Transitioning to IFRS Managing the Transition Janet S tockton - PDF document

Transitioning to IFRS Managing the Transition Janet S tockton March 31, 2010 Managing the Transition Milestones along the way • Communicating to the public • IFRS financial stat ements S elect ing and applying policies under IFRS - IFRS 1 and the opening balance sheet - First interim IFRS financial statements - First annual IFRS financial stat ement s - • Involving the auditor Impact of a change in auditors - Working together on financing transactions - Transitioning to IFRS Page 2 1

Managing the Transition Communicating to the public Part icipant s in t he t ransit ion • Management • Audit commit tee/ Board of Directors • Auditor • Analysts Ultimately – the shareholder Transitioning to IFRS Page 3 Managing the Transition Communicating to the public Ensuring t he confidence of t he shareholder Is management effect ively monitoring and controlling the • move to IFRS Is management preparing analysts and shareholders for the • changes they will see under IFRS How is t his being communicat ed? • Looking at MD&A in a new way Transitioning to IFRS Page 4 2

Managing the Transition Communicating to the public MD&A Account ing policy choices and implementat ion decisions • Information syst ems • Int ernal controls over financial reporting • Disclosure cont rols and processes • S ufficiency of financial report ing expert ise • Business activities influenced by GAAP measures • Transitioning to IFRS Page 5 Managing the Transition Communicating to the public MD&A Account ing policy choices and implementat ion decisions • Information syst ems • Int ernal controls over financial reporting • Disclosure cont rols and processes • S ufficiency of financial report ing expert ise • Business activities influenced by GAAP measures • Transitioning to IFRS Page 6 3

Managing the Transition Communicating to the public New opport unit ies in financial report ing – will “ non- GAAP” measures be a thing of the past? IAS 1 presentat ion standard is much more open, may even • require new headings and subt ot als New opportunit ies for bett er report ing? • How will t he Cdn regulat or react? • How will t he auditor react? • Transitioning to IFRS Page 7 Managing the Transition IFRS financial statements • Selecting and applying policies under IFRS • IFRS 1 and the opening balance sheet • First interim IFRS financial stat ements • First annual IFRS financial stat ements Transitioning to IFRS Page 8 4

Managing the Transition Selecting policies under IFRS What does “ selecting” include Det ermining an appropriate account ing policy • Deciding not t o change a current policy • General advice offered by your auditor* Differences bet ween existing Cdn GAAP and IFRS s • Alternative FIRS account ing policies • Analysis of alt ernative IFRS accounting policies • * This is not an assurance engagement Transitioning to IFRS Page 9 Managing the Transition Applying the policy Concerns when applying a specific IFRS accounting policy Has t he policy been correctly int erpreted • Has the policy been appropriat ely applied • General advice offered by your auditor* Views on interpretat ion and application • * This is not an assurance engagement Transitioning to IFRS Page 10 5

Managing the Transition IFRS 1 and the opening balance sheet Preparing an “ int ernal opening IFRS st at ement of financial posit ion” Involving the auditor – providing assurance • What level of assurance can t he audit or provide • To whom can the auditor provide that assurance • What assurance standard is the auditor working under • What fact ors will t he audit or consider before accept ing t he • engagement Transitioning to IFRS Page 11 Managing the Transition IFRS 1 and the opening balance sheet Nat ure of t he audit report S pecial purpose report • Purpose, scope • Basis of accounting • • Explanat ory paragraphs Account ing policies may be different from t hose used for t he • ext ernal st at ement s “ Fair presentat ion” can only occur with a complete set of financial • st at ement s • Restrictions as to use of t he report Transitioning to IFRS Page 12 6

Managing the Transition First interim IFRS financial statements The 135 day crunch Annual 2010 Cdn GAAP statements 90 days First IFRS interim financial statements 45 days* • Statement of financial position at: March 31, 2011 - December 31, 2010 (UNAUDITED) - January 1, 2010 (opening IFRS statement of financial position) (UNAUDITED) - • Statements of comprehensive income, changes in equity and cash flows for: Three months ended March 31, 2011 and 2010 - • Reconciliation notes Transitioning to IFRS Page 13 Managing the Transition First interim IFRS financial statements Addit ional pressure on management and st affing t o deal wit h audit ors during t he “ crunch” period S hould you have your audit or perform a review? Timely considerat ion of significant account ing matt ers • Opportunity for early resolution • Transitioning to IFRS Page 14 7

Managing the Transition First interim IFRS financial statements Obj ective of the review Provide a basis for report ing whether any mat erial • modificat ion needs to be made to be accordance with GAAP Based on an expect ation developed from knowledge of • account ing and financial pract ices Knowledge base set s the stage for inquiries, analytical • procedures and discussions Transitioning to IFRS Page 15 Managing the Transition First interim IFRS financial statements What are your auditor’ s concerns when reviewing the first IFRS int erim financial stat ements? • Updating understanding of the entit y and it s control environment • Changes in internal controls to ensure completeness and accuracy of IFRS adj ust ment s • Change in internal cont rols to ensure completeness and accuracy of informat ion not previously required under Cdn GAAP Transitioning to IFRS Page 16 8

Managing the Transition First interim IFRS financial statements What is the impact on the nature and extent of procedures typically completed by the auditor? Forming an expectat ion • Will be based on updat ed underst anding of ent it y and it s cont rol • environment Analytical procedures impacted: • Comparat ive period previously prepared under different GAAP • Reconciliations prepared in the context of two different financial • report ing frameworks Transitioning to IFRS Page 17 Managing the Transition First annual IFRS financial statements Considerations to the entity and the auditor Doing work early • Audit the comparative period and the opening balance sheet • simultaneous with t he 2010 audit? Impact on materiality considerations • Rot ation issues • Communicat ions – deficiencies in internal control? • Transitioning to IFRS Page 18 9

Managing the Transition Working with your auditor Change in audit or aft er 2010 audit is complet ed Who takes responsibility for the 2010 comparatives in the • first annual IFRS financial stat ements? Acquisition statements and consents Converting AS PE GAAP to IFRS • where will t he regulat ions fall? • Lead time required? • Impact on audit report ? • Transitioning to IFRS Page 19 10