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CICA report on IFRS adoption in Canada

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07 Dec 2012

The Canadian Institute of Chartered Accountants (CICA) has published a report outlining the results of a review of the transition to International Financial Reporting Standards in Canada.

The report, entitled The Changeover To IFRSs — Preparers’ And Auditors’ First Impressions Of The Canadian Experience, was undertaken by CICA’s Canadian Performance Reporting Board (CPRB) to obtain views of preparers and auditors.  The results are based on interviews with senior representatives of a relatively small, but in CICA's view representative, number of publicly listed entities and management entities, together of six of the largest Canadian audit firms.

Some of the highlights of the findings include:

  • The IFRS conversion process was considered a "challenging experience", but interviewees where considered to have an overall positive and forward-looking tone
  • Many interviewees expressed some degree of surprise at the extent of the detailed differences existing between IFRSs and previous Canadian GAAP
  • IFRS was considered by many as an opportunity to address issues such as ensuring appropriate and consistently applied accounting policies, reallocating work within the organisation, and achieving a greater focus on project costs
  • Even if aspects of IFRSs had caused interviewees difficulties at various times in the conversion process, they were usually reluctant to cast this as an inherent “problem” with IFRSs
  • Specific issues identified included:
    • Issues related to financial instruments (such as debt vs. equity classification)
    • The determination of discount rates for purposes of measuring asset retirement obligations and other provisions at present value in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets
    • Difficulties in determining the appropriate “cash-generating units” for purposes of testing assets for impairment in accordance with IAS 36 Impairment of Assets (often due to IFRS to Canadian GAAP differences)
  • The noting of other impacts, such as financial statements being longer, volatility in reported results under IFRSs, inconsistencies due to exemptions on initial adoption, and various other matters.

Specific feedback is also included on liaison with, and the perspectives of, auditors.

Click for access to The Changeover To IFRSs — Preparers’ And Auditors’ First Impressions Of The Canadian Experience (link to CICA website).

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