IFRS Update by fuw70346

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									          IFRS Update

          Ian P.N. Hague, CA
    Principal, Accounting Standards

Own views – not those of AcSB or other staff
Agenda


 • AcSB IFRS Strategy
 • IFRSs – Tackling the transition
 • Helpful resources
 • Private Cos & NFPOs
 • Closing & questions


                                     2
All systems go for 2011
adoption
 • Balance of factors:
    • Five years lead-time
    • Date certain
    • Relatively stable platform of IFRSs
    • Limited period of C-GAAP falling behind
    • Desire to drop IFRS-US reconciliation
    • Desire for common global reporting
    • EU Equivalence
    • Many enterprises in advanced stages of
    preparation
                                                3
When is adoption required?


                        Opening                         IFRS
                        balance             Interim   Reporting
                         sheet                F/S       date

                8 months




Jan. 1,   Preparatory   Jan. 1,          Jan. 1,      Dec. 31,
 2008        period      2010             2011          2011


                             Cdn. GAAP & IFRS
                                                             4
Who does this apply to?

  • Publicly Accountable Enterprise:
    • Issued, or is in the process of issuing, debt
        or equity instruments that are or will be
        outstanding and traded in a public market (i.e.
        all public companies are PAE’s); or
    •   Holds assets in a fiduciary capacity for a
        broad group of outsiders as one of its primary
        businesses, (i.e. others with large or diverse
        groups of users, such as a bank, insurance
        entity, securities broker/dealer, credit union,
        mutual fund or investment banking entity).
  • Also, Public Sector: GBE/GBTO (see ITC)
  • NOT required for NFPOs
  • Others may choose to adopt IFRSs
                                                      5
International developments


 • Global acceptance of IFRSs (100+
   countries)



 • IASB and FASB working closely together
 • Elimination of IFRS/US GAAP reconciliation
 • Single set of high quality standards –
   “Memorandum of Understanding”
                                            6
    • Agreed upon standards by June 2011
SEC Roadmap

 • US Filers to adopt IFRSs in 2014-16?
 • Decision for roadmap – 2009?
 • Decision for 2014-16 - 2011
 • Largest international issuers choose to adopt as
   early as 2009
    • 20 largest in industry globally
    • IFRSs used most often in that industry
 • Will consider
    • MoU                                  Comments
    • Accountability & funding of IASCF were due by
    • XBRL                               April 20, 2009
    • Education & training
    • Application experience                            7
Canadian Securities
Administrators
   • Preparing investors for the transition –
    disclosures
    •“Grooming Disclosures” CSA Staff
      Notice – 52 - 320
      •2008 – Annual (interim if available)
      •2009 & 2010 – Annual and Interim
    •Guidance also available from CICA
   • Early adoption - Staff Notice 52 - 321
                                                8
What does it mean to adopt
IFRSs?

 • PAEs adopt IFRSs without modification as
  Canadian GAAP – all Canadian GAAP falls
  away (for PAEs)

 • Interpretations by IFRIC only
 • Focus of attention becomes on IASB in
  London

                                              9
Benefits to Canada

• Access to foreign markets

• Lower cost of capital – familiar
 standards

• Continued principles-based standards –
 less complexity

• Efficiencies for international companies
                                             10
Agenda


 • AcSB IFRS Strategy
 • IFRSs – Tackling the Transition
 • Helpful resources
 • Private Cos & NFPOs
 • Closing & questions


                                     11
Implications for educators

   • A changing world
   • Opportunity to refresh course content
   • Teach fundamental concepts
   • Introduce international perspectives into
    curricula
   • Broaden students minds beyond standards
    compliance
   • Research opportunities
   • Demand for comprehensive training
                                                 12
Planning –
Changing Standards

• Today’s IASB project is tomorrow’s Canadian
 GAAP for Publicly Accountable Enterprises

• Therefore students need to focus on what will be
 in place in the future, not solely on what is in

 place today

• So, what is changing and what is stable?

                                                     13
Majority of IFRSs remain
unchanged through 2011
• Inventories                • Associates
• Accounting Policies &      • Hyperinflation
 Accounting Changes          • Interim Reporting
• Events after the Balance   • Impairment?
 Sheet Date                  • Intangible Assets
• Property Plant &           • Investment Property
 Equipment                   • Agriculture
• Government Grants          • Business Combinations
• Foreign Currency           • Extractive Activities
• Borrowing Costs            • Segments

                                                       14
IFRS Adoption at
changeover

• Many similarities between IFRSs & Cdn GAAP
• BUT: Also some major differences
   • Revaluations
 • Impairment
 • Securitization
• Devil is in the details!

