Effective communications with all stakeholders will be essential for the successful conversion from Canadian GAAP to IFRS. A communication strategy needs to be devised, which should include the timing and nature of communication with executives, supervisors and staff. The Project Manager Office (PMO) should inform both the Board of Directors and the Audit Committee regularly on its plan and progress.
Managing investors and other stakeholders’ expectations with respect to the impact of IFRS and the company’s progress towards conversion will be an important area for the Board to monitor. Clear, continuous and consistent communication will reduce the risk of misunderstandings and assist with the smooth transition.
In maintaining investor relations, a company needs to plan it’s communications with the outside investor community. Capital markets are “reactive” and therefore companies should proactively manage investor communications and perceptions. Therefore a communication plan for managing stakeholder expectations is necessary – one which is responsive to investor and analyst needs. It will be necessary to develop an approach to educating users of the financial statements. If the users can anticipate the effects of the changes any possible problems caused by the lack of understanding can be reduced.
Companies will also need to consider communications with its financial institutions – it will be important to understand the impact on loans and covenants. For example, if there is a potential risk for violating bank financial covenants, discussions and negotiations with the bank will be required to “re-finance” or re-set those covenants.
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.