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New Accounting Standards – The clock is ticking, are you ready


Published on May 17, 2017

1IFRS 9 (Financial Instruments) and IFRS 15 (Revenue from Contracts with Customers) are completely new accounting standards superseding IAS 39 and IAS 11/18 and related interpretations with an effective date of January 1, 2018. IFRS 16 (Leases) is also an important and completely new standard, which is on the horizon and will supersede IAS 17, with an effective date of January 1, 2019.

The path forward

IFRS 9, IFRS 15, and IFRS 16 (collectively the ‘new standards’) have implications that extend far beyond the accounting function.

The new revenue standard will likely affect every aspect of a business — from  financial reporting (including revising certain accounting processes and controls) — to compliance with debt covenants, and to remuneration schemes, for example. Yet with only 9 months left to the date of adoption, many companies are still in the early phases of their implementation plan, which means they may be dangerously behind. 

While the first financial reports to be issued for IFRS 9 and IFRS 15 may be about a year away (March 31, 2018 for calendar year-end public companies), the comparative reporting periods are well underway. Companies that are ahead in this regard, and currently working to implement the standards, are finding implementation to be more complex and time-consuming than expected.

It’s time to take action, in order to ensure a smooth, no surprises, implementation of the new standards.
By asking the right questions at the right time, finance leaders and those charged with governance can contribute to a successful transition by helping to ensure the company’s implementation project stays on track. The following non-exhaustive list of questions may be useful for leadership to understand an entity’s implementation plan and status:

Build the plan

  • Has the entity developed a detailed project plan for the implementation of the new standards?
  • Has a project sponsor been identified for the implementation project?
  • Has a cross-functional team with expertise in key areas of the business affected by implementation of the new standards (accounting, IT, legal, sales, processes/controls, HR, etc.) been identified?
  • Does the project plan identify roles and responsibilities? Does it identify key deadlines and project milestones?
  • Does the entity have personnel with sufficient knowledge on the new standards for an effective implementation?
  • Does the entity’s personnel have sufficient capacity to follow through on the project plan as part of their other responsibilities?
  • Does the project have a detailed budget for its implementation cost? Are the necessary approvals for the cost in place?
  • To what extent are external auditors and external advisors involved in the process?

Understand the impact

  • Has a preliminary assessment of the new standards’ impact on the entity’s financial results been completed?
    • Has there been an identification of revenue streams/financial instruments/leases that are potentially within the scope of the new standards? Based on a review of the related source documents (e.g., contracts, lease arrangements, etc.) have potential accounting differences been identified?
    • What is the preliminary assessment for the magnitude of transition effort and impact?
    • Has the entity benchmarked its preliminary assessment against the most recent disclosures made by its peers?
  • What are the other finance and accounting impacts?
    • What are the expected changes to accounting policies?
    • How are internal controls impacted?
    • How will the entity’s financial statement disclosures change? Has the entity assessed disclosure gaps, and how it will obtain the new required data?
    • What processes have been implemented to monitor and consider emerging interpretations? (e.g., the Joint Transition Resource Group for Revenue Recognition has discussed over 40 agenda papers[1], and the Transition Resource Group for Impairment of Financial Instruments has discussed over 20 agenda papers)
  • What are the follow-on impacts outside of the finance and accounting teams?
    • What new accounting processes/controls or IT systems/controls are required?
    • What are the impacts on: tax (deferred taxes, tax planning, and cash tax impact), sales and legal (commercial business practices and other contract terms), human resources (employee compensation and training), key operating and performance indicators, treasury (debt covenants), marketing (impact of sales and bundles), and what other areas are affected?
  • Regarding the specific technical provisions related to adoption of the standard:
    • What is the planned transition method (e.g., full retrospective or modified retrospective) and why has that method been selected? How does this compare to peer groups?
    • Have the standard’s practical expedients been considered? Which ones are available and which ones are being elected?
    • Based on the entity’s internal control framework, what approvals are needed in the process of establishing these new accounting policies?
  • What are the areas of risk, significant judgments and estimation uncertainty?
    • How are these risks being mitigated? And how are the estimations being developed?

Develop the communication strategy

  • How will the implementation plan be monitored and how will progress be communicated to executive management? To the Board/Audit Committee? To other finance personnel?
  • What is the expected timing of implementation?
    • Preparing pro-forma financial statements as a “dry run” before the new standards are effective can be an important exercise to enable a company to understand its ability to meet the new standards’ financial statement and disclosure requirements and to get feedback from interested parties, such as senior management and auditors. When will pro-forma financial statements and disclosures (including disclosures of new judgments and estimation uncertainties) be ready for senior management’s review? And the external auditor’s review?
  • What is the entity’s plan for making the required disclosures on the effect of new standards in the periods leading up to the change?
    • Has the entity considered the guidance from securities regulators?
    • What are the entity’s plans for communicating with stakeholders?
    • What continuous disclosure document requirements are applicable leading up to the effective date?

What does this mean for Canadian reporting issuers?

IFRS requires disclosure of known or reasonably estimable information relevant to assessing the possible impact from application of a new accounting standard on an entity’s financial statements[2].

Canadian regulators are strongly encouraging management, audit committees, and auditors of reporting issuers to have extensive discussions about the impact and progress of transition to these new standards[3]. In addition, the Ontario Securities Commission (‘OSC’) Staff stated that they expect audit committees to closely monitor implementation as part of their responsibilities over financial reporting. The OSC Staff also set an expectation for entities to provide increasingly detailed financial statement disclosure about the expected effects of the new standards.

Consistent themes around the globe

U.S. Generally Accepted Accounting Principles (‘U.S. GAAP’) also has new standards on the horizon in the same three areas, ASU 2014-09 5a(Revenue from Contracts with Customers, the U.S. GAAP counterpart to IFRS 15), ASU 2016-02 (Leases, originally a joint project with IFRS 16), and ASU 2016-13 (Measurement of Credit Losses on Financial Instruments). The U.S. Securities Exchange Commission (‘SEC’) has made statements regarding its expectations for disclosures on the new standards. For example, at the 2016 AICPA Conference on Current SEC and PCAOB Developments, speakers encouraged companies to provide disclosures about reasonably estimable quantitative information even when there is a lack of certainty related to the ultimate impact of adoption[4]. Further, they indicated that it would be appropriate to disclose information about the expected impact of adopting the new revenue standard even when the impact is only known for a subset of revenue (e.g., a single product category or revenue stream). They noted that a reporting issuer should generally provide more qualitative disclosures when there is a lack of quantitative disclosures.

The European Securities and Markets Authority (ESMA) released a public statement on the implementation of IFRS 15, and within it states an expectation that issuers provide progressively more entity-specific qualitative and quantitative information about the application of IFRS 15 in their financial statements[5]. The statement also included explanations of disclosures to be provided when an issuer expects the application of IFRS 15 to have a significant impact on its financial statements. ESMA later published a similar statement on the adoption of IFRS 9[6].

Call to action

While some entities are nearing the completion of their implementation projects for the new standards, many are not as far ahead as they should be.

If you are an entity in the latter group, there is still a lot to do, and very minimal time to ensure effective implementation. Careful project management and oversight will be very important. As your next step, enhance the focus on your entity’s new standards implementation plan by considering the questions above.

In-order to minimize future headaches and ultimately ensure that your entity meets its reporting deadlines - the time to act is now!

As always, should you have any questions or concerns, or need help with any aspects of the new standards implementation, feel free to reach out to your Deloitte contact.



Kerry Danyluk Kerry Danyluk
Kerry joined Deloitte in 2006 with over 20 years of experience in industry, public practice and standard setting. She is currently the National Director of Accounting Services at Deloitte, with overall responsibility for accounting consultations. She serves clients in a variety of sectors, most significantly resources, financial services, retail, public sector and utilities.
Maryse Vendette Maryse Vendette
Maryse is a partner for Deloitte Canada’s National Office and co-leader of the IFRS Canadian Centre of Excellence. She is recognized nationally as a specialist in revenue recognition, business combinations and IFRS in general, and contributes to the development of the firm’s views on complex accounting issues. Prior to joining the National office, Maryse was a member our advisory group, where she provided financial reporting services to clients in a variety of industries.
Chris Tynan Chris Tynan
Chris is a manager in Deloitte Canada’s National Services Accounting Group. In this role, he researches technical positions under various frameworks. Chris also develops and reviews technical accounting resources aimed to assist engagement teams across the country.


[1] For more information, see Deloitte’s August 2016 Clearly IFRS – IASB and FASB joint transition resource group for revenue recognition Summary of implementation issues discussed to date publication.
[2] IAS 8, paragraph 30
[3] OSC Staff Notice 52-723, Office of the Chief Accountant Financial Reporting Bulletin issued in November 2016

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