Will the Canadian IFRS Conversion be deferred?

No deferral of the IFRS conversion date (for fiscal years beginning on or after January 1, 2011) is expected.


I have been speaking with a number of people about IFRS in Canada over the last week or so. A surprising number (perhaps) are asking whether the Canadian Accounting Standards Board plans a deferral of the conversion date. The answer is that there is no deferral and it is definitely not on the table for discussion.


The credit crisis has distracted many from the effort of converting to IFRS. It is quite difficult to concentrate on an exercise that seems to be two years away one one is concerned about meeting current commitments.


How prepared are publicly accountable enterprises? A survey by the CICA late last year indicated that the degree of preparedness has increased over 2008 but less than 50% had indicated their initial preparation for IFRS! Less than 4% of the companies surveyed by the CICA have appointed a project leader or team for IFRS. This is really surprising!


There is some anecdotal evidence that there has been some delay in IFRS projects. Many may not have gone much further than an initial diagnostic and some early stage training. We will see some information in the next few months as companies issue their MD&A for the December 31, 2008 year end under CSA requirements to disclose the progress toward IFRS conversion. The first voluntary results (discussed on the CICA webinar on the CSA MD&A requirements this week) seem to indicate that initial activity may have been minimal when compared with the large task ahead. However as the presenter, Dr. Chant from Deloitte, pointed out there may be a reluctance to disclose to much too early since it is simply too early to be too definitive. (I will give you some highlights from the CICA webinar and a link tomorrow - it was worth listening to).


Last year was a year of surprises. We knew about the credit crisis but we certainly did not call the extent of the market declines in the fall that caused a flurry of activity. Including the fair value discussion among accounting setters around the world. Commodity prices, especially oil, have come down dramatically. The Canadian Dollar declined by 20% or so. All these matters affect the psyche of accounting standards setters. We can expect more activities and indeed we have the right to actually demand more activity on critical issues such as fair value determination and impairments.


Another factor of some concern to some people is the activity at the IASB to conform with US accounting standards (the "Norwalk" agreement). The SEC's proposed IFRS roadmap sets out certain milestones and this has raised the ante somewhat.


Change is everywhere on the accounting horizon. Just take a look at the projects that are on the IASB's plate! To help us track these projects the AcSB has published a memorandum to help us understand the possible changes that may take place from now until 2011. We have not been provided with the same stability as the EU conversion a few years ago. It will be a critical part of everyone's conversion plan to monitor the IFRS changes that will be taking place and are pending over the next three years or so! Of course this will also be true for other countries (e.g Brazil and India) converting or converging with IFRS over the next few years.


According to Paul Cherry, the Chair of the Canadian Accounting Standards Board, there will be no deferral of the IFRS conversion date for Canadian Publicly Accountable Enterprises. Mr. Cherry was speaking at a Deloitte session last week on year end issues for Corporate Directors. We are still on track for 2011. We have still to hear the official positions about accounting rules going forward on private enterprises and not for profit entities from the AcSB. The word is that it will not be too much longer.


So it's not full speed ahead an d**n the torpedoes. It is go ahead expeditiously and watch for the icebergs ahead, you will need to keep a sharp look out for those changes.