|
IFRS is a “principle base” set of standards that provides options and interpretations on how to apply these standards within your industry and within your Company’s unique situation. The impact of IFRS on any Canadian company is variable and this makes it more challenging for Management to scope out the amount of effort to complete the conversion.
In Phase I of an IFRS project we investigate what IFRS Standards apply and identify the impact the new Standards will have on your accounting policies, operational procedures, information systems, financial reporting, contracts and disclosures.
In most cases your Public Accounting firm would provide assistance in Phase 1 of the IFRS project by identifying the differences between the two sets of standards. Our expertise is interpreting the differences and developing a plan of action to disseminate these changes into the business environment.
Some of the notable areas of difference between IFRS and Canadian GAAP by way of examples are:
|
Financial Report Presentation
- Additional Report - Change in Equity is mandatory
- Format changes for Statement of Comprehensive Income (Income Statement) & Statement of Financial Position (Balance Sheet)
|
 |
Fixed Assets
- IFRS is required to breakdown an asset into classes that have a significant value and that have a different useful life
- Two options for Asset valuation after date of recognition – Cost or revaluation model
- Assets held for Sale have a different recognition and measurement standard – depreciation continues under IFRS
- Disclosures are more detailed
|
 |
Inventory Valuation
- Two methods of valuation – FIFO and Average Costs
- Impairment testing is required annually
- Lower of Cost and Market (Selling Price – Cost to Sell)
- Transportation “IN” costs included in inventory
|
 |
Financial Instruments
- Four separate categories of Financial Instruments under IFRS
- Concepts are similar but details are different
- Cost of financial instruments form part of the capital value of the financial instruments
|
 |
Borrowing Costs
- Borrowing costs relating to internal construction of assets are capitalized under IFRS
|
Under most IFRS Standards more detailed disclosures are required to provide better insight into the operations and financial performance of the entity.
Phase 1 of an IFRS project would review each standard by referencing the IFRS/Canadian GAAP difference, document the high level impact, identify the options, assign resources to investigate the impact and determine the estimated amount of effort. The result would be an audit committee report and a high level gnat chart.
|
