Canada’s IFRS Discussion Group - January 2012

Canada’s IFRS Discussion Group assists the Accounting Standards Board (AcSB) regarding the application of International Financial Reporting Standards (IFRS). The Group comprises members with various backgrounds who participate as individuals in the discussion.

Views expressed in the public meeting do not necessarily represent the views of the organization to which a member belongs or the views of the AcSB. The discussions of the Group do not constitute official pronouncements or authoritative guidance. Only the International Accounting Standards Board (IASB) or the IFRS Interpretations Committee can make such a determination.

Listen to the audio recordings of the topics discussed by the Group in January 2012. For additional information, see the Group’s agenda and description of items.

1. Opening Remarks and Updates;
2. Preparing Annual IFRS Financial Statements;
3. IFRS 1: Change in Date of Transition to IFRSs;
4. IFRS 2 & IAS 32/39: Recognition of Share Purchase Warrants;
5. IFRS 11: Classification of Limited Partnerships Subject to Joint Control;
6. IFRS 11: Guarantees of Debt of a Joint Arrangement;
7. IAS 8: Disclosure Requirements for Retrospective Application of New Standards;
8. IAS 10: Reissuing Financial Statements in Connection with an Offering Document;
9. IAS 23: Capitalization of Borrowing Costs on Major Renovations;
10. IAS 28: Dilution in Ownership Interests;
11. IAS 36: Impairment Test of Provisional Goodwill Acquired during the Current Period;
12. Issues Submitted but Not Brought Forward.

IFRS Outlook Survey for the United States

Corporate financial reporting in the United States is in a period of change and uncertainty. In light of these changes, PricewaterhouseCoopers (PwC) published, in December 2011, a report called 2011 US IFRS outlook survey: Companies' thoughts on the best timing and methods for incorporating IFRS into the US financial reporting system. The report presents the views of finance executives and other stakeholders on approaches to incorporating International Financial Reporting Standards (IFRS) that would best serve the interests of investors, preparers and other users of financial statements.

The key findings are as follows: 1) Respondents had differing perspectives on the timetable for any SEC announcement as well as whether aspects of IFRS incorporation should be mandatory or voluntary. 2) Many companies have taken a “wait and see” attitude. Although a majority of executives still see the transition from US GAAP to IFRS as inevitable, most have not yet committed resources to the process. 3) Support for the US transition to IFRS remains strong, but has declined over the past year. This is attributed to uncertainty about the timing and specifics of the SEC’s plans. 4) The endorsement approach to transition, as outlined by the SEC staff in their May 2011 staff paper, is widely seen as a viable – though not necessarily the most preferred – means for the US to transition to IFRS. 5) There is still considerable debate and uncertainty in the cost-benefit analysis of moving to IFRS. Each company is different, so there is no easy way to generalize about the impacts of IFRS on US companies.

Canadian IFRS adoption - some inconclusive evidence

What, if any, are the potential economic consequences or benefits of the Canadian IFRS adoption?

As the activities of preparing and auditing the first set of complete annual reports using international financial reporting standards (IFRS) are in full swing, it is easy to identify some costs of transitioning from Canadian GAAP to IFRS. So it is an appropriate time to ask, why are we going through this transition? Are there benefits that my company, my clients or the country as a whole might expect to realize from IFRS adoption?

Recent academic literature has examined IFRS transitions, mainly the European Union (EU) transition, which occurred in 2005, and provides evidence that some benefits have accrued to some IFRS-adopting firms. Here, these benefits are summarized, cases where the evidence to date appears to be relatively inconclusive are highlighted and some cautions about generalizing from the EU transition experience to Canada are noted.

(For more information, read the article “Inconclusive evidence” by David Godsell and Michael Welker in the January/February 2012 edition of CAmagazine online.)

Reporting Alerts on IFRS and related resources

Information on new and revised IFRS, together with CICA's Reporting Alerts are now made available on the CICA Canadian Standards in Transition website. Related resources that are targeted towards the needs of smaller public companies are also available.

Reporting Alerts provide an orientation to the standard by highlighting the significance, content and timing of the standard or regulation; summarizing key changes from any predecessor; and suggesting an action plan to follow.

Resources that provide application guidance will vary depending on the nature of the particular standard. They may include checklists, decision trees, questions and answers, and comparisons to former requirements.

Canadian GAAP at a crossroads: Which path should private companies choose: ASPE or IFRS?

In 2011, private companies will start issuing financial reports based on either Accounting Standards for Private Enterprises (ASPE), or International Financial Reporting Standards (IFRS). Although both sets of standards are derived from the existing Canadian GAAP-based CICA Handbook – which will be phased out that same year – there are distinct differences between the two financial reporting systems. Much discussion has revolved around the more demanding disclosure requirements of IFRS; however, that’s just one of many factors private companies need to consider.


The first step in making an informed decision is analysing the business, accounting and stakeholder considerations, and the impact of choosing ASPE versus IFRS. While both sets of standards enable credible financial reporting, allowing capital providers and other stakeholders to monitor the performance of the enterprise, the choice ultimately comes down to weighing the differences between the two sets of standards against the information needs of stakeholders and intermediaries. The answer will not be the same for everyone.

(For more information, visit the Deloitte website and read Canadian GAAP at a crossroads, updated in April 2011.)