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On October 1, 2010 the Canadian Securities Administrators (CSA)
finalized amendments to National Instrument 31-103 Registration
Requirements and Exemptions, along with National Instrument
52-107 Acceptable Accounting Principles and Auditing
Standards. This package of IFRS-related rules [available here] will come
into effect on January 1, 2011 and, among other things, will impact
Canadian registrants.
For financial years beginning on or after January 1, 2011, IFRS
will be incorporated into the Handbook of the Canadian Institute of
Chartered Accountants (the CICA Handbook) as Canadian Generally
Accepted Accounting Principles for publicly accountable
entities.
Canadian registrants will be required to file their audited
annual financial statements with the applicable CSA members in
accordance with IFRS, but on a non-consolidated basis. Registrants
will also have to disclose that the financial statements comply
with IFRS except that they have been prepared on a non-consolidated
basis.
As a transition exemption, annual and interim financial
statements of a registrant for a financial year beginning in 2011
that comply with IFRS may exclude comparative information for the
preceding year or period. In addition, registrants will have a
15-day extension to the deadline for filing the first interim
financial information and completed Form 31-103F1 that are required
to be filed in the first year of adopting IFRS for the first
interim financial period beginning on or after January 1, 2011.
The amendments also clarify that a registrant's interim
financial information for financial years beginning on or after
January 1, 2011 may be limited to the following:
a statement of comprehensive income for the 3-month period
ending on the last day of the interim period and for the same
period of the immediately preceding financial year, if any and
a statement of financial position, signed by at least one
director of the registrant, as at the end of the interim period and
as at the end of the same interim period of the immediately
preceding financial year, if any.
In other words, assuming a December 31 year-end, the registrant
would file the following interim financial information:
January 1 to March 31
April 1 to June 30 and
July 1 to September 30.
Financial statements of registrants that are not based in Canada
(that is, international registrants) may be prepared in accordance
with:
U.S. Generally Accepted Accounting Principles (U.S. GAAP)
IFRS
Accounting principles that meet the disclosure requirements of
the applicable foreign authority governing the registrant in its
home country or
Accounting principles that cover substantially the same core
subject matter as Canadian GAAP.
However, these financial statements must be prepared and filed
on a non-consolidated basis.
With respect to investment funds, on October 8, 2010 the CSA
issued Staff Notice 81-320 Update on International Financial
Reporting Standards for Investment Funds[available here]. This Notice
explains that the Canadian Accounting Standards Board (AcSB)
published amendments to the CICA Handbook on October 1, 2010 that
provide a one-year deferral of the transition to IFRS for
investment companies, the majority of which are "investment
funds" for the purposes of securities legislation.
For this reason, the CSA are not at this time finalizing the
proposed amendments to National Instrument 81-106 that were
published for comment along with the above-noted instruments in
October 2009.
Investment funds should expect that they must adopt IFRS for
financial years beginning on or after January 1, 2012, although the
CSA will permit earlier adoption.
The CSA staff acknowledge that some investment funds may wish to
prepare their financial statements in accordance with IFRS for
annual periods beginning prior to January 1, 2012. Therefore, an
investment fund that wants to use IFRS for interim and annual
financial statements relating to annual periods beginning prior to
January 1, 2012 must apply for exemptive relief from the current
requirement in NI 81-106 to prepare its financial statements in
accordance with Canadian Generally Accepted Accounting Principles
as applicable to public enterprises. Investment funds filing
applications for exemptive relief from NI 81-106 must explain any
issues that early adoption may create with respect to their
financial disclosure.
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.
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