In the United States, the Financial Accounting Standards Board and the U.S. Securities and Exchange Commission are still in the midst of addressing the merits and challenges of adopting International Financial Reporting Standards for listed companies. However, by 2005, the entire European Union as well as areas such as Hong Kong had already adopted and been through the transition to the new standards.
In Canada, the deadline for transition came and went on Jan. 1, 2011. With the benefit of the experiences of other countries and the preparatory work beginning well in advance of the deadline, Canadian companies have reached the mid-year point of the first year of transition relatively unscathed.
With sleepless nights and long work days common practice for many companies seeking to meet their Q1 deadlines, it appears the efforts have paid off and the changes have been a welcome addition to many listed (and in some cases cross-listed) companies.
THE LEAD UP
There was no lack of preparation far in advance of this year's deadline. "For most companies this was a significant effort requiring planning and dedicated resources," says Mark Walsh, principal with the Canadian Accounting Standards Board. "While Canadian GAAP and IFRS were quite similar in most respects, the devil is in the detail [and] many companies started their conversion project up to three years ahead of the 2011 effective date.'
Many on the ground agree. The large accounting firms in Canada began working with clients as many as four years back to get the IFRS ball rolling. Doug Reid, national practice leader with KPMG, notes that his firm's process began four years ago to initiate a program focused on two fronts. The company looked at internal education to prepare for the adoption of IFRS in Canada. "[KPMG wanted to] identify individuals to take on leadership roles to other parts of the world," he says.
Once that took place, KPMG was ready to move on the second front and help clients get ready for transition, which began in earnest more than three years ago.
The same process was followed by other firms such as Deloitte, which started its journey with clients about two years ago, says Don Newell, national practice leader for IFRS Services. But, he adds, in many cases it was the larger companies that got a good head start on preparation for the transition.
"The smaller companies, with fewer resources, were not thinking about it until last fall,' he says, noting there was one common...