Transition to International Financial Reporting Standards in Canada

March 2008

In 2011, Canadian Generally Accepted Accounting Principles ("GAAP") will be replaced with International Financial Reporting Standards ("IFRS") an accounting standard which has already been adopted by more than 100 other countries around the world including the EU. International Financial Reporting Standards are a single set of high quality, understandable and enforceable global accounting standards.

On February 13, 2008, the Canadian Accounting Standards Board (AcSB) confirmed that the use of International Financial Reporting Standards (IFRS) will be required in 2011 for Canadian publicly accountable profit-oriented enterprises. AcSB originally intended March 31, 2008 to be the date to confirm whether or not 2011 would be the adoption year for IFRS in Canada. However, based upon the information gathered by the AcSB, it was able to confirm earlier than anticipated that in fact the changeover date of 2011 for IFRS was achievable and therefore would be adopted.

IFRS will replace Canada's current Generally Accepted Accounting Principles (GAAP) for Canadian publicly accountable profit-oriented enterprises. These include listed companies and other profit-oriented enterprises that are responsible to large or diverse groups of stakeholders.

The official changeover date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. Private companies (non-publicly accountable enterprises), and not-for-profit organizations are not required, but are permitted, to adopt IFRS in 2011.

"With the date firmly established, enterprises can plan for the changeover with certainty about the timetable," said Paul Cherry, Chair, and AcSB. "A significant challenge lies ahead but it will be made far more manageable if business leaders prepare early."

Companies will have to provide comparative IFRS information for the previous fiscal year. Therefore, enterprises must be ready to prepare comparative information a year prior to the 2011 changeover date. "This clearly demonstrates why planning for the transition to IFRS must begin now," stressed Cherry.

As part of DMCT, LLP's integrated approach to assisting our clients and others in the transition to IFRS, we are providing a document from the CICA which frames issues and addresses key considerations for audit committee members and board members with respect to the transition to IFRS.

"What's New" on the DMCT web site has the 20 Questions Directors and Audit Committees Should Ask about IFRS Conversions.

The CICA has also launched a dedicated IFRS website that offers resources to assist companies and individuals through the transition to IFRS. (www.cica.ca/IFRS)

We will continue to provide updates, resources, and materials as we move down the road to IFRS adoption.

Please contact our standards committee for further information on the transition to IFRS

Michael Allen
Email. mallen@dmct.com
Tel.416-322-1659

Octavio Cabral
Email. ocabral@dmct.com
Tel. 416-322-1657