Ifrs in Canada
Question 1 – a)
Putting Canada on a continuum between fully converging or partially converging with the international financial reporting standards (IFRS) with their “Made in Canada” (Canadian Institute of Chartered Accountants [CICA], 2006) generally accepted accounting practice (GAAP), Canada would lie very close, if not on the line of convergence.
Over the past few years, before the consideration of IFRS and leading up to the full convergence of it, Canada’s GAAP has been a ‘no mans land’ (Martin, 2009). It was becoming vastly foreign to the rest of the world, when it was once similar to US GAAP. As a result participants in Canadian capital markets were left “increasingly uncomfortable” (Cherry, 2008). The costs of translating/reconciling these practices in various ends of foreign business were significant and repelled interest foreign investment and cross boarder-debt investment in Canadian companies. Canada accounts less than four per cent of the global capital market, so having a set of globally unrecognized financial standards served no merit; therefore a strong approach at converging IFRS was needed. (Martin, 2009). Canada’s GAAP is considered to be more alike in comparison to the gap between EU GAAP and the IFRS (Martin, 2009) allowing standards and principals to converge much easier.
In January 2006, The Accounting Standards Board of Canada (AcSB) made the decision to adopt the IFRS, after 2 years of research and consideration amongst the board and publicly. In January 2008 date for transition to the new system was announced. Convergence has been in full, with no areas in particular having significant differences to that implied in the IFRS. However Canada left, what was considered “ample time” (Martin, 2009) for the adoption of the IFRS in comparison to Australia and Europe, this left time for the converging to be well planned, monitored and learned but also left a lot of time for the International Board of Accounting Standards (IBAS) to
Putting Canada on a continuum between fully converging or partially converging with the international financial reporting standards (IFRS) with their “Made in Canada” (Canadian Institute of Chartered Accountants [CICA], 2006) generally accepted accounting practice (GAAP), Canada would lie very close, if not on the line of convergence.
Over the past few years, before the consideration of IFRS and leading up to the full convergence of it, Canada’s GAAP has been a ‘no mans land’ (Martin, 2009). It was becoming vastly foreign to the rest of the world, when it was once similar to US GAAP. As a result participants in Canadian capital markets were left “increasingly uncomfortable” (Cherry, 2008). The costs of translating/reconciling these practices in various ends of foreign business were significant and repelled interest foreign investment and cross boarder-debt investment in Canadian companies. Canada accounts less than four per cent of the global capital market, so having a set of globally unrecognized financial standards served no merit; therefore a strong approach at converging IFRS was needed. (Martin, 2009). Canada’s GAAP is considered to be more alike in comparison to the gap between EU GAAP and the IFRS (Martin, 2009) allowing standards and principals to converge much easier.
In January 2006, The Accounting Standards Board of Canada (AcSB) made the decision to adopt the IFRS, after 2 years of research and consideration amongst the board and publicly. In January 2008 date for transition to the new system was announced. Convergence has been in full, with no areas in particular having significant differences to that implied in the IFRS. However Canada left, what was considered “ample time” (Martin, 2009) for the adoption of the IFRS in comparison to Australia and Europe, this left time for the converging to be well planned, monitored and learned but also left a lot of time for the International Board of Accounting Standards (IBAS) to