IFRS - The wrong move for Canada?

Al Rosen, a forensic accountant and principal of Rosen & Associates in Toronto and a former professor at York University in Toronto has written an interesting article setting out his concerns with the adoption of IFRS in Canada. Please read it and tell us what you think. The article is from the July 21 2008 issue of Canadian Business magazine and entitled Pass the Buck.


http://www.canadianbusiness.com/columnists/al_rosen/article.jsp?content=20080611_72311_72311

We interupt this program

Some announcements


Thank you

Thank you everyone for continuing to read this blog. I do not have an e-mail sign up yet and I am in two minds whether to add this. I like the idea of privacy. If you wish to contact me you can do so at the e-mail listed in my profile on this site.

You can also track me through Google Alerts - keyword IFRS if you really do not mind a daily e-mail!

Other Countries

You may wonder why I speak about other countries here. Well we need to start thinking internationally. India and Brazil for example are working on similar timetables to Canada - they have their own set of issues and I will not explore these too deeply. The focus here is Canada and the USA.

If you want to communicate with me and do not speak English you can do the translation of a short comment through babelfish

http://babelfish.yahoo.com/

I can translate a comment I make and paste it to my reply. You need to keep it short.


Recently I sent an e-mail to a reader in Brazil with the Portuguese translation from babelfish. Probably not the best but it sort of does the trick.

Logo Header

You will notice that I added a logo header to the site.

Linkedin

You may have been trying to review my background on Linkedin. I just added some more information there. See

http://www.linkedin.com/in/theifrsexorcist

Forthcoming Postings

There is no shortage of things to talk about. There have been quite a few developments in the USA and I wanted to be reasonably timely. I plan to have a weekly feature on Difference of the Week soon. Please send me your requests.

IFRS and US GAAP: The FASB's two horses

Much was said about the FASB and “riding two horses” at the recent FASB Forum on IFRS dealing with issues relating to the possible adoption of IFRS in the USA.

A date for adoption by US companies is yet to be set. If I was a betting woman I would say that the odds seem good that the USA will eventually adopt IFRS in some form or other. Perhaps you might say the odds would be evens or better? When will they adopt IFRS that’s the $64,000 question, with inflation the $64 million or perhaps the $64 billion question. Inflation has a habit of getting out of hand (that’s another question)

A date is required so that other things such as training and college education can proceed. What are the odds on which date? 2011 – 500 to1, 2013 - 2 to 1, 2015 – evens. There is a variety of opinion here. (I have seen reports that a date will not even be announced for two years!)

An even more difficult question is what conditions will the SEC/FASB/IRS/Regulators etc . have in order to ink a deal to adopt IFRS? Several thoughts have been advanced. I have heard there should be a “much improved” IFRS (with more guidance?), further convergence before implementation, a moratorium on standards issuance of up to 3 years on conversion (i.e. no IFRS standards for 2 years before conversion and one year after), a five-year conversion period etc. I have also heard a suggestion that perhaps , in the first instance, only some companies would be allowed to adopt IFRS for industry comparability? This is all too complicated to handicap.

We are following this debate in Canada with a lot of interest as the USA is our main trading partner. Many of our companies raise capital in the USA.

Perhaps in order to bring the USA to the altar there will need to be a good prenuptial agreement (and a postnuptial) agreement?

The FASB is acting in good faith here and is doing yeoman work in working of convergence projects. This is a good thing in any event. And Canada is also actively working on these convergence projects. Of course we have the 2011 conversion and adoption date to provide focus!

Now to the FASB’s other horse----

The FASB continues to work on improvements to US GAAP. After all it certainly has a mandate to do that. You might be interested in one development that seems to be somewhat quietly happening in the background. There is a project to codify US GAAP and the project is in its latter stages. Anybody who has worked with US GAAP knows that it can be difficult to work with if you are not working with it continuously. There are many sources of US GAAP and the FASB is working towards codification to provide one set of US GAAP A prototype is in the process of trial and anyone can sign up and try it for free and provide comments. For more information see http://www.fasb.org/project/codification&retrieval_project.shtml.

