CSA release IFRS transition disclosure review report
The Canadian Securities Administrators (CSA) today released CSA Staff Notice 52-326 IFRS Transition Disclosure Review, which provides an assessment of IFRS transition disclosure made by issuers in 2009 annual MD&A. The review, which was completed in consideration of disclosure guidance provided in May 2008, ultimately found an improvement in the amount and quality of transition disclosure. Specifically, findings included:
- 95% of issuers reviewed disclosed their IFRS transition plans;
- 60% of issuers described milestones and anticipated timelines associated with key elements of their transition plans;
82% of issuers identified significant accounting policy differences between Canadian GAAP and IFRS; and - 80% of issuers provided an update of transition information from 2008 disclosure.
The CSA did, however, identify various areas for improvement. For example, despite the fact that the vast majority of issuers disclosed their transition plans in their MD&A, many failed to discuss key elements of their plans. According to the CSA, "[f]or each key element of an IFRS changeover plan discussed in MD&A, issuers should have described the significant milestones and anticipated timelines." The CSA also stated that issuers should consider whether they can communicate quantified information in 2010 interim and annual MD&A prior to final approval of IFRS balances.
It is expected that the CSA will continue to review IFRS transition disclosure as part of their overall continuous disclosure review program and that issuers should expect requests to refile MD&A if disclosure obligations are not met. Thus, the movement towards the implementation of IFRS continues. As 2011 approaches, it is clear that, while issuers are making definite improvements in disclosing their IFRS transition plans, care must be taken to ensure that regulatory expectations are met.
