We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
Professional firms and other business advisors have been raising
awareness and emphasizing the need for publically reportable
entities to begin their conversion processes to International
Financial Reporting Standards (IFRS) for many months now.
Presently, the conversion need is no doubt a priority. In the past
months, the uncertainty over the economic environment coupled with
the internal competition for resources likely meant that management
had other issues to deal with, and therefore governing boards and
audit committees were not pursuing the conversion process.
In addition, reporting entities that have non-calendar year-ends
will have extra time for conversion − their first
IFRScompliant financial statements will be for the first year ended
in 2012 (an entity with a December 31 year-end will have to issue
its 2011 financial statement in compliance with IFRS).
For a public entity, managing investor expectations must always
be on the priority list and IFRS conversion will increase that
need. It will be important to manage the investor community to
ensure that share prices do not suffer by springing IFRS-conversion
surprises on the market. In this respect, communicating the impact
of the conversion should also be made a priority.
For a smaller reporting entity, the resources available may be
limited. Internally, there is unlikely to be a vast body of IFRS
knowledge from which to draw and the hours available that could be
applied to the project may be equally limited. Furthermore,
pressure on auditors to provide assistance with client conversions
will no doubt increase between now and the issuance of the first
financial statements under IFRS which may lead to delays in
service.
Our suggested approach to the task is as follows:
Spend sufficient time at the planning stage to be able to
identify the main conversion issues. Investing time early will mean
that time and resources are not wasted on smaller items.
Consider the resources for the project realistically, including
the number of hours available and their timeframe. The planning
stage should also involve making realistic assessments of the time
required for each step; for example, the amount of time required to
draft the first set of IFRS-compliant financial statements should
not be underestimated.
Consider the system implications including the consequences for
certifications of controls over financial reporting. In a
worst-case scenario, the financial reporting may be cut and pasted
together using a series of Excel spreadsheets in order to meet the
deadline. However, controls must be in place to manage the risk of
misstatement and the need to restate errors in a future period and
the associated costs, not least of all in management
reputation.
Our suggestion would be to outsource discrete components of the
process to knowledgeable advisors to manage the deadline. Whatever
the approach taken, there should be an emphasis on retaining the
knowledge of the new accounting standards within the company.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
On June 6, 2013, at the Toronto Centre CRA & Professionals Breakfast Seminar, the Canada Revenue Agency discussed (a) recent developments at the Income Tax Rulings Directorate and (b) the process through which the General Anti-Avoidance Rule in section 245 of the "Income Tax Act" may be applied in the course of an audit.
Many people think succession planning is estate planning (i.e. transfer of ownership). Instead, it is a
formal statement of what will happen to the management of the business when the owner/manager is no longer running it. Consider it to be a "will" for the business.
When you think about accounting, what may first come to mind may be number crunching, expense reporting or tax season. Admittedly, these are generally all true; however, I would like to introduce you to another side of accounting.
One of the downsides for Canadian companies that moved to IFRS in 2011 is that it came in the middle of the IASB’s and FASB’s joint program to improve and converge IFRS and US GAAP.