It is also keyword searchable. I wish I had a tool like this years ago. The codified GAAP is still in the trial phase and should not be used as an authoritative source of US GAAP. The codification project was reviewed in the Podcast Accounting Best Practices with Steve Bragg, Episode 62 on Accounting Standards codification. You can down load the Podcast into iTunes. You could transfer it to your iPod if you have one. I love my iPod – it’s indispensible to me.

Stay tuned in.

IFRS Canadian early implementation rules from CSA

CSA Staff Notice 52-321 Early adoption of International Financial Reporting Standards, use of US GAAP and reference to IFRS-IASB has recently been issued (June 27) See the full text here.
http://www.gov.ns.ca/nssc/CSANotices/csanotice52-321.pdf


Essentially the CSA will allow exemptive relief to issuers who may wish to apply IFRS in financial statements prior to the mandatory implementation date in 2011. This will be done on a case by case basis. The following cautionary note was added.


We expect an issuer contemplating the possibility of adopting IFRS before 2011 would carefully assess the readiness of its staff, board of directors, audit committee, auditors, investors and other market participants to deal with the change. An issuer should also consider the implications of adopting IFRS before 2011 on its obligations under securities legislation including those relating to CEO and CFO certifications, business acquisition reports, offering documents, and previously released material forward-looking information.


Readers are reminded that the OSFI has previously prohibited the early adoption of IFRS by FRFIs(Federally Regulated Financial Institutions) - this reference can be found on the CICA's website at http://www.cica.ca/3/9/1/6/6/index1.shtml

IFRSCanada: Are you "publicly accountable"?

As readers of this blog know the CICA has mandated that IFRS be adopted for all "publicly accountable" enterprises effective for fiscal years beginning on or after January 1, 2011.

How do you know if you are "publicly accountable" for this purpose? Please read the CICA Exposure Draft Adopting IFRSs in Canada April 2008. You can find the definition under the Scope section. There may be some surprises here to some of you who have a broad concept of who is "publicly accountable".

Essentially you are "publicly accountable"for this purpose unless you are excepted (read it carefully).

Broadly the exceptions are:

1. Private enterprises who have not issued debt or equity "instruments" in a public market (presumably anywhere including jurisdictions where IFRS has not been adopted - USA?). Entities who are in the process of issuing such "instruments" would also be swept up under this provision ( for example you would seem to be swept in here if you issued such instruments as late as 2010, with no transitional period).

2. Private enterprises who do not hold assets in a fiduciary capacity for a broad group of outsiders.

3 Not for profit enterprises as defined

4. Public sector entities, as defined. However, government business enterprises and business-type enterprises are not covered by this exception (i.e. they would be subject to IFRS).

Interestingly pension funds whether public or private would, it is proposed, receive a special treatment. It is complicated, I will cover it later in a separate posting. Once again you are in unless the CICA says you are out.

The above discussion is very summarized. Do not rely on this discussion to make your decision. Please read the definition carefully. It may not be immediately obvious if you are included. In case of doubt please consult your auditors - well consult them in any case!


Please pay particular attention to VI of the Exposure Draft on Comments Requested. The first question asks for input on who should be covered. Should there be more or fewer exceptions, should there be special transitional provisions? You have until July 31 2008 to provide your input on this and other questions.


The CICA Exposure Draft can be found at
http://www.acsbcanada.org/download.cfm?ci_id=44313&la_id=1&re_id=0

Other Blogs Part two

The FEI Financial Reporting Blog


The FEI Financial Reporting blog from the US reports on financial reporting developments in the USA. The blog is looking for readership. Please check it out. You can sign up at the link in this URL. (it is open to all)


http://www2.financialexecutives.org/blog/blog.cfm?blog_id=1#20080620082520



Please refer to the June 20 post - (the morning) - Do you know somebody? That post contains a link to sign up.

IFRS - Spotting the Differences

So you are ready to get down and do some serious work on the details. One step is to get familiar with the differences between Canadian GAAP and IFRS.

