AcSB reflects on Canadian IFRS adoption strategy
The Canadian Accounting Standards Board (AcSB) has released its annual report for the 2011-2012 year, which includes reflection on AcSB's strategy of adopting IFRSs for Canadian publicly accountable enterprises and permitting their use by other entities.
The annual report, publicly released earlier this month, includes a lengthy section on the AcSB's IFRS adoption strategy. The report notes recent feedback reveals "generally lower level of satisfaction" with IFRS and that "some stakeholders question, or disagree with, the adoption of IFRSs but vocal opponents of the strategy are relatively few."
Criticisms noted by the AcSB include costs of transition (particularly for smaller entities), industry-specific issues and Canada choice of moving to IFRS in light of recent developments in the United States.
Notwithstanding these concerns, the AcSB has concluded that are "no new arguments or evidence that, in its view, would call the strategy into question" and that although IFRSs require improvement, they represent the only practical route to achieving the goal of a single set of high quality, globally accepted financial reporting standards contributing to the improved functioning of global capital markets.
The report also notes "undesirable divergence in practice" on some IFRS interpretative issues and the AcSB's lack of satisfaction with the IFRS Interpretations Committee over the past few years because of its failure to provide much helpful guidance in the application of IFRSs. Some of the AcSB's concerns have been at least partially addressed by the reviews by the Monitoring Board and IFRS Foundation Trustees.
In relation to industry-specific matters, the report focuses on the lack of specific guidance on accounting for the effects of rate regulation and the AcSB's view the IASB should restart its project on this topic as a key response to its agenda consultation process. However, the AcSB's reiterates that "the greater good is served by not introducing carve-outs or interpretive add-ons to IFRSs on this issue", in spite of the divergent accounting treatments resulting from the deferral of IFRS adoption for affected entities and Canadian securities regulators’ actions that allow those entities to adopt US GAAP in place of IFRSs for 2012-2014.
Click for access to the annual report (link to AcSB website).