The Canadian Securities Administrators say that many of the firms they regulate directly will be required to prepare their financial statements in accordance with International Financial Reporting Standards (IFRS) by 2011.

The Canadian Accounting Standards Board has set Jan, 1, 2011 as the date IFRS will replace current Canadian accounting standards and interpretations for publicly accountable enterprises. This includes many registered firms, whether they belong to a self-regulatory organization (SRO), or are regulated directly by the Canadian securities regulators (such as investment counsel and portfolio managers, limited market dealers, exchange-contracts dealers, scholarship plan dealers, restricted dealers and, in Quebec, mutual fund dealers.)

In a notice published today, the CSA says that their staff’s position is, “that any non-SRO registrant that holds or has access to any client assets will be required to deliver financial statements prepared in accordance with IFRS to the Canadian securities regulatory authorities for financial years commencing on or after Jan. 1, 2011.”

It adds that CSA staff are considering whether non-SRO firms that do not hold or have access to any client assets should be required to use IFRS and, if so, the appropriate implementation date for that changeover. They are also considering whether all registrants should be required by securities rules to use IFRS.

The SROs, the Mutual Fund Dealers Association of Canada and the Investment Industry Regulatory Organization of Canada, will provide guidance to their members on the use of IFRS separately.

“Changing from current Canadian GAAP to IFRS will be a significant undertaking that may materially affect a registrant’s reported financial position and results of operations,” the notice says, adding that registrants will need to provide comparative information for their first reporting period under IFRS. Also, firms with financial years ending December 31 will be required to prepare their working capital calculations in accordance with IFRS beginning on January 1, 2011.

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

IE