IFRS readiness: adopters confident

The majority of senior-level accountants interviewed for the most recent CICA/RBC Business Monitor (Q4 2009) continue to voice confidence in their state of international financial reporting standards (IFRS) readiness. Of the respondents in companies that are required to adopt IFRS, 81% say they are “very likely” to be ready to comply for the 2011 deadline.  

Respondents were asked to select the statement that best describes their company’s current state of IFRS readiness. Responses included: appointed a transition team leader (5%); completed education process, planning conversion (15%); assessed impact, begun educating staff on changes (19%); in process of assessing potential impact on organization (26%) and started the conversion process but not yet completed (22%). And 7% reported that they have completed the conversion process.

“I am heartened to see that a handful of companies are finished, and more than half of adopters have begun the transition,” says Ron Salole, vice-president, standards, CICA. “While it is encouraging to see positive forward movement, adopters should not underestimate the work that remains.”

The proportion that indicated their company had not yet begun to assess the impact of the changeover dropped to 5% in the final quarter of 2009 from 22% in Q4 2008. The CICA/RBC Business Monitor is issued quarterly and draws upon the business insights of CAs in leadership positions.

New CICA resources to support IFRS transition projects
Transition to IFRSs — Communicating the Impact of the Changeover is a new Canadian Performance Reporting Board publication. It discusses how to summarize the effects of the changeover in your MD&A to ensure your investors are not caught off guard.

Interim Financial Statements in the Year of Adoption of IFRSs  is issued by the Accounting Standards Board. It reviews questions that might arise about the presentation of interim financial statements.

Assurance Implications of the Changeover to IFRSs looks at the complexities related to the IFRS changeover and new challenges auditors may face.

These resources are available for free download at the CICA’s designated IFRS website: www.cica.ca/IFRS, your trusted source for everything IFRS.

Changes to CICA Handbooks

The CICA Handbook – Accounting has been revised to reflect the Accounting Standards Board strategy for adopting different sets of standards for different categories of entities. It has been restructured into five parts:

Part I • IFRS
Part II • accounting standards for private enterprises
Part III • accounting standards for not-for-profit organizations (not yet available)
Part IV • accounting standards for pension plans (available spring  2010)
Part V • the existing Handbook contents.

Not-for-profit organizations and pension plans will continue to follow Part V until the completion of due process for changing the standards applicable to those entities. Following that, Part V of the Handbook will be phased out.

Making IFRSs available electronically in both languages required an enormous effort. CICA Language Services first had to undertake a yet-to-be-completed review of the existing French translation of the standards issued by the International Accounting Standards Board (IASB), the London-based organization responsible for the development of IFRSs. Recognizing their unique expertise, the IASB further called upon them in July 2009 to take the lead role going forward in translating into French all exposure drafts and new standards for use in Canada.

The CICA Handbook – Assurance has also been restructured to reflect the new Canadian auditing standards (CASs), which come into effect for audits of financial statements for periods ending on or after December 14, 2010.

The new Assurance Handbook contains:

Part I

• Preface
• CSQC 1, Quality Control for Firms That Perform Audits and Reviews of Financial Statements, and Other Assurance Engagements.
• Thirty-six CASs Retained Sections and Guidelines (applicable to engagement other than audits of financial statements).

Part II

• Existing Handbook contents.
  The CICA Handbook – Accounting and the CICA Handbook – Assurance are available in electronic format through www.knotia.ca.

New rules mean more small and midsized CA firms can train CA students

Until recently, only CA firms able to offer the required minimum chargeable hours in audit and assurance were eligible to train CA students. This meant many small and midsized CA firms either couldn’t train CAs or couldn’t train as many as they wanted to.

That has changed. The profession has new rules for qualifying practical experience. Now, students who want to become CAs can obtain qualifying experience in areas of professional practice other than auditing, as well as in approved corporate and government departments.  

This is good news for small and midsized CA firms, which can now train students in thriving practice areas such as compilations, reviews and tax. While these students still need the required chargeable hours if they want to practise public accounting, they could do so at a later date after qualifying as CAs.

Firms only interested in training CA students who wish to practise public accounting but lack the audit hours to do so should also consider hiring experienced CA students who have already completed the required chargeable audit hours at another firm. CA students can complete their practical experience requirements for qualification at your firm and may be eligible to practise public accounting. The current economic situation has resulted in the availability of a number of experienced CA students ready and able to take on new opportunities.

Succession planning strategy
Over the next 10 years, succession planning will become an increasing priority for CAs in small and midsized firms who will be retiring. The new rules for qualifying practical experience make it possible to train CA students in-house — a strategy that should be considered as part of a viable succession plan.

CA firms interested in exploring these new opportunities need to be approved by their provincial institute. The process is straightforward and can be completed in a few weeks. For more information, contact your provincial institute, or visit www.catoadvantage.ca. Note: these opportunities are not yet available in Quebec, where required changes are currently in process.

Next month: learn about new opportunities for companies to train CA students.

Proposed IFRS sparks Canadian discussion

Financial Instruments: Amortized Cost and Impairment
A recent International Accounting Standards Board (IASB) Exposure Draft could result in significant changes for Canadian businesses. The proposed new standard Financial Instruments: Amortized Cost and Impairment would alter the pattern of income reporting for IFRS adopters with financial assets measured at amortized cost. Although the proposed model may appear at first to be of concern only to lenders, other entities, including those selling goods or providing services on credit, may find major changes to their operations and financial reports. Given the challenges the proposed standard could impose, the AcSB is encouraging Canadians to review the document and submit comments. The AcSB will hold a roundtable this spring to give stakeholders
an opportunity to ask questions and provide input on the proposal. Visit www.acsbcanada.org for more information about the Exposure Draft and the roundtable. The comment period closes June 15, 2010.

Expanded CPD opportunities for 2010

After the rough ride of 2009, 2010 is expected to bring recovery. The CICA’s continuing education programs can help you prepare by honing your skills, expanding your knowledge base and enhancing your professional network.

“Success will be about preparedness to capitalize on change,” says Frank Colantonio, director, CICA continuing education. “That’s why we’re expanding our 2010 offerings into new technical and practice areas.”

One important emerging practice area is climate change and the accounting, verification and reporting of greenhouse gas emissions. “We’re presenting a national conference on these key topics, and we’ll be launching an in-depth course on greenhouse gas verification.”

New courses are also available in highly technical areas. Colantonio describes a new in-depth course on transfer pricing as “absolutely leading edge in its ability to elucidate what has become an essential yet complex process that needs careful analysis and interpretation of the impact of key factors, with respect to corporate activities of multinationals, in order to maximize pricing strategies.”

For small and medium-sized business advisory practices, the SME Advisors Conference will be held in Ottawa in August.

“SME was a highly popular conference, particularly for networking,” says Colantonio. “With all the standards changes underway — notably Canadian auditing standards, IFRS and in particular the new private company GAAP — we believe practitioners will find enormous benefit in learning the new practitioner’s landscape.”

Check out the 2010 continuing education catalogue included with this month’s CAmagazine, or visit www.cpd.cica.ca. Education programs can make a difference to you, your clients and your organization.