The Canadian GAAP to IFRS project should begin with a “scoping exercise” such as a gap analysis or impact assessment. The conversion project starts with a focus on accounting differences and accounting policy choices. But transitioning to IFRS will not be solely a technical exercise. It will involve widespread changes that will impact many areas of the organization. The impact will go beyond accounting and will affect other business areas such as Tax, IT, and also consider how to translate any accounting choices into solutions that work for your business.
An important aspect of diagnostics and strategic planning will be to complete an assessment of company stakeholders – their interest and representation in the conversion process. In addition to including internal stakeholders, a broader analysis is required to address the concerns of external stakeholders. For example, debt covenants and banking relationships will need to be carefully reviewed. Also be sure to address Investor Relations, insurance providers and external auditor involvement. Getting the external auditor involved early can be helpful and prevent surprises later on.
Some the changes a company should expect from IFRS include:
• Executive and employee evaluation and compensation plans (HR).
• FX and hedging activities (Treasury).
• Corporate income taxes (Taxation).
• Ratios and Bank Covenants (Finance and Treasury).
• Internal controls and processes (Finance).
• Investor Relations and Communication to Capital Markets (Finance and Investor Relations).
• Management Reporting (Finance).
• IT and Data Systems (IT).
Diagnostics in these areas will assist management and Board of Directors to visualize and anticipate the extent and complexity of the IFRS conversion, and allow them to make a better decision on how to plan, structure, and resource the project, and determine the next steps. The company’s CFO is typically the Project Sponsor.
I hope this helps. This is one of a series of blogs that is meant to convey information relating to Canada’s transition from Canadian GAAP to IFRS.
For further information, please refer to the ongoing series of IFRS blogs on the Edelkoort Smethurst Schein CPA’s LLP web-site and please remember to contact your accounting professional for further guidance.
Edelkoort | Smethurst | Schein CPAs LLP is located in Burlington Ontario servicing the Golden Horseshoe and Greater Toronto Area and beyond. The firm is fully licensed with CPA Ontario to provide assurance, tax and accounting services as well as registered as tax preparers with the Canada Revenue Agency (CRA) & Internal Revenue Service (IRS). The firm is also registered as an IRS Certified Acceptance Agent.
All blog posts published on this site are for informational purposes only and do not constitute professional advice. Readers should contact a professional to discuss their individual situation. Neither the author or the accounting firm shall accept any liability for any reliance placed on the information posted.