Measurement bases for financial reporting

In 2005, the International Accounting Standards Board issued Measurement Bases for Financial Accounting – Measurement on Initial Recognition. The Discussion Paper analyzes possible bases of measurement for assets and liabilities on initial recognition. Issues relating to re-measurement, including impairment, will be dealt with in subsequent papers. The conclusions reached are tentative and will be re-assessed when their potential implications for re-measurement are considered in subsequent papers. The project summary and comment letters are available on the IASB website.

Making the change

It is tempting for organizations to view the adoption of IFRS as simply an accounting exercise but this assumption is dangerous. Converting to IFRS is a change in primary GAAP. That means everyone in the organization must learn a new basis of reporting to the capital markets. For many, this will mean fundamental changes in business operations that can affect the viability of some products and even the reported profitability of the organization itself. It is likely to take considerable time to plan and make the necessary changes and to integrate them fully across the organization while continuing normal business operations. Making the Change to International Financial Reporting Standards, a publication by PricewaterhouseCoopers, provides useful insight on managing the change.

Principles versus rules

The Institute of Chartered Accountants of Scotland has published a paper Principles not Rules: A Question of Judgement. It expresses the view that the ever-increasing volume of accounting rules is not sustainable, especially during the process of global convergence of accounting standards. Maintaining and adhering to a large, complex set of accounting rules creates insurmountable problems for standard setters, preparers of financial statements, auditors and users. The paper explores how a principles-based approach serves the public interest, meets the needs of responsible enforcement and shows sensitive awareness of diversity in environment and culture.

Global Positioning: The New Direction

Over the next five years, accounting standards in Canada will change. Global Positioning: The New Direction (Bulletin #1) provides a broad overview of the changes facing public companies and their stakeholders. The changes for publicly-traded companies will also affect other publicly-accountable enterprises, such as Crown corporations, credit unions and cooperatives, and regulated public utilities. Subsequent issues in the series will deal with specific topics in more detail.