1. Bob Young KPMG Enterprise March 4, 2011 KPMG ENTERPRISE Implications of Implementing Accounting Standards for Private Enterprises

2. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Transition relief Transition issues / views Financial statement disclosures The future Audit, Review and Compilation Engagement Issues Accounting Standards for Private Enterprises “Implementation Issues” 2

3. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Defined Benefit Pension Plans – New Transition Relief Transition relief for sponsors of defined benefit pension plans that do not adopt the immediate recognition model Sponsor can carry forward unamortized actuarial gains or losses as calculated under a previous GAAP Eliminates need to recalculate unamortized gains from inception of plan Any remaining transition adjustment must be written off on adoption of ASPE 3

4. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Implementing the Simplified Hedging Model Concerns heard: Accounting for exchange gains (losses) between transaction date and settlement date Requirement for equivalent prepayment options for interest rate swaps and related debt instrument Commodity forward contracts – location differentials and other hedging approaches Interest rate swaps – hedging of future borrowings Anticipated exposure draft in spring 2011 4

5. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Transition Issues Fair value election – PP&E / Intangible assets Fair value election available on an item by item basis No fair value transition option for intangible assets such as quotas 5

6. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Transition Issues –Views Property, plant and equipment, fair value election Considerations: At the transition date Valuation / appraisal costs Management required to provide appropriate evidence of fair value Future amortization costs Potential future impairment charges Income taxes: Impact on access to small business deduction, SR&D credits, thin capitalization rules 6

7. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Transition Issues –Views Government assistance for acquisition of capital assets received prior to transition date Unamortized balance of government assistance: need it be deducted from fair value of item of property, plant and equipment or set up as a deferred credit? 7

8. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Transition Issues –Views Transaction costs: Investee is controlled Investor accounts for investment using the equity or cost method Transaction costs should be expensed following the guidance in HB 1582 8

9. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Transition Issues –Views Contingent consideration: Investee is controlled Investor accounts for investment using the equity or cost method Contingent consideration should be recorded as a liability at fair value at the acquisition date. 9

10. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Transition Issues Transition Date: When the end of an entity's annual reporting period does not coincide with the end of a month, the entity should apply new or amended standards in the annual reporting period beginning on or after the 21st of the month immediately preceding the month of the effective date specified in the standard. 10

11. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Transition Issues Requirement for balance sheet as at transition date Presentation options: 3 rd column on balance sheet, or Note presentation (equivalent detail to current period’s balance sheet) 11

12. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Transition Issues Communication with users: Accounting policy choices Transition elections / options One year / Two year reporting 12

13. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Accounting Policy Choices Defined benefit pension plans Deferral and amortization Immediate recognition Income taxes Future (deferral) method Taxes payable Subsidiaries / significantly influenced investees Cost/equity methods (except for investees whose equity instruments are quoted in an active market) 13

14. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Accounting Policy Choices Development costs: Capitalize / expense Financial instruments other than publicly traded equities Amortized cost or fair value Item by item basis Irrevocable election on initial recognition Compound financial instruments Bifurcation of debt/equity components is optional 14

15. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Transition Opportunities Fair value items of property, plant and equipment Clear balance sheet deferrals to retained earnings: Unrecognized actuarial gains and losses Past service costs Cumulative translation account Business combinations Options regarding retrospective application of HB 1582 Related party transactions Prospective or retrospective application Stock-based compensation Prospective or retrospective application 15

16. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Enhanced Financial Statement Disclosure: Balance Sheet - Investments 16

17. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Balance Sheet – Current Liabilities 17

18. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Balance Sheet – Tax Basis Preferred Shares Preferred shares issued under a tax planning arrangement under Sections 51, 85, 85.1, 86, 87 or 88 of the Income Tax Act: - present at stated value in the equity section of the balance sheet 18

19. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Income Statement – Revenue 19

20. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Income Statement Investment Income 20

21. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Note Disclosures – Intercorporate Investments 21

22. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Note Disclosures 22

23. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. ASPE – Assurance Issues Subsequent Events Management and the public accountant are responsible for identifying / responding to events between year end and the date of the completion of the assurance engagement Audit / Review Engagement is complete only when: Financial statements are complete and ready for release (includes notes) Audit / review engagement is complete Those charged with governance have assumed responsibility for the financial statements 23

24. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. ASPE – Assurance Issues Comparative financial statements in transition financial statements: Audited or unaudited? Reviewed or not reviewed? 24

25. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Audit Reports in the Transition Year 25 Prepared/ audited under C GAAP Current year prepared under ASPE Prior year comparatives restated under ASPE Prior Year Transition Year

26. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Audit Reports in the Transition Year 26 Current year prepared / audited under ASPE Prior year comparatives restated under ASPE marked as unaudited Prior Year Transition Year One year auditor’s report – prior year marked as unaudited Prepared/ audited under C GAAP

27. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Audit Reports in the Transition Year 27 Prepared/ audited under C GAAP Current year prepared / reported under ASPE Prior year comparatives restated / audited under ASPE Prior Year Transition Year Two year auditor’s report

28. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. ASPE – The Future “Betterment” criteria for considering future IFRS for incorporation into ASPE  Relevance to private enterprises  Existing ASPE adaptation  Need for change (clear yes or no?)  Benefits  Costs of compliance  Education and training 28

29. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. ASPE – The Future Employee future benefits Subsequent events Consolidation (VIEs) Discontinued operations Agriculture Fair Value Conceptual Framework Leases Revenue 29

30. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. ASPE – The Future Employee future benefits Joint IASB / FASB project Recognize funded position on B/S (“immediate recognition”) »Record unamortized gains / losses as component of OCI »Recycle through income (FASB), or »No recognition through income (IASB) ASPE considerations No OCI Current immediate recognition model – income statement recognition Funding vs. accounting measurement of accrued benefit obligation 30

31. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. ASPE – The Future Subsequent events Conform accounting and assurance models (audit and review) »Match management’s responsibility with that of the public accountant 31

32. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. ASPE – The Future Leases: - recognize all leases (other than short-term) on balance sheet - Issues include -Lease term -Contingent rentals 32

33. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. ASPE – The Future Revenue: - proposed model by IASB - potentially earlier recognition of revenue by R&D type entities - discontinue use of percentage of completion model 33

34. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. IAASB Review Engagements ED Review engagements ED: General purposes / special purpose financial reporting frameworks Fair presentation / compliance frameworks Acceptability of framework Determination of materiality »Use in designing procedures and evaluating results Reporting »Sufficient appropriate evidence »Emphasis of matters / Other matters paragraphs »Dating convention 34

35. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. IAASB Compilation Engagement Project Compilation engagements ED: Not associated unless engaged to report Work effort »Financial reporting framework »Suitability for intended use / distribution »Knowledge of business »Basis for significant judgments »Estimates / going concern 35

36. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. GAAP for NPOs Key distinction: Government controlled (GNPOs) Based on PS Accounting Handbook Other NPOs Based on ASPE (Part II of HB) with 4400 section for issues specific to NPOs or IFRS 36

37. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 37 DISCLAIMER The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.