Adopting International Financial Reporting Standards in Canada

1. Adopting International Financial Reporting Standards in Canada The views expressed in this presentation are those of the presenters, and not necessarily those of the AcSB or other staff

2. Agenda • The AcSB’s strategic plan • Planning for IFRS • IFRS versus Canadian GAAP

3. AcSB Strategic Plan • Fundamental changes in direction • Strategy last formulated in 1996-1998 -changing needs in changing times • Motivated by changes in the financial reporting environment • Effects of Enron et al • Experiences with US GAAP in Canada • IASB and acceptance of IFRSs globally • IASB and FASB working closely together – road-map

4. AcSB Strategic Plan • Adopt IFRS as Canadian GAAP for publicly accountable enterprises following a transitional period • Private companies and Not for Profit Organizations

5. Agenda • The AcSB’s strategic plan • Planning for IFRS • IFRS versus Canadian GAAP

6. Planning for IFRS • Who does the plan affect? • When does the plan take effect? • The transition period • Planning

7. Who does the plan affect? • Publicly Accountable Enterprises (PAE’s) • Public companies and some other relatively large or diverse classes of financial statement users • Non-PAE’s may choose • Not for Profit Organizations

8. When does the plan take effect? • One time AND Phased-in approach • Joint convergence projects • Omnibus exposure draft • Change-over timing • Progress review – complete by March 31, 2008

9. Transition Period • Global Convergence projects – AcSB will adopt converged standards • 2006 – Accounting Changes • 2007 – Business Combinations, Earnings Per Share • 2008 – Income Taxes, Joint Ventures

10. Transition Period • Canadian only projects – AcSB may adopt some IFRS early when it provides a better solution - Inventories • IASB only projects – AcSB may adopt at the same time if a conflict with U.S. GAAP is not created – Financial Instruments–Disclosure

11. Transition Period • Canada and U.S. GAAP – changes by FASB only on standards with a high degree of similarity to Canadian GAAP (case-by-case) • Variable Interest Entities and QSPEs • Factors – enhancement versus lifespan

12. Planning - Right now • Start gaining IFRS knowledge now • Attending presentations • Internet learning modules, illustrative financial statements, newsletters, webcasts • AcSB’s comparisons of IFRS to Canadian GAAP • IFRS on Knotia • AcSB – ‘Implementation Plan for Incorporating IFRSs into Canadian GAAP’

13. Planning • Appendix B of the AcSB’s Implementation Plan can help • Five categories • Convergence before changeover • Project in process at changeover • IFRS adoption at changeover • No Canadian counterpart • No comparable IFRS

14. Planning • Train key personnel • Assess changes to data collection required and the impact on systems needed – embedding!!! • Educate users of your statements on the anticipated affects – profit sharing employees, audit committees, investors and anyone providing financing • Learn from experiences of others

15. Planning • Prepare your enterprise’s implementation plan • Appoint your implementation team • Board of Directors / Audit Committee involvement at the beginning • Assess the effect of IFRSs on your company

16. Planning – Your Future • Monitor IASB’s Documents Issued for Comment and respond directly to the IASB – these documents are your future!!!!!

17. Convergence projects in process • Fair value measurement • Financial statement presentation • Liabilities and equity • Leases

18. Convergence projects in process • Revenue recognition • Financial instruments • Derecognition • Intangible assets

19. Participating in global convergence • Comment on IASB proposals • Participate in international projects • Conceptual Framework • IFRS Advisory Groups • Leases, Small- and Medium-sized Entities • Undertake research • Measurement Objectives – Initial Measurement • Disclosure Framework • Extractive Activities

20. Agenda • The AcSB’s strategic plan • Planning for IFRS • IFRS versus Canadian GAAP

21. Similarities to Canadian GAAP • Structure and content of financial statements • Conceptual framework • Many similarities of approach and specific content • More ability for revaluation in IFRSs

22. Differences to Canadian GAAP • Differences on which a global or other project is currently converging the standard • Differences on which no project is anticipated prior to ‘changeover’

23. Differences to Canadian GAAP • Differences – project in process • Impairment • Two incompatible models • N. America – undiscounted cash flows, other than temporary impairment, no reversals • IFRS – discounted cash flows, faster write-down, reversals

24. Differences to Canadian GAAP • Differences – project in process • Business combinations • Consolidations • Special purpose entities (VIE’S)

25. Differences to Canadian GAAP • Differences – project in process • Employee future benefits • Income taxes • Earnings per share

26. Differences to Canadian GAAP • Differences – project in process • Segment reporting • Inventories • Insurance contracts • Differential Reporting Options/SMEs

27. Differences to Canadian GAAP • Differences – no convergence project • For example: • Transfer of receivables/securitization • Non-financial liabilities • Debt breach at year end

28. First-time Adoption • Exceptions on applying new basis of accounting • Prohibits retrospective application when judgment with benefit of hindsight • Transitional disclosures • Only applies on full adoption of IFRSs

29. Further informationwww.acsbcanada.orgian.hague@cica.cakaren.mccardle@cica.ca