Many if not most of you have already made this step to some degree or another. The Accounting Firms have published some quite weighty publications dealing with the identification of differences. Visit the “Big Four” websites in particular where there are downloads of publications. Some firms charge for detailed comparisons and these are generally restricted to clients for the most part. Speak to your auditors about what they will provide to you.

Do not forget to check out the websites of firms that are not part of the “Big Four”. For example, BDO in Canada has a series analyzing differences on various topics.


These difference analyses, although very useful in gaining some familiarity, can be dangerous. Remember we are comparing one principles-based system with another principles-based system. There will be nuances that will emerge later (the devils in the details).

Here are some points to consider.

A “minor” difference may turn out to be very material in your case. Conversely, a matter identified as “major” in an analysis could be immaterial in your case or not apply to you at all.

Because of materiality considerations (hopefully not an error) you could be following an accounting treatment that may differ from a strict reading of Canadian GAAP as set out in the analysis documents. It is essential that you have a complete understanding of your existing accounting and the basis for following it.

In a past life I worked in the National Department at a major firm. The focus was on differences between US GAAP and Canadian GAAP. Among other things this analysis was used to identify candidates to be used in the reconciliation for US filings. (This still goes on today). However, this identification is in many cases only a first step and a great deal of care must be taken to research the areas carefully. Sometimes there can be surprises. An initial impression could be changed when a call is made to experts (in that case New York office). There are likely to be a number of such situations that will arise in the case of IFRS differences. I suggest document, document, document………..and never make assumptions.

There are a number of mechanical issues when dealing with these differences memoranda. It is probably impossible to be totally comprehensive despite the yeoman work done on the documents. You could get an impression of comprehensiveness just looking at the sheer size of the documents. There can be no guarantees, especially in the case of principles-based rules such as IFRS.

You must make sure that you are using the current version of the analysis of differences. I was reluctant to provide links because it could be very dangerous to refer to an out-of-date document. The IFRS world moves on. Watch those projects on convergence and the “Annual Improvements” project on IFRS, not to mention IFRIC interpretations. You will need to keep an eye on these and their effective dates. I plan to discuss these considerations in future. Work with your auditors on this.



These difference analyses can be dangerous in the wrong hands when used as a tool for conversion. They are very useful for initial familiarity though. Do not rely on the analyses without further research. A sophisticated background in accounting theory and practice is very useful in navigating through the minefield of these “differences”. Take care you do not get blown up by a mine!

Is it all about differences?

The objective of the IFRS conversion is to actually report in the other GAAP – IFRS – not to be able “just” to do a reconciliation. That is an entirely different exercise. It is strategic and not tactical. It is mission critical to become fluent in the IFRS areas that apply to your business. This point comes up in many discussions on IFRS conversions.

I will discuss the issue of how to be fluent in later posts. E&Ys question (“Do you Speak IFRS?”) is a good one!

The IFRS/Canada difference of the week.

I will be starting a feature soon on the “Difference of the week” as identified in the documents discussed. I will look at the differences from different perspectives. I need your input here. I will provide questions and not answers. Stay tuned

IFRS Media and Entertainment webcast

On July 9 Ernst & Young is hosting a webcast on IFRS conversion in the media and entertainment industry. I find it useful to see how issues are to be resolved in different industries and plan to attend the webcast.

If you wish to attend you can go to

http://webcast.ey.com/thoughtcenter/default.aspx?seriesunid=%7B8ec87156-246b-4dd9-8ba1-d9784083e4a7%7D&prog=%7B529691e6-7451-4b4b-b010-eaa06de8beca%7D

You will be asked to fill out a registration form on line but the webcast is open to non-clients of E&Y.

IFRS in India

I had just finished writing the article on India in my last post when Google Alerts made me aware of these articles on developments in India.

http://economictimes.indiatimes.com/News/Economy/Policy/The_business_case_of_IFRS_in_Indian_context/articleshow/msid-3143804,curpg-2.cms

http://economictimes.indiatimes.com/News/Economy/Policy/Its_a_fait_accompli_let_us_brace_up_for_it/articleshow/3143807.cms

Seems like IFRS adoption is going ahead but there are a number of problems such as Companies Act requirements. In Canada IFRS is going to be included in the CICA Handbook and as such IFRS will be on side with our Company Law that refers to the CICA Handbook as GAAP. That's one problem we do not have. I was interested in the comments about the difficulties relating to obtaining fair values. I would like to hear from readers about their difficulties getting fair values for IFRS in Canada.

