The differences set out in this material have been compiled after comparing Canadian GAAP as it exists in 2010 with IFRSs at the same date and after considering a sample of companies’ expectations of the nature and effects of major changes. It should be recognized, however, that differences will vary from entity to entity, even within the same industry. Accordingly, the examples of differences in the accompanying material do not purport to represent an exhaustive list of all the changes that may be encountered.

You can access this guide by clicking here (PDF).

This is one of the problems with the IFRS  - the IFRS standards in many ways are subject to interpretation, which means that each country and even each company has an ability to develop their own interpretations of the IFRS standards. Further, to add icing on the cake, the IFRS standards are not yet finalized, they are a moving target. So the companies might reach a consensus on a standard as it is written today, but these standards might change by the time the company actually adopts the accounting standards.  Hence, for the implementation of the accounting standards suggest that all the companies operating in the same economic sector should brainstorm the issues together and reach a consensus as to the interpretation of the IFRS standards that they collectively intend to follow.

Click here to see this PWC  publication:

A_practical_guide_to_new_IFRSs_for_2010 (PDF – 49 pages)

[Reference:  PWC website and the above guide]

The key advantage for adopting IFRS is to financial results more transparent and comparable for the ultimate users of financial statements. However, till the time IFRS is fully adopted across the globe, it would be hard to determine the impact that IFRS would have on an entity.

For the users of the financial  statements, there are many key shareholders who have a vested interest in an enterprise’s performance who need to understand what reporting financial information under IFRS will mean for them.  These key stake holders are not limited to — the shareholders, research analysts, potential investors, regulators, lenders, and others.  All the entities need to include in their transition plans a communication strategy with the external stakeholders.

The key questions that an entity has to ask itself are as follows:

• Do external stakeholders understand the IFRS-related changes that are coming?
• Do the analysts understand the impact of IFRS?

KPMG conducted a survey to assess the understanding of IFRS and its impact on the external stakeholders. The results of this survey suggest that external stakeholders still have a lot to learn about IFRS and how it will affect the financial reporting of specific enterprises.

KPMG publication: Preparing your stakeholders for IFRS

The guidance contained in CSA Staff Notice 52-320 applies to disclosure relating to each financial reporting period in the three years before the first year for which an issuer prepares its financial statements in accordance with IFRS.  You can access CSA Staff Notice 52-320 at the link here (PDF) .

The reconciliations in the financial statements are unlikely to highlight key matters, however. Accordingly, this guidance sets out examples of ways to provide a succinct MD&A discussion of the impact of the changes in a way that highlights significant differences, including how changes will impact an entity’s future financial reporting.

In assessing the effects of the changeover, investors will want to understand the impact of any elections that were made, such as the elimination of the Cumulative Translation Adjustment that would otherwise have been carried forward to affect future income. As well, investors may want to separately identify the effects of reclassifications and any pervasive changes that result in significant differences in reporting, for example the effect of consolidating previously non-consolidated entities where investors may not have a sufficient historical perspective to formulate expectations. Therefore, the guidance suggests ways to summarise the effects of various categories of changes.

You can access this guide by clicking here (PDF).

This publication issued by the Canadian Institute of Chartered Accountants (CICA) lists “20 Questions” briefing is designed to be a concise, easy-to-read introduction to an issue of importance to directors.

CLICK HERE to access the publication

Congressionally-Mandated Study Says Improve, Do Not Suspend, Fair Value Accounting Standards

Washington, D.C., Dec. 30, 2008 — The Securities and Exchange Commission today delivered a report to Congress mandated by the Emergency Economic Stabilization Act of 2008 that recommends against the suspension of fair value accounting standards. Rather, the 211-page report by the SEC’s Office of the Chief Accountant and Division of Corporation Finance recommends improvements to existing practice, including reconsidering the accounting for impairments and the development of additional guidance for determining fair value of investments in inactive markets, including situations where market prices are not readily available.

As mandated by the Act, the report addresses the following six key issues:

1. the effects of such accounting standards on a financial institution’s balance sheet;
2. the impacts of such accounting on bank failures in 2008;
3. the impact of such standards on the quality of financial information available to investors;
4. the process used by the Financial Accounting Standards Board in developing accounting standards;
5. the advisability and feasibility of modifications to such standards; and
6. alternative accounting standards to those provided in such Statement Number 157.

SEC Report to Congress on Mark-to-Market Accounting (in PDF format – 211 pages)

Read the full press release

Source: SEC.gov

The key consideration is the implementation time-line, which would depend on the complexity of the organization, which can take anything from two to five years. The larger multinational organizations especially in banking, insurance, forestry, utilities and full-cost accounting oil and gas industries typically might face some of the more challenging conversion issues. It is more challenging for multi-national organizations which have decentralized operations around the world with legacy IT systems.