                                           15
How do we get there?

C-GAAP changes before changeover
• Business combinations [IFRS 3/IAS 27] –
 2011 - complete
• Earnings per share [IAS 33] – 2010??
• Joint ventures [IAS 31] – 2011
• Economic Environment? – 2010/11?


                                            16
Business combinations

  • IASB/FASB standards finalized
   • IASB and FASB not fully converged
   • AcSB converged with IASB
  • Effective January 1, 2011 with prospective
   application – early adoption permitted
  • Will significantly change some aspects of
   accounting for business combinations

                                                17
Earnings per share

• IASB Exposure Draft issued – Comment Deadline
 December 5, 2008
• Simplify and converge IASB and FASB EPS
• Principle - which instruments to be included in
 basic EPS
• Diluted EPS –
  • FV through P&L – no adjustment
  • FV not through P&L – mkt price at the end of the
   period
• Effective 2010?
                                                       18
Joint ventures / arrangements

IASB Exposure Draft - comment deadline January 11,
 2008 – final expected H2 2009
• Eliminates proportionate consolidation for
 jointly controlled enterprises
• Maintains proportionate consolidation for
  jointly controlled assets and jointly
  controlled operations
• Key is how the structure qualifies within the
  definition –
     • Direct interest in underlying asset – p.c.
     • Indirect interest in net outcome- equity
                                                     19
Economic environment

• Issued guidance on ABCP
• Issued guidance on FV in Inactive Markets
• Issued amendments to reclassfcn of fin’cl
 assets

• Amended 3862 re FV & Liquidity disclosures
• Considering Consolidations and Derecognition
• Comprehensive Financial Instruments project    20
IASB changes expected

Other IASB changes before 2011
• Liabilities – 2009
• Management commentary – 2010
• Fair value measurement (how not when) –
 2010
• Income taxes – 2010
• Emissions trading – 2010
          2009 probably effective 2011
          2010 probably effective 2012      21
IASB isolated changes


Isolated changes
• Related Party Disclosures
• Discontinued Operations
• Group Cash-settled Shared-based Payment
• First-time Adoption


                                            22
IFRS 1 choices


New Canadian proposals
• Full cost oil and gas
• Rate-regulation
• Assessments when prior accounting same as
 IFRSs - Leases




                                              23
Changes expected in 2011

 • Financial statement presentation
 • Insurance contracts
 • Liabilities & equity
 • Leases
 • Employee benefits
 • Revenue recognition
  Likely to be effective in 2013. Might not be
  available for early adoption?

                                             24
IASB Projects in longer term

• Reducing complexity in financial instruments
• Extractive activities
• Common control transactions
• Government grants
• Intangible assets
• Conceptual framework

                                                 25
Agenda


 • AcSB IFRS Strategy
 • IFRSs – Tackling the Transition
 • Helpful resources
 • Private Co’s and NFPO’s


 • Closing & questions
                                     26
IFRS resources

• IASB web site – www.iasb.org
• IFRSs: Knotia, Omnibus ED, CAAA, IASB web site
• AcSB web site – www.acsbcanada.org
   • What’s changing when?
   • Canada/IFRS GAAP Comparisons – two levels
   • AcSB’s IAC Meeting Notes, Bulletins, etc.
• CICA – 20 Qns for Audit Committees
     - MD&A Guidance
• Major firms – Newsletters, webcasts,
 publications, illustrative F/S, syllabi, case
 studies, training materials, etc. etc.          27
Agenda


 • AcSB IFRS Strategy
 • IFRSs – Tackling the Transition
 • Helpful resources
 • Private Co’s and NFPO’s


 • Closing & questions
                                     28
What about private
companies?
• Some might elect to use IFRSs

• For others:

  • Starting from existing GAAP

  • But aspects evolving towards IFRSs

• ED – April/May 2009

                                         29
Not-for-profit Organizations

• IFRS does not explicitly deal with NFPOs
• Possible strategy:
 • Allow NFPOs to use either:
   •IFRS, or
   •Private enterprise GAAP, with addition
     of NFPO guidance?
• ITC – December 2008
                                             30
Questions/comments?




                      ?
           ian.hague@cica.ca

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