Teaching Advanced IFRS Accounting Topics

The Canadian Institute of Chartered Accountants made a significant commitment to provide supplementary materials to assist in the teaching of IFRS to students. Last September the Institute issued some teaching material at the Intermediate level. The CICA has now issued IFRS teaching materials at the advanced level.

These teaching materials are distributed to Canadian Academics but can be downloaded free on the CICA's site. The document was prepared by a team of IFRS experts from National Accounting Firms and Academe.

The 280 page Filling the GAAP to IFRS is an exposition of some advanced IFRS implementation areas with illustrative examples.

This is not intended to replace existing advanced accounting textbooks. It is however, a very serious and thorough exposition of the topics. The document includes the "usual suspects" but a few extras (like "Biological Assets"- not covered under Canadian GAAP). Here are the contents

• Biological Assets
• Asset Impairment
• Provisions, Contingent Liabilities and Contingent Assets
• Joint Ventures
• Income Taxes
• Financial Instruments

Classification and reclassification
Fair Value Measurement issues
Impairments
Debt v Equity Classification
Disclosures
Hedge Accounting (were you afraid to ask)
De recognition (Securitization) of assets and liabilities

• Employee Benefits (includes pensions)
  
• Share Based Payments
• Business Combinations
• Consolidations and separate financial statements
• Foreign Currency Translation
• Earning per Share

When was teaching financial accounting ever this fun? The list does of course also include some topics that have been traditionally covered in upper intermediate level courses - hey just technicalities.

This document is required reading, especially for areas affecting you business. It will be a valuable piece of guidance going forward. There is a disclaimer at the beginning that the guidance is not authoritative in anyway. Nevertheless it reflects a lot of work by a lot of very informed individuals - not to be sneezed at! I will be going over this with a great deal of interest. I find the more I read the more issues come out of the woodwork.

These materials are written from a Canadian perspective and may be misleading from the point of view of other GAAP such as US GAAP, Brazilian GAAP, Indian GAAP or whatever. They could be useful as a guide on areas to be considered but please be careful, as we are careful when looking at IFRS presentations by US Accounting Firms. The SEC considers the development of teaching materials for IFRS an important milestone. Can similar materials for the US be far behind.

IFRS Training: A process not an event

Training is an integral and key component of the IFRS implementation process spanning every level of the organization up to and including the Board of Directors. IFRS training also applies to a variety of external stakeholders as well as investors, regulators and government. It is necessary but not sufficient to provide information on the major changes between Canadian GAAP and IFRS. Training activities will be continuous over the implementation period and be incorporated explicitly in an implementation plan.

The initial awareness stage of training has started. The CICA has provided a great deal of information on its website and elsewhere. Public accounting firms have done a yeoman job in providing overview courses for clients and other interested parties. They have also provided excellent self study resources on their websites focusing on the IFRS/Canadian GAAP differences and planning considerations. Much of this information is available for specific industries in some detail derived from their affiliates in IFRS reporting countries. Accounting Associations are also presenting courses. As well there have been updates at conferences such as the FEI Canada conferences and IFRS focused conferences such as the IASB/CICA conference in April 2008. See the CICA website at http://www.cica.ca/index.cfm?ci_id=17150&la_id=1

Qualified instructors who have an in depth understanding of IFRS and the differences from Canadian GAAP are in short supply. There is, however, an immediate need for training in most Canadian companies.

Initial courses are being well received but I am hearing that people want and need more. They want to start the quest for the “devils in the details” and exorcise them sooner rather than later! There is a time when the talking around the topic needs to end and the examination of details needs to start in earnest.

The next phase of training will involve intensive “hands on” tailoring to company requirements in more detail than can be provided in a general course, even perhaps those tailored to an industry. All levels of the company must be involved, not just the Finance Department (and not just the internal GAAP gurus and "IFRS aficionados” as I have called them). Major public companies with external financial reporting policy departments have started this detail process, but indications are that the involvement of senior management and the Board may have only just started. Auditors will be an integral component of the IFRS implementation team but they cannot be expected to do all of the work (similar to the SOX exercise). Unless you have in-house accounting and financial reporting experts with available time, there is a need for external help who can provide tailored training programs or research certain areas where there may be important potential differences between IFRS and Canadian GAAP.


