1. Adopting International Financial Reporting Standards in Canada The views expressed in this presentation are those of the presenters, and not necessarily those of the AcSB or other staff

2. Agenda  The AcSB’s strategic plan  Planning for IFRS  IFRS versus Canadian GAAP

3. AcSB Strategic Plan Fundamental changes in direction  Strategy last formulated in 1996-1998 - changing needs in changing times  Motivated by changes in the financial reporting environment  Effects of Enron et al  Experiences with US GAAP in Canada  IASB and acceptance of IFRSs globally  IASB and FASB working closely together – road- map

4. AcSB Strategic Plan  Adopt IFRS as Canadian GAAP for publicly accountable enterprises following a transitional period  Private companies and Not for Profit Organizations

5. Agenda  The AcSB’s strategic plan  Planning for IFRS  IFRS versus Canadian GAAP

6. Planning for IFRS  Who does the plan affect?  When does the plan take effect?  The transition period  Planning

7. Who does the plan affect?  Publicly Accountable Enterprises (PAE’s)  Public companies and some other relatively large or diverse classes of financial statement users  Non-PAE’s may choose  Not for Profit Organizations

8. When does the plan take effect?  One time AND Phased-in approach  Joint convergence projects  Omnibus exposure draft  Change-over timing  Progress review – complete by March 31, 2008

9. Transition Period Global Convergence projects – AcSB will adopt converged standards  2006 – Accounting Changes  2007 – Business Combinations, Earnings Per Share  2008 – Income Taxes, Joint Ventures

10. Transition Period  Canadian only projects – AcSB may adopt some IFRS early when it provides a better solution - Inventories  IASB only projects – AcSB may adopt at the same time if a conflict with U.S. GAAP is not created – Financial Instruments–Disclosure

11. Transition Period  Canada and U.S. GAAP – changes by FASB only on standards with a high degree of similarity to Canadian GAAP (case-by-case)  Variable Interest Entities and QSPEs  Factors – enhancement versus lifespan

12. Planning - Right now Start gaining IFRS knowledge now  Attending presentations  Internet learning modules, illustrative financial statements, newsletters, webcasts  AcSB’s comparisons of IFRS to Canadian GAAP  IFRS on Knotia AcSB – ‘Implementation Plan for Incorporating IFRSs into Canadian GAAP’

13. Planning Appendix B of the AcSB’s Implementation Plan can help Five categories  Convergence before changeover  Project in process at changeover  IFRS adoption at changeover  No Canadian counterpart  No comparable IFRS

14. Planning  Train key personnel  Assess changes to data collection required and the impact on systems needed – embedding!!!  Educate users of your statements on the anticipated affects – profit sharing employees, audit committees, investors and anyone providing financing  Learn from experiences of others

15. Planning Prepare your enterprise’s implementation plan  Appoint your implementation team  Board of Directors / Audit Committee involvement at the beginning  Assess the effect of IFRSs on your company

16. Planning – Your Future Monitor IASB’s Documents Issued for Comment and respond directly to the IASB – these documents are your future!!!!!

17. Convergence projects in process  Fair value measurement  Financial statement presentation  Liabilities and equity  Leases

18. Convergence projects in process  Revenue recognition  Financial instruments  Derecognition  Intangible assets

19. Participating in global convergence  Comment on IASB proposals  Participate in international projects  Conceptual Framework  IFRS Advisory Groups  Leases, Small- and Medium-sized Entities  Undertake research  Measurement Objectives – Initial Measurement  Disclosure Framework  Extractive Activities

20. Agenda  The AcSB’s strategic plan  Planning for IFRS  IFRS versus Canadian GAAP

21. Similarities to Canadian GAAP  Structure and content of financial statements  Conceptual framework  Many similarities of approach and specific content  More ability for revaluation in IFRSs

22. Differences to Canadian GAAP  Differences on which a global or other project is currently converging the standard  Differences on which no project is anticipated prior to ‘changeover’

23. Differences to Canadian GAAP Differences – project in process Impairment  Two incompatible models  N. America – undiscounted cash flows, other than temporary impairment, no reversals  IFRS – discounted cash flows, faster write-down, reversals

24. Differences to Canadian GAAP Differences – project in process  Business combinations  Consolidations  Special purpose entities (VIE’S)

25. Differences to Canadian GAAP Differences – project in process  Employee future benefits  Income taxes  Earnings per share

26. Differences to Canadian GAAP Differences – project in process  Segment reporting  Inventories  Insurance contracts  Differential Reporting Options/SMEs

27. Differences to Canadian GAAP Differences – no convergence project For example:  Transfer of receivables/securitization  Non-financial liabilities  Debt breach at year end

28. First-time Adoption  Exceptions on applying new basis of accounting  Prohibits retrospective application when judgment with benefit of hindsight  Transitional disclosures  Only applies on full adoption of IFRSs

29. Further information www.acsbcanada.org ian.hague@cica.ca karen.mccardle@cica.ca