IFRSCanada: 2011 - we are not alone

Did you know?



Do you do business in India or with India? IFRS will be mandatory there for "public interest entities" for accounting periods commencing on or after 1st April, 2011. The IFRSs will be adopted for the listed entities and other "public interest" entities such as banks, insurance companies and large-sized entities.

The announcement (July 2007) can be found on the IASB website at

http://www.iasb.org/News/Press+Releases/India+announces+convergence+with+IFRSs+for+public+interest+entities+from+2011.htm

IFRSUSA: Can we have a date?

CFO magazine posted an article today on matters discussed at the FASB Forum yesterday.

Everyone seems to be waiting for a date for a move to IFRS to be announced. Is IFRS Coming to America? Read more at



http://www.cfo.com/article.cfm/11569504/2/c_11566846?f=home_todayinfinance&x=1

In Canada many people did not really get serious until the CICA confirmed the 2011 implementation date. There is nothing like a firm date to get people's attention. Likewise in the US so many plans hinge on a definitive date as discussed in the CFO Magazine article.

IFRS Conversions: Statistics and Surveys - a devil?

An interesting point came up at the FASB Forum yesterday. Has anyone considered the effect of the conversion to IFRS on government statistics and on the various surveys completed by companies?


I must confess this point had escaped me until one of the speakers raised the issue. Governments collect a mountain of data from companies. How will their reporting be affected by IFRS conversion. On first blush there seems to be a danger and indeed high probability of data inconsistency say from 2010 to 2011 in Canada's case. "Heads up" to Statistics Canada - I hope that you have started to think about this!


As a former CFO I am familiar with the various surveys from magazines, newspapers, associations, government etc. The surveys could be prepared for the top companies in Canada or some such thing. They can be tricky and need to be controlled by respondents. Often there might be different definitions for the "same" thing. For example "assets" can mean different things from one survey to another e.g. what is included as assets. Be careful here. One of the most important things in these surveys is consistency from year to year - forget that on IFRS conversion. Do the authors of the surveys know that IFRS conversion will happen? What are their plans?


Perhaps this "Statistics and Surveys" issue can be helped and even resolved by the adoption of automated reporting such as XBRL? I don't know. It seems to me that if data is collected at a certain level of granularity a "Taxonomy" can be developed to cover these situations and remove the possibility of error - over to the IT gurus - am I just talking through my hat? I would like to hear from you.

Consider the following quote and quote within a quote and reflect on it. Both Mark Twain and Disraeli are a great source of inspiration to me.

Figures often beguile me, particularly when I have the (task of) arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: "There are three kinds of lies: lies, damned lies and statistics."

From Mark Twain

IFRS: Is there a devil in your contracts?

One of the areas everyone is saying that you must consider is the effect of the conversion to IFRS on contracts.

My first reaction to this point is that I believe that every company should already have existing controls in place to deal with changes that would have occurred in individual accounting policies under National GAAP. Would it not be part of contract administration already?

Even though this may be the situation there is no escaping the fact that the change to IFRS is certainly potentially more material than any change in accounting policy that you have experienced before (unless of course you went through another IFRS conversion).

When thinking of contracts my immediate thoughts go to debt covenants. Nobody wants to trigger an immediate requirement to repay debt. However, the problem is more pervasive. There are hidden devils everywhere and in places that you may not have thought about.

In the FASB Forum yesterday (see yesterday’s entry) some other potential problems were identified.

What about profit sharing arrangements that refer to a percentage of income under GAAP? Sharing of income under joint ventures – perhaps the participants are in multiple jurisdictions? Employment arrangements that pay employees a percentage of income (not necessarily confined to “executives”), long term royalty arrangements … etc…. The list continues.

