Canadian Securities Lawyer & Attorney : Stikeman Elliott Law Firm : Montreal, Ottawa, Calgary, Vancouver, Montreal, Toronto

On September 30, IIROC published a notice setting out its position and providing guidance to its Dealer Members regarding the adoption of IFRS. As they are considered to be "publicly accountable enterprises", Dealer Members will also be subject to  the Canadian Accounting Standards Board's decision to move from Canadian GAAP to IFRS as of January 1, 2011.  This notice sets out IIROC's views on some of the transition issues raised by the move to IFRS for Dealer Members, including  IIROC's decision not to permit early adoption prior to January 1, 2011.  The notice also reminds Dealer Members that they are required to conduct their own firm-specific impact assessments and conversion planning (which may require the input of outside expertise), and that they will be required to submit progress reports on their conversion plans, with the first report to be due by April 1, 2009.  While the conversion date is January 1, 2011, as set out in the notice, Dealer Members will need to start planning for and implementing necessary changes well prior to 2011, including running parallel IFRS-based accounting records for up to a year prior to conversion.  Some of the critical and regulatory reporting dates are also set out in the notice.

• Email This
• Print
• Comments
• Trackbacks

CSA Staff Notice 33-313 was published on September 12, 2008 and details the impact of the changeover to IFRS for registrants that are not members of an SRO (non-SRO registrants).

Under the current plans of the Canadian Accounting Standards Board (the AcSB), IFRS will replace Canadian GAAP effective January 1, 2011 for publicly accountable enterprises (PAEs). While many registrants are considered PAEs and will have to move to IFRS according to the AcSB’s implementation plan, others, mainly non-SRO registrants, do not fall under the definition of PAE and are technically not covered by the AcSBs implementation plan. These include investment counsel and portfolio managers, limited market dealers, exchange-contracts dealers, scholarship plan dealers and, if amendments to the registration regime are adopted under proposed NI 31-103, will also include new categories of exempt market dealers and investment fund managers.  

For all of these registrants, the Staff Notice identifies that if they hold or have access to any client assets, the CSA will expect them to comply with IFRS, which includes preparing both financial statements and working capital calculations in accordance with IFRS as opposed to Canadian GAAP. The Staff Notice also cautions that the move from Canadian GAPP to IFRS may also affect certain business functions, thus, planning for the changeover should be started soon, if not already underway. For those who do not hold or have access to any client assets, the CSA are still reviewing whether they should be mandated to use IFRS, and if so, what the appropriate implementation date should be for such a change.

• Email This
• Print
• Comments
• Trackbacks

On Wednesday, the SEC also voted to publish a proposed roadmap that could lead to the adoption of International Financial Reporting Standards (IFRS) beginning in 2014.  The roadmap provides several milestones that lead to a 2011 decision on whether adoption of IFRS occurs.

• Email This
• Print
• Comments
• Trackbacks

CSA Staff Notice 52-321 is an update to CSA Concept Paper 52-402 published in February 2008 and sets out conclusions that the CSA staff have reached on the following issues (which represent some but not all issues raised in the concept paper):

• Early adoption of IFRS: Staff are prepared to recommend exemptive relief for issuers wanting to transition to IFRS before January 1, 2011. However, if a domestic issuer has previously filed financial statements prepared in accordance with Canadian GAAP or US GAAP for interim periods in the first year that the issuer proposes to adopt IFRS the staff will recommend that the issuer file revised interim financial statements prepared in accordance with IFRS-IASB, revised interim management discussion and analysis, and new interim certificates.
• Staff are proposing to retain the exemption in NI 52-107 for a domestic issuer that is also an SEC issuer to continue to use US GAAP.
• Staff are proposing to retain references to IFRS-IASB (instead of referring to post 2011 principles as Canadian GAAP), however, issues relating to the availability of an appropriate French translation of IFRS and reference to both IFRS-IASB and Canadian GAAP are continuing to be considered.

• Email This
• Print
• Comments
• Trackbacks

Simon Romano and Ramandeep Grewal | Version française

The Canadian Securities Administrators (CSA) published Concept Paper 52-402 (Concept Paper) on February 15, 2008 to discuss ramifications for securities rules as a result of the impending transition from Canadian GAAP to International Financial Reporting Standards (IFRS, as issued by the International Accounting Standards Board (IASB)). As the Canadian Accounting Standards Board (AcSB) has adopted a transition plan to move to IFRS for years beginning on or after January 1, 2011, the CSA must now consider implications of this move on securities laws and regulations.

The purpose of the Concept Paper is to set out some of the issues that arise as a result of the impending transition, including the alternatives available to address them. The CSA caution that the review of issues presented is not exhaustive and that the conclusions set out in the paper are tentative only. The following is a summary of some of the issues raised in the Concept Paper, along with the CSA's tentative proposals to address them:

Early adoption of IFRS by domestic issuers

The CSA propose allowing domestic issuers to voluntarily move to IFRS prior to January 1, 2011. Some of the reasons cited for this tentative conclusion include early adoption benefits for:

• domestic issuers that are subsidiaries of foreign-based parents that must comply with IFRS;
• domestic issuers with significant foreign operations and foreign-based subsidiaries who must comply with IFRS;
• domestic issuers who are SEC registrants and wish to take advantage of the SEC's recent decision to allow foreign private issuers to comply with IFRS (without US GAAP reconciliation); and
• Canadian entities considering an IPO in Canada and the U.S. prior to January 1, 2011.

Use of US GAAP by domestic issuers

With respect to domestic issuers who currently rely on the exemptions under National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency in order to prepare financial statements in accordance with U.S. GAAP, the CSA propose to eliminate such exemptions (thus requiring Canadian GAAP filing) for financial years beginning on or after January 1, 2009. This effective "early transition deadline" would not apply to issuers who currently file or will have filed U.S. GAAP financial statements for the most recent year ending on or before December 31, 2008: such issuers would have a five year transition period for moving to IFRS, spanning from 2009 to 2013.  

Other issues addressed by the Concept Paper include how the CSA will deal with references to Canadian GAAP in various securities rules. The CSA's tentative conclusion is that all such references will be changed to refer to IFRS as issued by the IASB. This is notwithstanding the fact that the AcSB's strategic transition plan proposes to import IFRS into Canadian GAAP and continue to then refer to such standards as Canadian GAAP. 

Comments on the Concept Paper are requested by April 13, 2008.

• Email This
• Print
• Comments
• Trackbacks