As we outlined in our September 2008 Alert entitled Impact
of International Financial Reporting Standards on Canadian
Registrants[available here], the Canadian Securities
Administrators (CSA) announced their views last fall that many
registrants would be required to use International Financial
Reporting Standards (IFRS) under the Accounting Standards
Board's (AcSB) definition of a publicly accountable enterprise.
The CSA also indicated that they were considering whether
securities rules should require registrants to prepare financial
statements using IFRS, regardless of whether they meet the
definition of a publicly accountable enterprise.
The CSA now have confirmed that staff have concluded that all
non-SRO registrants should be required to use IFRS for financial
years beginning on or after January 1, 2011 regardless of whether
the registrant fits the definition of a publicly accountable
enterprise set by the AcSB. CSA Staff Notice 33-314
International Financial Reporting Standards and
Registrants[available here] confirms the
latest CSA staff position. The CSA confirmed that the requirement
to use IFRS will apply also to the firms that will be required to
register in the various new registration categories set out in
National Instrument 31-103 Registration Requirements and
Exemptions, once that instrument comes into force. This will
include firms that may not be registrants today, including exempt
market dealers and investment fund managers.
The CSA expect to publish for comment later this year amendments
to National Instrument 52-107 Acceptable Accounting Principles,
Auditing Standards and Reporting Currency that will propose
the new requirements for registrants to use IFRS in preparing their
The CSA indicated that the Investment Industry Regulatory
Organization of Canada (IIROC) and the Mutual Fund Dealers
Association of Canada (MFDA) will be publishing separate notices
regarding the use of IFRS for their members.
Over the past year, we have watched the Canadian dollar drop relative to its U.S. counterpoint impacting Canadian businesses. U.S. goods and services are now more expensive, U.S. sales make a premium and errors when recording foreign exchange transactions can cost you more money.
We use a risk based approach to audit a company's year-end financial statements, but the term " risk based audit approach" can sound like the latest in business buzzwords similar to holistic, innovative and mission critical.
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