guidance is particularly interesting since it discusses issues related to KPIs (Key Performance Indicators). The guide notes that:

Since investors often focus on Key Performance Indicators (KPIs), rather than individual financial statement lines, the guidance discusses the impact of the conversion on KPIs. Often, the impact on KPIs will be known even though the effect of the conversion on some financial statement line items is still being determined.

The Guide will provide additional grist for the mill as we all grapple with the content of these "grooming disclosures". It will be interesting to see how companies are coping with the IFRS conversions against the backdrop of the credit crisis.

No comments: