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Cost and benefits of IFRS adoption

Date recorded:

IFRS country profiles

Paul Pacter introduced the development of the IFRS country profiles, in particular an on-line survey and questions it posed.  The Council expressed appreciation for the work done.  The country profiles were very welcomed.  The idea of preparing a bound volume/ hard copy of the material was not recommended, the dynamic nature of the data and the relative accessibility of the profiles on the IFRSF website being seen as sufficient.

Canadian Executives Research Foundation/ AcSB study on IFRS transition in Canada 

Karen Brooks (FEI Canada) introduced the topic.  The report is currently in draft, so no final documents were available.  The basis of the report was an on-line Survey of FEI Canada members supplemented by a roundtable held in February 2013 at which 14 FEI preparer/ IFRS transition officers attended. She went on to review some high-level findings:

  • The principal finding was to plan early; devote adequate resources
  • Smaller companies did not find the transition arduous
  • Cost of transition: 0.05% of revenues or less
  • Resolving differences between major audit firms was an occasional source of frustration
  • However, the use of major audit networks as subject matter experts helped
  • Small group of issuers found fewer issues than expected
  • Cost on on-going compliance: some said the same; some increased;
  • Cross-listed companies: reduced, because SEC reconciliation was no longer required.
  • Full report to be available by October 2013.

A Council member noted that major corporates obviously drove the process, and asked how did those companies feel afterwards?  The removal of SEC reconciliation was a major benefit and reduced on-going compliance costs significantly.

Ms Brooks noted that, in the end, transition to IFRSs was a ‘non-event’ in Canada.  There was no big reaction in the markets and analysts took it in their stride.  However, that result belies the significant effort involved.  It required lots of planning and dedicated teams.

IFRS and Korea

A Council member presented a summary of a report on the Korean transition experience.  

Mr Cherry cautioned that the two reports demonstrated that each jurisdiction is different.  Canada was mostly there; many arguments had been won and lost.  This situation was not the same as elsewhere.  Another Council member noted that the real necessity was a firm political will: without political support, transition would not succeed.  In addition, in Canada (and Australia in 2005) there was a large body of experienced technical accountants, regulatory support, etc.

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