The “hands on” approach will continue to be supplemented by industry focused courses and focus groups. There are some external suppliers also in this space but my advice is that you ask questions about Canadian content in the courses. This industry focused problem solving is strongly encouraged by the CICA.

Looking ahead, there will be a need for training for boards, for external users such as analysts, and indeed the business community in general. This type of training has not really started yet although such individuals have attended sessions at professional conferences and have undertaken self study.

It is important to understand that training is not an event but will be a continuous process through the IFRS implementation period.

The Canadian Executives Research Foundation (CFERF) issued an Executive Research Paper in April 2008, “IFRS Readiness in Canada”. The study deals with issues relating to the preparation for IFRS implementation in Canada and is a very useful reference source for the state of play, at least as at the first quarter of this year. (See page 17 for quotes from me about “Obtaining the Knowledge”). The Executive Research Paper is available as a free download on the FEI Canada website - http://www.feicanada.org/resources/feic_resources/research_papers.html


I will be coming back to some of the themes in the CFERF Executive Research Paper in future postings on this Blog. I welcome your comments, updates and sharing of plans for training.

Finding the devils in the details

There has been a lot of discussion in the Canadian accounting community over the last few years about the move from Canadian GAAP to International Financial Standards (IFRS). However, there is recent evidence that a good many companies have not really started their implementation in earnest. They have not started to find the devils yet. A recent Canadian Financial Executives Research Foundation (CFERF) Executive Research Paper "IFRS Readiness in Canada" discusses the state of (lack of?) preparation for the IFRS implementation in Canada. (More details can be found on the FEI website http://feicanada.org/). The study was sponsored by Ernst & Young in Canada. I will be picking up some of the themes from the Executive Research Paper in future postings.



Some people have been surprised by the current status of IFRS implementation. We should not be surprised since financial managers have been dealing with a multitude of issues over the last few years. Sarbanes Oxley (SOX) and the Canadian requirements on internal controls is only one. Other issues have included the BIS Capital Adequacy requirements for banks, Asset Backed Commercial Paper, and the fall out from the rapid appreciation of the Canadian dollar are among others. The life of the CFO is a really busy one - I know.



Unless you came to this site thinking it is some discussion on a new occult group - "The Devil" you know or rather you do not know - you most probably know that the CICA has mandated a move to IFRS and has issued a 2400+ page exposure draft of the IFRS detailed standards. (The exposure draft can be downloaded for free on the CICA website http://www.cica.ca/ - have a lot of ink in your printer if you want a hard copy). I will deal with some aspects of this in future postings. Just reading the document seems a daunting task even for IFRS afficionados. Somehow we must all get a grasp on this. Financial Reporting was my first love a very long time ago. I had a very interesting stint at the CICA in Accounting Research in the early days. Accounting Policy was not "sexy" in those days not like a "real" job?




The purpose of this Blog is to explore the devils in the details in IFRS implementation in Canada. I will look at creating awareness, finding the devils and dealing with them. I have called the process of dealing with them "exorcism" and I have called myself "The IFRS Exorcist" somewhat tongue in cheek. We all of us are virtually certain that there will be devils in the details and some of them may be hiding in places where we least expect them!





Please have patience with me on this project. Some of my associates have said that I have stepped in where angels fear to tread. You know what that would make me? My blogging experience to date has been posting on other Blogs. It has been fun in particular to comment on the US primaries. It may take a while to iron out the process. In the next post I will set out some rules for responsible blogging here. Comments are always welcome.



This is a forum to express views and information and to share experiences. Do not look to it for final opinions to be used as a technical reference. Look to it to provide "grist for the mill".



Good Luck and Bon Voyage to us all!