Full conversion to International Financial Reporting Standards (IFRS) is due by 2011. But there are a number of critical tasks that need to be completed prior to 2011, either to satisfy financial reporting and regulatory requirements or to ensure that when January 1, 2011, arrives, everything is in place to ensure a smooth transition. Financial statement preparers must begin by determining what conversion tasks are important now, and which tasks can wait until later. With careful planning and a well thought-out implementation strategy, conversion to IFRS can be a smooth and cost-effective exercise.

 

The Accounting Standards Board (AcSB) of the Canadian Institute of Chartered Accountants (CICA) has announced its intent to replace Canadian GAAP with IFRS for all publicly accountable entities (as defined by the CICA). The first date on which IFRS will replace Canadian GAAP in published annual reports is January 1, 2011. Between now and then, entities will have to manage the conversion from Canadian GAAP to IFRS.

Does this mean that those who understand current Canadian GAAP become obsolete on New Year's Eve 2010? Does it mean that there will be a seismic shift on that date that will require overtime efforts to comply in 2011? The answer to both of the above is "no." This is not an accounting revolution, but a journey from one comprehensive basis of GAAP to another. This new basis involves important conversion issues that should be addressed immediately, some that, while important, may be addressed later in the conversion process, and other items that are expected to be converged with Canadian GAAP prior to the overall convergence date. In addition, there are a whole host of details, including enhanced disclosure requirements that will need to be addressed before the conversion date. Beneficially, many areas are already closely aligned with the current Canadian financial reporting framework — and some Canadian standards will fall away.

With some careful route planning and a good map, any journey can be made more manageable. There are essentially four phases to the journey to IFRS: scoping the effort, enabling the resources, executing the plan and finally, monitoring the process. The accompanying guide addresses the first phase of conversion. It considers the factors that determine the scale and breadth of the exercise, provides advice on setting deadlines and priorities and assigning responsibilities - as well as on acquiring the appropriate resources.