Ernst & Young recommends that the Canadian Securities Administrators (CSA) give Canadian companies the option to adopt International Financial Reporting Standards (IFRS) before the 2011 changeover date.
This is one of several recommendations Ernst & Young has made in response to the CSA’s call for comments on its February 2008 concept paper proposing changes to securities rules on acceptable accounting principles for financial reporting.
Though IFRS adoption in Canada is slated for 2011, Ernst & Young fully supports the CSA’s proposal to permit early adoption for financial years beginning on or after Jan. 1, 2009.
“The market will likely dictate which companies should adopt early,” says Lou Pagnutti, chairman and CEO of Ernst & Young Canada. “Right now, we’re working with companies that have foreign-based entities or subsidiaries in places where IFRS is already a requirement. Early adoption could provide significant advantages for them, as well as for those considering IPOs in both Canada and the US.”
Ernst & Young also supports the CSA’s proposal to refer to the new standards in securities rules as IFRS-IASB instead of Canadian GAAP.
The firm does not agree, however, with the proposal to eliminate the use of US GAAP by Canadian issuers who are SEC registrants. The firm believes that Canadian businesses who elect to use US GAAP generally believe their investors are more accepting of US GAAP financial statements, and that this basis of reporting affords better comparability with US-based industry peers.
“There’s rapidly growing interest in the U.S. for the use of IFRS for domestic issuers, so this issue may become moot in the near future,” Pagnutti says. “For the time being, however, we believe it would be best for the CSA to leave the US GAAP option open to Canadian-based SEC registrants.”
Ernst & Young’s submission to the CSA is available at ey.com/ca/ifrs.
Ernst & Young supports early IFRS adoption
Calls on CSA to keep U.S. GAAP option open to Canadian-based SEC registrants
- By: IE Staff
- April 16, 2008 April 16, 2008
- 09:50