In an earlier issue, we reported on the Canadian
Securities Administrators' (CSA) Staff Notice 52-320
Disclosure of Expected Changes in Accounting Policies Relating
to Changeover to International Financial Reporting Standards
— to provide our readers advance notice of the mandatory
transition of financial reporting standards applicable to Canadian
publicly accountable enterprises from Canadian generally accepted
accounting principles (Canadian GAAP) to International Financial
Reporting Standards (IFRS) for fiscal years beginning on or after
January 1, 2011.
CSA Staff Notice 52-320 provides guidance to an issuer on
disclosure, in the three years beforethe first year in which the
issuer is required to use IFRS, of expected changes in accounting
policies relating to an issuer's changeover toIFRS as the basis
for preparing its financial statements. The notice focuses on
MD&A disclosure, and recognizes the disclosure willbe
incremental and provide more detail as the issuer approaches its
Further, in CSA Staff Notice 52-321 Early Adoption of IFRS,
Use of US GAAP and Reference to IFRS-IASB, CSA staff
recognized that some issuers may wish to prepare their financial
statements in accordance with IFRS for periods beginning prior to
January 1, 2011, and indicated that staff is prepared to recommend
exemptive relief on a case-by-case basis to permit a domestic
issuer to do so, despite Section 3.1 of National Instrument 52-107
Acceptable Accounting Principles, Auditing Standards and
Reporting Currency, which requires Canadian issuers to prepare
financial statements in accordance with Canadian GAAP.
Domestic issuers that would benefit from early adoption include
those issuers with joint ventures or subsidiaries already reporting
under IFRS (common for issuers with business affiliates operating
in Europe, Africa, Australia and New Zealand, regions from which
more than 100 countries are already reporting under IFRS), where
reporting would be streamlined and related costs reduced by
developing a common and consistent reporting system across the
group. The same rationale would also apply to domestic issuers that
are subsidiaries of a foreign entity reporting under IFRS and
domestic issuers undertaking an initial public offering in both
Canada and another IFRS jurisdiction before 2011. Use of a single
reporting system willalso assist readers of the issuer's
The application for early adoption of IFRS seeks exemptive
relief from the requirement to prepare financial statements using
Canadian GAAP. In reviewing the application, the regulators will
focus on the rationale behindthe application and the issuer's
readiness and changeover plan for its transition to IFRS. To date,
exemptions have been granted by the Ontario Securities Commission
and the B.C. Securities Commission, acting as principal
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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