Special kinds of devils could reside in contracts that specify the use of GAAP at a certain date such as the inception of the contract. This is referred to as “frozen” GAAP by one of the presenters at the FASB session. This could be a nightmare to keep the old records under the “old” GAAP simply to comply with a contract.

Do you have other examples?

Time is running out to open the lines of renegotiation. There are many matters to consider.

The devil is in the non-accounting details indeed.

FASB IFRS Forum June 16, 2008

Today the FASB held its Forum on issues and considerations with respect to the potential adoption of IFRS by US companies. I had planned to attend in person but I was unable to get to New York. I did however listen to most of the presentation by webcast. There was no video and it was difficult for me to follow who was speaking at times. However, the FASB is to be complimented on having the session which covered a variety of issues. The session was recorded and is available at:
http://fasb.trz.cc/live.php

See also the FEI blog at:
http://www2.financialexecutives.org/blog/blog.cfm?blog_id=1#20080616111610
The FEI blog deals with the SEC and FEI positions on IFRS adoption.

Many US accountants believe that US GAAP is principles-based with a lot of guidance but there is concern with adopting the principles-based IFRS that has much less guidance. This would lead to a different cultural/behavioral shift in the US. One of the speakers spoke about the current environment in the US - about the regulatory instincts and propensity to litigate. He referred to this as “the death threat of liability”.

I will be drawing on the FASB forum over the next few days to cover some interesting areas of interest that were covered there.

IFRS: Other blogs part one

I am monitoring other blogs and I came across this one from PwC. It has interesting video interviews imbedded. I am a blogging newbie and I do not have big firm resources. However, I will try to jazz my blog up over the next few months. The particular entry deals with revenue recognition.



http://pwc.blogs.com/ifrs/2008/05/revenue-recogni.html?cid=118751134#comments



I am searching for other blogs and other information that is publicly available.



I would add that at this time I am not affiliated with PwC or any other accounting firm. Please send me the URL of your blogs. There has to be content and not an overt marketing of services. I do not even do that in my own blog entries. If there is a question please e-mail me.

IFRS: Is there an "Official" Language - yesterday's question.

The answer to yesterday's question could be English - choice number 5. The answer could be 6 there is no "official" language of IFRS. The answer is not simple, read on.


This is the statement in the Preface to IFRSs. You can read this in the 2500+ exposure draft downloadable on the CICA's website (page 37).



The approved text of any discussion document, exposure draft, or IFRS is that
approved by the IASB in the English language. The IASB may approve translations in other languages, provided that the translation is prepared in accordance with a process that provides assurance of the quality of the translation, and the IASB may license other translations.





I understand that in Canada the CICA will continue to assure that it will provide an authoritative French version of IFRS going forward. This is one role the CICA will take going forward in the brave new world of IFRS-Canadian style.



You could say that as far as we are concerned in Canada the answer is 2 - English and French.




This language issue is interesting. It is difficult enough to order a salami sandwich in a foreign country. Try dealing with accounting for complex transactions. I would think this is especially true in a "principles-based" set of accounting principles such as IFRS. Still if there are variations in practice it would be the role of IFRIC to sort this out provided the issue was within its mandate.



I suppose that everyone would have to go back to the original IASB discussions in English?




I do not know how this all works out in practice. Do any of you have any experiences to relate to us in this blog?

IFRS Facts: Did you know?

What are the official language(s) of IFRS?

What is the answer?

1) French

2) English and French

3) They follow the official language rules of the U.N.

4) There are official National language versions in every country that adopts IFRS

5) English only

6) There is no official language for IFRS

Answer tomorrow.

IFRS: Demystifying the IASB

IASB AND THE IASC FOUNDATION

Who are these folks, how are they organized and who pays for them anyway? How do they develop standards?

This document is a useful overview.

http://www.iasb.org/About+Us/A+guide+to+the+IASB+and+the+IASC+Foundation.htm

IFRS: Information Overload?

