The review suggests that issuers could do a better job in disclosing their progress toward the transition, and its potential effects, than was done in the 'Management Discussion and Analysis' sections of their 2008 annual and 2009 interim financial reports.
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In 2008 MD&A, we expected issuers to have discussed the status of the key elements and timing of their IFRS changeover plan....
Overall, we found that issuers are not adequately disclosing information related to their IFRS transition efforts.
A summary of our findings is as follows:
- 40% of issuers received a letter from staff questioning whether a changeover plan was in place as it was not evident from reading their MD&A disclosure. Given the short time remaining before the changeover date this raises concerns that issuers may not be able to comply with future filing obligations.
- Of the 60% of issuers that discussed an IFRS changeover plan in their 2008 annual MD&A, approximately half simply provided a generic description of the plan without any direct application to their own circumstances. The most valuable information for investors is IFRS transition disclosure that is specific to the issuer.
- 80% of issuers that discussed an IFRS changeover plan failed to describe significant milestones and anticipated timelines associated with each of the key elements of the plan. It is important that issuers discuss the timing associated with key elements so that investors can readily assess whether the project is progressing in accordance with the changeover plan.
- 48% of issuers that discussed IFRS transition in 2008 annual MD&A failed to provide quarterly updates in 2009 interim MD&A on the progress related to their changeover plan. Investors need progress updates to assist them in assessing the likelihood that the issuer will be able to complete its IFRS conversion on time.
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Click to download the study IFRS Transition Disclosure Review (Staff Notice 52-718) (PDF 442k).
