Canadian securities regulators have decided that the firms they regulate directly will have to start reporting in compliance with International Financial Reporting Standards by 2011.

The Canadian Securities Administrators issued a staff notice on the use of IFRS by non-self-regulatory organization registrants, setting out its decision that these firms will be required to use IFRS for financial years beginning on or after Jan. 1, 2011. This includes investment counsel and portfolio managers, limited market dealers, exchange contracts dealers, scholarship plan dealers, restricted dealers and, in Québec, mutual fund dealers.

The CSA notice focuses on firms that are regulated directly by the securities commissions, as those that belong to the SROs — the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada ‘ will have their transition requirements set by the relevant SRO. Also, in Québec, in which the Autorité des marchés financiers, rather than the MFDA, performs oversight of mutual fund dealers, the AMF will provide separate guidance on the applicability of IFRS.

The CSA stresses that changing from current Canadian generally applied accounting principles to IFRS “will be a significant undertaking that may materially affect a registrant’s reported financial position and results of operations.” It says that firms will need to provide comparative information for reporting periods in their first year under IFRS, and reminds them to maintain appropriate records to prepare this comparative information.

The CSA adds that the switch may also affect certain business functions, “As a result, significant planning for the changeover, if not already started, should start as soon as practicable.”