Very interesting quote


Increased volume and complexity of financial disclosures –

Reviews of the 2005 financial statements of EU companies suggested financial disclosures under IFRS increased by upwards of 30% over prior national GAAP levels. Changes in level of disclosure in Canada are expected.

This is a quote from the CICA publication “20 Questions Directors and Audit Committees should ask about IFRS Conversions” http://www.cica.ca/index.cfm/ci_id/43008/la_id/1

The quote is out of context (apologies) but I put it up for discussion of the broader issue of the increasing level of disclosures.

You could analyze the above quote with a critical or even cynical eye. So perhaps some of the countries in the EU started with less disclosure than in Canada? Surely the increase in disclosure will subside once we are over the initial years of implementation when increased disclosure is required to explain the effects of the new accounting? Will one come up short if there is not about 30% more disclosure on adoption? Will we then have provided too little disclosure? This is something like the feeling you get when after assembling furniture you have screws and other hardware left over – I must have left something out you say?

The important point is that there will be more disclosure on the adoption of IFRS. There will be increased disclosure in any event even without IFRS implementation. This is a continuing trend and management and boards must deal with it.

What are the implications of this information explosion?

One result will probably be an acceleration of the move to paperless reporting (or at least paper-reduced reporting). There is only so much real estate in an annual report. Who wants their annual report to resemble the telephone directory of the Greater New York or L A area? Let’s protect our trees. I am particularly sensitive to this. My name is “Sycamore” after all.

Securities Analysts do not seem to be concerned about where the financial information, or other information, resides just as long as they can get at it. With some analysts it seems that more is always better. Of course information has to have integrity – it needs to be accurate, timely and relevant among other factors. This is certainly part of a business case for automated financial information that allows users to search for relevant key information.

Check out the coming of XBRL for some background in the area of automated financial reporting. You may have heard about XBRL and perhaps you were afraid to ask? Here are some interesting sources that will help you.

A presentation by the Chairman of the SEC

http://www.youtube.com/watch?v=oYaLeXowl5A

XBRL in plain English

http://www.youtube.com/watch?v=5F1E-2LkhW8

The Business Case for Automated External Financial Reporting

(A free download)

http://www.claritysystems.com/Resources/WhitePapers.aspx

I will come back to a discussion of XBRL later in a future blog entry. What are the implications during IFRS conversions? What are the implications for data tagging under IFRS?

Another implication for the exploding level of disclosure is the business imperative to obtain and maintain control over the process of developing the disclosures. The process can be very manual and subject to error. In the old days accountants were worried about getting the numbers right. The notes came later and were often thought of as explanations of numbers. Measurement was King (or Queen) in financial reporting. We have come a long way since those early days and there is a lot of emphasis, and quite rightly so, on the quality of disclosures both within and outside the financial statements. It’s a whole package, often driven by regulatory requirements that extends to Management Discussion and Analysis, special reports like corporate sustainability and beyond. Appropriate controls must be adopted in the development of this information. Have the right people been involved? Are the numbers consistent? Are the messages consistent? Are we even using the right version of a source document? It goes on and on. The devil is surely in the details when ensuring that one has acceptable disclosure controls.

Finally are we dreaming the impossible dream when we seek to simplify financial reporting into plain English, French, Arabic, Italian, Spanish or whatever?

In Canada, we used to say in the "old days" that financial information should be understandable by “the old lady in tennis shoes” or “Joe six pack” (yes people did not seem to fuss about political correctness in those days). You get the point though – I am referring to he “ordinary” man or woman. I would not underestimate “the old lady in tennis shoes’ (she might have been a CEO or a CFO) she can bring us back to common sense.

The world is complex indeed and we have been seeking the answer to this simplification conundrum for years. How to simplify and maintain integrity? What do you think? How does one convey complex financial information to non financial people? At least we should be able to explain it to members of boards of directors!

