IFRS Update Ian P.N. Hague, CA Principal, Accounting Standards Own views – not those of AcSB or other staff

1. IFRS UpdateIan P.N. Hague, CAPrincipal, Accounting StandardsOwn views – not those of AcSB or other staff

2. Agenda • AcSB IFRS Strategy • IFRSs – Tackling the transition • Helpful resources • Private Cos & NFPOs • Closing & questions

3. All systems go for 2011 adoption • Balance of factors: • Five years lead-time • Date certain • Relatively stable platform of IFRSs • Limited period of C-GAAP falling behind • Desire to drop IFRS-US reconciliation • Desire for common global reporting • EU Equivalence • Many enterprises in advanced stages of preparation

4. When is adoption required? Opening balance sheet IFRS Reporting date Interim F/S 8 months Jan. 1, 2008 Jan. 1, 2010 Jan. 1, 2011 Dec. 31, 2011 Preparatory period Cdn. GAAP & IFRS

5. Who does this apply to? • Publicly Accountable Enterprise: • Issued, or is in the process of issuing, debt or equity instruments that are or will be outstanding and traded in a public market (i.e. all public companies are PAE’s); or • Holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses, (i.e. others with large or diverse groups of users, such as a bank, insurance entity, securities broker/dealer, credit union, mutual fund or investment banking entity). • Also, Public Sector: GBE/GBTO (see ITC) • NOT required for NFPOs • Others may choose to adopt IFRSs

6. International developments • Global acceptance of IFRSs (100+ countries) • IASB and FASB working closely together • Elimination of IFRS/US GAAP reconciliation • Single set of high quality standards – “Memorandum of Understanding” • Agreed upon standards by June 2011

7. SEC Roadmap • US Filers to adopt IFRSs in 2014-16? • Decision for roadmap – 2009? • Decision for 2014-16 - 2011 • Largest international issuers choose to adopt as early as 2009 • 20 largest in industry globally • IFRSs used most often in that industry • Will consider • MoU • Accountability & funding of IASCF • XBRL • Education & training • Application experience Comments were due by April 20, 2009

8. Canadian Securities Administrators • Preparing investors for the transition – disclosures • “Grooming Disclosures” CSA Staff Notice – 52 - 320 • 2008 – Annual (interim if available) • 2009 & 2010 – Annual and Interim • Guidance also available from CICA • Early adoption - Staff Notice 52 - 321

9. What does it mean to adopt IFRSs? • PAEs adopt IFRSs without modification as Canadian GAAP – all Canadian GAAP falls away (for PAEs) • Interpretations by IFRIC only • Focus of attention becomes on IASB in London

10. Benefits to Canada • Access to foreign markets • Lower cost of capital – familiar standards • Continued principles-based standards – less complexity • Efficiencies for international companies • BUT: It will take work to get there

11. Agenda • AcSB IFRS Strategy • IFRSs – Tackling the Transition • Helpful resources • Private Cos & NFPOs • Closing & questions

12. Implications for educators • A changing world • Opportunity to refresh course content • Teach fundamental concepts • Introduce international perspectives into curricula • Broaden students minds beyond standards compliance • Research opportunities • Demand for comprehensive training

13. Planning – Changing Standards • Today’s IASB project is tomorrow’s Canadian GAAP for Publicly Accountable Enterprises • Therefore students need to focus on what will be in place in the future, not solely on what is in place today • So, what is changing and what is stable?

14. Inventories Accounting Policies & Accounting Changes Events after the Balance Sheet Date Property Plant & Equipment Government Grants Foreign Currency Borrowing Costs Associates Hyperinflation Interim Reporting Impairment? Intangible Assets Investment Property Agriculture Business Combinations Extractive Activities Segments Majority of IFRSs remain unchanged through 2011

15. IFRS Adoption at changeover • Many similarities between IFRSs & Cdn GAAP • BUT: Also some major differences • Revaluations • Impairment • Securitization • Devil is in the details!

16. How do we get there? C-GAAP changes before changeover • Business combinations [IFRS 3/IAS 27] – 2011 - complete • Earnings per share [IAS 33] – 2010?? • Joint ventures [IAS 31] – 2011 • Economic Environment? – 2010/11?

17. Business combinations • IASB/FASB standards finalized • IASB and FASB not fully converged • AcSB converged with IASB • Effective January 1, 2011 with prospective application – early adoption permitted • Will significantly change some aspects of accounting for business combinations

18. Earnings per share • IASB Exposure Draft issued – Comment Deadline December 5, 2008 • Simplify and converge IASB and FASB EPS • Principle - which instruments to be included in basic EPS • Diluted EPS – • FV through P&L – no adjustment • FV not through P&L – mkt price at the end of the period • Effective 2010?

19. Joint ventures / arrangements IASB Exposure Draft - comment deadline January 11, 2008 – final expected H2 2009 • Eliminates proportionate consolidation for jointly controlled enterprises • Maintains proportionate consolidation for jointly controlled assets and jointly controlled operations • Key is how the structure qualifies within the definition – • Direct interest in underlying asset – p.c. • Indirect interest in net outcome- equity

20. Economic environment • Issued guidance on ABCP • Issued guidance on FV in Inactive Markets • Issued amendments to reclassfcn of fin’cl assets • Amended 3862 re FV & Liquidity disclosures • Considering Consolidations and Derecognition • Comprehensive Financial Instruments project

21. IASB changes expected Other IASB changes before 2011 • Liabilities – 2009 • Management commentary – 2010 • Fair value measurement (how not when) – 2010 • Income taxes – 2010 • Emissions trading – 2010 2009 probably effective 2011 2010 probably effective 2012

22. IASB isolated changes Isolated changes • Related Party Disclosures • Discontinued Operations • Group Cash-settled Shared-based Payment • First-time Adoption

23. IFRS 1 choices New Canadian proposals • Full cost oil and gas • Rate-regulation • Assessments when prior accounting same as IFRSs - Leases

24. Changes expected in 2011 • Financial statement presentation • Insurance contracts • Liabilities & equity • Leases • Employee benefits • Revenue recognition Likely to be effective in 2013. Might not be available for early adoption?

25. IASB Projects in longer term • Reducing complexity in financial instruments • Extractive activities • Common control transactions • Government grants • Intangible assets • Conceptual framework

26. Agenda • AcSB IFRS Strategy • IFRSs – Tackling the Transition • Helpful resources • Private Co’s and NFPO’s • Closing & questions

27. IFRS resources • IASB web site – www.iasb.org • IFRSs: Knotia, Omnibus ED, CAAA, IASB web site • AcSB web site – www.acsbcanada.org • What’s changing when? • Canada/IFRS GAAP Comparisons – two levels • AcSB’s IAC Meeting Notes, Bulletins, etc. • CICA – 20 Qns for Audit Committees - MD&A Guidance • Major firms – Newsletters, webcasts, publications, illustrative F/S, syllabi, case studies, training materials, etc. etc.

28. Agenda • AcSB IFRS Strategy • IFRSs – Tackling the Transition • Helpful resources • Private Co’s and NFPO’s • Closing & questions

29. What about private companies? • Some might elect to use IFRSs • For others: • Starting from existing GAAP • But aspects evolving towards IFRSs • ED – April/May 2009

30. Not-for-profit Organizations • IFRS does not explicitly deal with NFPOs • Possible strategy: • Allow NFPOs to use either: • IFRS, or • Private enterprise GAAP, with addition of NFPO guidance? • ITC – December 2008

31. Questions/comments? ? ian.hague@cica.ca