Canada’s CAs offer guidance to communicate impact of IFRS changeover
Canada’s Chartered Accountants are providing guidance to help public companies summarize for investors the effects of the changeover to International Financial Reporting Standards (IFRSs).
Most Canadian public companies will commence reporting in accordance with IFRS in 2011. At that time, the changeover will potentially result in numerous changes to an entity’s financial statements.
A new publication by the Canadian Institute of Chartered Accountants (CICA) titled “Transition to IFRSs – Communicating the Impact of the Changeover” focuses on using Management Discussion and Analysis (MD and A) to explain the effects of the move to international standards.
The MD and A is a filing required by securities regulators that accompanies quarterly and annual financial statements. A well-presented MD and A provides the context investors need to better understand the company’s performance and prospects as well as its financial statements.
“The publication provides examples of how to provide a succinct MD and A discussion of the impacts associated with the changeover,” said Chris Hicks, Principal, Knowledge Development, CICA. “Investors want to compare an entity’s performance from one period to the next. On the changeover to international standards, this comparison will become distorted because of the application of a new set of accounting rules.”
The publication, developed by the CICA’s Canadian Performance Reporting Board (CPRB), is available electronically (www.cica.ca/cpr). The Board focuses on guidance about the measurement and reporting of organizational performance outside of financial statements.
The document also is one of several resources available on a special CICA website dedicated to Canada’s transition to international standards (www.cica.ca/IFRS).
“Investors need to understand the extent to which prior reported performance has varied because of the changeover and the extent to which that change can be expected to affect future reporting,” noted Hicks. “The CICA publication is a resource public companies can turn to for assistance in effectively summarizing the financial reporting impacts of the changeover to investors.”
Source: CICA Website
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