The Mutual Fund Dealers Association of Canada has decided that all of its members will be required to report in accordance with International Financial Reporting Standards.

In a bulletin to members released Thursday, the MFDA says that it received 11 submissions in response to a bulletin published earlier this year to highlight issues surrounding the impending transition to IFRS in 2011.

“Generally, commenters highlighted the fact that not all MFDA members would meet the definition of a [publicly accountable enterprise] and therefore, imposing IFRS on firms that would not otherwise be required to convert to this standard may result in increased costs,” it reports. The areas of concern regarding costs focused on one-time conversion/transition costs, and increased accounting and audit fees on an ongoing basis.

“These commenters also questioned whether the benefits derived from imposing one reporting standard on all members, given the different business and operational models they might have, would compensate for the increased costs expected,” it adds.

In response, the MFDA says that it considered having two reporting standards — IFRS and private enterprise GAAP. However, it points out that maintaining two standards would require staff to be familiar with both standards, cause duplication of electronic filing platforms, and create an inability to effectively compare and analyze financial data across the membership.

“This increase in regulatory oversight requirements would lead to increased operational costs to the MFDA and thus, indirectly, the membership,” it notes.

The bulletin also notes that the MFDA staff considered the approach taken by other securities regulators in Canada, and believe that it is important to maintain a consistent standard of reporting across the industry. As a result, “MFDA staff considers the requirement to adopt one standard for all MFDA Members, based upon IFRS, to be the best approach to ensure that consistent, fair and cost-effective regulatory oversight of the membership continues,” it says.

Additionally, in response to concerns regarding possible increased costs versus benefits, the MFDA says that its’ staff intends to review the specific financial statement disclosure requirements and consider whether it is appropriate to allow a departure from IFRS on the MFDA Financial Questionnaire and Report, “where minimal regulatory benefit would be achieved from requiring full IFRS compliance. Furthermore, MFDA staff does not consider comparative financial statement information to be of significant regulatory importance as the primary purpose of the reporting requirements is to assess the current solvency of the firm. Therefore, comparative financial statement balances for regulatory reporting purposes will likely not be imposed during the first year of transitional reporting.”

“As the requirements of IFRS and MFDA financial reporting will be reviewed from the perspective of relevance/regulatory benefits achieved, MFDA staff does not anticipate that requiring financial reporting in accordance with IFRS will create widespread changes or have a significant impact on member operations for those who would not otherwise be required to report using IFRS,” it says.

IE