IFRS and Canada's Credit Unions

International Financial Reporting Standards (IFRS) represent a global movement towards a single, unified set of accounting standards recognized worldwide. More than 100 countries have changed to require IFRS reporting by public companies. Canada has decided to join this movement to provide Canadian organizations better access to international capital markets and investment opportunities.

How IFRS affects credit unions

Most credit unions are already in the year of transition to IFRS, however for many credit unions with non-calendar year-ends this may still be an area where focus is needed. The IFRS areas of significance for most credit unions include:

Loan Loss Provisions

Expected future losses cannot be provisioned. Credit unions must apply an “incurred-loss” model in measuring loan impairments both individually and on a collective portfolio basis. As a result, general loan loss provision requirements are more stringent under IFRS. In the future, this is expected to cause additional income volatility.

Property, Plant and Equipment

Components may need to be identified at a more detailed level and fair value versus cost measurement options need to be assessed.

Securitizations

It will be difficult to achieve off-balance sheet treatment for mortgage securitizations and credit card securitizations under IFRS.

No matter what stage your credit union is at in your transition it is important to stay informed on the above areas of significance and to keep on top of IFRS standards as they continue to change.

As you transition to IFRS

The move to IFRS is potentially extensive, both on a credit union’s financial reporting and on its internal processes and policies. As a result, a significant investment in time, education and managing change is required to ensure your credit union makes the switch in the most efficient and effective manner possible. Working closely with your team, MNP’s local credit union team can advise you on every facet of managing this change to help ensure your credit union makes a smooth, seamless transition to IFRS.

Read on for more information about the switch to IFRS, how it evolved and what it means for your credit union.

To find out how MNP can help your credit union make the transition to IFRS, please contact your local Credit Union Team Member or call Sean Du Plessis, CA, Credit Union IFRS Leader at 1.877.500.0792

Download our IFRS Compliant Financial Statement Sample