The Investment Industry Regulatory Organization of Canada has released its proposal for moving to International Financial Reporting Standards for regulatory reporting.

IIROC published proposals Friday that aim to harmonize the standards used for regulatory financial reporting with IFRS as much as possible. The proposed amendments to its reporting forms include both significant and minor changes. IFRS reporting is scheduled to begin Jan. 1, 2011.

IIROC is also proposing to deviate from IFRS in certain areas, including: reporting client and broker trading balances on a net basis; treating preferred shares as regulatory capital; and, using a different valuation approach for investment positions held in dealer inventory and client accounts; among other things.

“An alternative to converging as much as possible to IFRS was to adopt IFRS and allow more prescribed departures,” the notice says.

However, this alternative is not being pursued, “because IIROC staff believe the prescribed departures from IFRS should be limited to only situations where the effort and cost to converge outweigh the regulatory value or benefit of complying with IFRS.”

The objective of IIROC staff’ was to minimize the reconciliation effort for dealers that want to prepare audited statutory financial statements that are IFRS compliant, IIROC says.

Comments are sought on the proposed amendments within 60 days.

IE