STOP PRESS: FEI USA FORMS IFRS ROUNDTABLE

Today the FEI in the US announced plans to form a Corporate Roundtable on International Financial Reporting (CRIFR) See the Press Release at http://fei.mediaroom.com/index.php?s=43&item=207

The following is a quote from the FEI in the USA:


Financial Executives International (FEI), the preeminent association for financial executives, today announced the formation of a new national coalition, the Corporate Roundtable on International Financial Reporting (CRIFR). The coalition will provide a forum for companies of all sizes and funding models to discuss all business issues related to the promulgation, implementation and convergence of International Financial Reporting Standards (IFRS) by U.S. companies.
Formally unveiled at today's FEI 2008 Global Financial Reporting Convergence Conference in New York City, the goal of CRIFR will be to facilitate dialogue on a broad range of issues surrounding IFRS, including (but not limited to) implementation and transition issues related to systems requirements, training, standards setting and reporting.


There is more discussion of the USA FEI plans in their blog at

http://www2.financialexecutives.org/messageboard/message.cfm?topic_id=593&board_id=5


Very clearly the Americans are taking a very serious interest in adopting IFRS. We in Canada will be under the microscope and we will no doubt have many useful experiences to relate to our American cousins. The Americans will be watching us closely. Will there be a coming great demand for Canadian accountants with IFRS experience - time will tell.

The game is a foot indeed.

We look forward to the FASB conference on June 16. I will report on it in this blog.

The Move to IFRS Tax Implications

PricewaterhouseCoopers in Canada has issued a very interesting publication dealing with the various tax implications of the IFRS conversion. Their Tax Memo - The move to IFRS:Tax Implications is downloadable for free on the PwC site.

http://www.pwc.com/extweb/pwcpublications.nsf/docid/44816034947235388525742F005EC7B4



The Appendices to their Memo have a quite detailed analysis of differences between IFRS and Canadian GAAP accounting for taxes. There are a lot of potential devils in the details here and these matters require further study. Do not leave this taxation stuff to the end! All of the Accounting Firms are cautioning that a proper implementation plan will involve tax experts from the very beginning and through the conversion period. Consult your tax advisors sooner rather than later is my advice.



I plan to look at the tax implications of IFRS conversion further and to see what the other firms have to say. Expect more discussion in a future blog entry.



I found the PwC publication informative and it looks like it will be very useful but must confess that I have yet to review it in detail. Its a message to us all that we must now get down to a fine level of detail. The Honeymoon, if we can call it that, is over!



A note to everyone. I am not affiliated with any firm and I will reference anything in this blog that is interesting to me and that I believe others might find useful. Other Accounting Firms are free to weigh in and indeed I will actively look for input.



Please feel free to comment and to reference other publications of interest in this area.

We interrupt this program

Here are some important announcements

Comments on postings

First of all thank you to those who have posted.

Antonello Dessanti posted his experiences with leading the IFRS conversion for the foreign network of a leading Italian Bank Group. It is an interesting posting. Thank you for your contribution Antonello! Somebody had to be first and thanks for stepping up. You can find Antonello’s comments under my posting of “Blogging Responsibly.”
Thanks also to Tsuifit. Yes she goes by one name, just like Cher or Madonna. She posted a nice comment under “Are you late for an important date” (the one with the White Rabbit). Tsufit wrote a book about getting noticed called “Step into the Spotlight”. There is some excellent advice in the book about getting noticed, including some advice on the dreaded 30-second personal commercials you have to do at networking events. See http://www.tsufit.com/book/about_tsufit.htm.

Thanks also to the many that have sent me personal notes of encouragement and support. It’s important to me.

Please keep the comments going and speak about your experiences. I plan to get into some IFRS details very soon. Together we will find the devils in the details and exorcise them.

Future Plans

I have some ideas for the future on this site so we can get into the “nitty gritty”. .I will look at some of the obscure and perhaps not so obscure aspects of IFRS.

Stay tuned – please send me your ideas.

How to subscribe to the blog

I am researching ways that you can subscribe to the blog so I can manage it better. You will remember that I am a newbie to blogging but I have had to be a quick study.

One way is simply to bookmark the blog under favorites.

http://ifrscanadadevilisinthedetails.blogspot.com/

You could then check the blog at your convenience. I plan on 3 – 4 entries a week but some can be quite short.

