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If you haven’t planned your transition to IFRS - the time to start is now! In part I of this II part series of blogs, I will highlight some of the key things you need to consider for your transition to IFRS, all to help ease the transition and save your company time and money.
But it’s still 2009 – there’s still over a year to start preparing for the transition, right?
Yes and no! IFRS must be adopted for all fiscal years beginning on or after January 1, 2011. However, you have to present comparative financial information – your 2010 “prior year” statements - under IFRS as well. This means that you must have a starting point and then use IFRS from this point forward… and your starting point is January 1, 2010. This date is approaching very quickly.
Furthermore, during 2010, your company will likely need to maintain two sets of records - one in accordance with current Canadian GAAP for 2010 reporting and one in accordance with IFRS for reporting your 2011 comparatives.
Okay, now what? Do IFRSs have to be applied retrospectively?
Yes! All IFRSs are required to be applied retrospectively, as if your company had been using IFRS since its inception. Thankfully however, the International Accounting Standards Board (IASB) recognized that full retrospective application would be costly and time-consuming for companies. In order to help tackle this problem, IFRS 1 First-time Adoption of International Financial Reporting Standards was developed to provide some exceptions and exemptions from full retrospective application of IFRS.
Take the time to go through these exceptions and exemptions to determine whether they will be applicable to your company. By spending the time now planning, you will save your company a lot of time and money in the future!
Are there additional requirements that need to be completed in the year of transition?
Yes! Another significant requirement in the first year of adoption is that you must disclose reconciliations from current Canadian GAAP to IFRS for your comparative data. You have to prepare these reconciliations for each financial report you issue in the first year of adoption (i.e. for both interim and year end periods). These disclosures will help your financial statement users understand how the move from current Canadian GAAP to IFRS has affected your company.
Stay tuned for part II of this blog on IFRS adoption and the impact it will have on other areas of your company.
For more information about adopting IFRS, please feel free to contact myself or your local MNP advisor.
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