It is quite obvious the transition to IFRS will be a significant undertaking for Canadian public companies. A successful transition will require diligent planning and project management. The first step of a sound IFRS transition planning strategy is a solid understanding of the implications of the timeline from now until the changeover date.

External Reporting Requirements (Calendar fiscal year)

2008

Public companies should expect disclosure requirements from securities regulators to include qualitative information regarding the impact of adopting IFRS and information on their transition plans.

2009

Public companies should be prepared to disclose quantitative information regarding the impact of adopting IFRS and information on their transition plans.

2010

PAEs will continue to report interim and annual external financial statements under existing Canadian GAAP.

Public companies should be prepared to disclose a significant level of detail on the quantitative impact of adopting IFRS.

2011

PAEs will report financial statements in accordance with IFRS, beginning with interim reporting for Q1 2011. 2010 comparatives in accordance with IFRS will be required for all interim and annual financial statements through 2011. Reconciliations of 2010 net income and equity, from the previously reported Canadian GAAP to the IFRS figures used in the comparatives, will form part of the 2011 financial statements.

Public companies should note that relief will likely be available from Canadian
securities regulators; they are likely to allow filings to include only a single year of comparative information in companies’ first year of IFRS adoption.

Planning Considerations

IFRS 1 is the standard that is applied through the first fiscal year in which an
entity adopts IFRS for the first time. According to definitions within IFRS 1, January 1, 2010 is the Transition Date for calendar year-end companies adopting IFRS in 2011.

Companies adopting IFRS are required to prepare an opening balance sheet as of this date in accordance with IFRS. This means applying IFRS standards, including measurements for estimates and impairments as of January 1, 2010.
IFRS 1 also requires that comparative information in the first year of adoption be presented in accordance with IFRS.

Therefore, companies need to be in a position to collect information needed to present 2010 financial information in accordance with IFRS as comparatives in their 2011 financial statements. This will require an understanding of the relevant sections of IFRS and consideration whether information systems are capable of collecting information needed for both current Canadian GAAP financial statements in 2010 and IFRS comparative information in 2011.

Further details on planning considerations will be included in upcoming issues of IFRS in Canada, as we discuss planning strategy recommendations for a successful transition.

Gordon Heard is the Principal Advisor of The Finance Group, providing Regulatory Advisory Services, including IFRS Transition Services. The Finance Group publishes IFRS in Canada (www.IFRSinCanada.com), a regular newsletter covering updates to accounting standards for Canadian public and private companies.