Blogger gives you the option of subscribing through “Atom” but you have to scroll right to the end of the blog to subscribe. Some people might get an icon to click on others might have a section appended in the favorites area of their toolbar. Others might be different?

Another way of subscribing to blogs is to subscribe through Google Reader. Just cut and paste my URL in the appropriate place. You can subscribe to other blogs as well. Google Reader appears to be a relatively new service.

Any ideas would be helpful.

I will look at sending a link to a special purpose website and assess that at the end of June. This might be easier to access but I still have to assess the pros and cons. You would still be able to view my blog on this URL as well.

More Rules of Blogging Responsibly

I have been asked about my copyright policy. General commercial rules and business etiquette applies here.

Of course, I encourage you to forward any posting to a contact via the e-mail link at the foot of the posting (very small envelope). If you quote from me I would appreciate (and expect) that you give me attribution.

If you wish to publish the whole or a major part of one of my postings please send me an e-mail at IFRS-the.exorcist@sympatico.ca.. I will consider where it is to be published and grant permission accordingly. In some cases I might request payment. I will be reasonable about this since I do like the exposure.

Comment mechanics

Please remember that I have only 2 choices on a comment. To accept or reject. I cannot edit for spelling etc and unless I have your coordinates I cannot contact you.


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Thank you everyone!

The IFRS Exorcist ©

The future of EIC Abstracts

In 1988 the Canadian Accounting Standards Board (AcSB) established the Emerging Issues Committee (EIC) see -http://www.acsbcanada.org/index.cfm/ci_id/3620/la_id/1.htmto serve the interests of the public by providing a forum for the timely review of emerging accounting issues that are likely to receive divergent or unsatisfactory treatment in practice in the absence of some guidance. The EIC issues EIC Abstracts and as of the beginning of April 2008 we are up to number 170.Will EIC Abtracts be redundant when publicly accountable enterprises adopt IFRS? One answer might be they are surely no longer relevant so let’s expunge them from GAAP - IFRS style, in Canada.

Surely the IASB in London will take up the mantle? This assumption may not be entirely correct. And assumptions are dangerous. The International Accounting Standards Board (IASB) has indicated that it will not provide detailed specific implementation guidance on narrow issues. Read more about IFRIC at http://www.iasb.org/About+Us/About+IFRIC/About+IFRIC.htm
In particular, according to their site, the IFRIC addresses issues of reasonably widespread importance, not issues that are of concern to only a small minority of entities.


The interpretations cover both

1) newly identified financial reporting issues not specifically dealt with in IFRSs;
2)issues where unsatisfactory or conflicting interpretations have developed, or seem likely to develop in the absence of authoritative guidance, with a view to reaching a consensus on the appropriate treatment.

Countless high value volunteer time was spent in the development and promulgation of EIC Abstracts. .With all the high quality input surely there could be something that can be mined that would be a lasting reference when IFRS is adopted?

The CICA had a committee of experts go through the EIC Abstracts in some detail and made recommendations on their disposition upon IFRS adoption. See the discussion and the committee’s conclusions at http://www.acsbcanada.org/4/2/6/6/1/index1.shtml
Many thanks should be given to the members of that group for their yeoman work.


While the experts concluded that the majority of EIC Abstracts can be removed from GAAP for IFRS adopters. There are others that will need to be addressed in coordination with the IASB. Will you be happy with the fact that Standards will be interpreted by IFRIC in the manner set out in their terms of reference? What role should the CICA play in the brave new world of IFRS? I’m sure they would be interested in your ideas.


Are you in a “publicly accountable enterprise” and currently relying on a particular EIC Abstract and what do you see happening on IFRS adoption? Are there potential problems? Please let us know. Others might be in a similar predicament and a devil could be lurking in the shadows. Is this an issue or a non-issue?


Please note that it is unsure how EIC Abstracts will apply to Private Companies in future GAAP world. This topic is currently under study. See the following for a private company discussion http://www.acsbcanada.org/index.cfm?ci_id=29407&la_id=1#next.