The IASB is very fond of advertising that over 100 countries have either adopted or converged with IFRSs. However, not all IFRS implementations were alike and they were done at different times. In some cases there were carve outs to allow more implementation time. Some countries just converged and others (as will be the case in Canada) have adopted IFRS. A list of the details of IFRS adopting countries can be found on the following Deloitte site.(Updated to August 5, 2008).
Be careful when you read IFRS financial statements. In particular, look for the specific statement of compliance with IFRSs, in the notes (typically the first note). In order to be in compliance with IFRSs a company must be able to make such a statement and actually make the disclosure. (Companies not making this disclosure are by definition not compliant with IFRS).
IAS 1 paragraph 16 states the following:
An entity whose financial statements comply with IFRSs shall make an explicit and unreserved statement of such compliance in the notes. An entity shall not describe financial statements as complying with IFRSs unless they comply with all the requirements of IFRSs.
This is extremely important. It also drives eligibility for using the transitional provisions available in IFRS 1. Under the Canadian transition we will be able to make the unreserved statement. Incidentally this is critical for the SEC to accept an IFRS filing from a foreign issuer under its 2007 ruling. A statement of unreserved compliance is required.
With this background in mind we can look at the7 cautions that we must consider when looking at these foreign "IFRS” statements. The list below is abridged from the CCH book on iGAAP 2008: IFRS for
Here are the points:
1) Be careful of the many options that an entity can follow under IFRS1. They can have a dramatic difference on comparability.
2) The company may be using a “National” form of IFRS (no specific statement of compliance). They may be following other standards that are of interest.
3) Legal and business practices differ among countries. They can influence reporting and even measurement.
4) There may be local environmental different attitudes to matters such as materiality and the use of Non-GAAP measures. It will be interesting to see if the CSA will prohibit certain non-GAAP measures that are not specifically prohibited under IFRS.
5) There can be differences in MD&A requirements from country to country, including no requirement for an MD&A at all. You may notice that IFRS in general requires more disclosure than Canadian GAAP. Some of the disclosures may be common in MD&A in
And similar to researching Canadian GAAP right now
6) New standards may have different optional start dates. You need to know what version is being adopted in the financials
7) If you are using old financial statements, they may be out-of-date. This is increasingly true as the pace of change continues to pick up.