FM Walsh & Associates Inc.

IFRS – What’s The Big Deal?

And I bet that I just lost a bunch of you at the word IFRS.  Funny how many accounting acronyms are four-letters (GAAP, FIFO, etc.), which are synonymous with other nasty four-letter words – not sure why TAX isn’t spelled TAXX or something like that.   I just sat through an 9 hour course on this topic.  And as far as I can see, it’s going to turn the accounting world upside down.  

IFRS is the new accounting standard that’s coming into effect in 2011.  (Yes it seems like a long way off – but realistically that’s only 2 years away).  It stands for International Financial Reporting Standards.  After the hey-days of Enron, Worldcom, and other crazy companies, the financial regulating bodies in the world got together and decided that one of the ways to prevent similar financial disasters would be to come up with a way to have a single set of standards.  No longer will there be one set for the US, one set for Canada, one set for the UK, one set for Japan, etc.  Or at least that is the idea.  Canada, and the EU are a couple of countries that are supporting this concept.  The US is slowly coming to terms with it –they have yet to fully embrace the idea – but rumour has it that they’re working towards accepting this in 2014. 

Basically, if your company currently is reporting under “Canadian GAAP” and you’re having an external accounting firm audit your financial statements, you’ll start hearing that things are going to have to change according to the new IFRS standards. 

In short, some things won’t change, but depending on your industry, you’ll find that there will be some new ways of accounting for various transactions. 

The best advice I can give you regarding these new standards and how they may impact your company is to ask your accountant.  As I said in another blog entry, these are your statements.  You need to understand what they have to say.  And you need to be aware how these new standards are going to impact your debt covenants and other financial metrics.  

Dayna Holland is a Chartered Accountant whose mission is to make numbers and taxes less intimidating to business owners.  Most of her career has been working with various High-Tech and telecommunications companies to minimize their tax burden.  Now running her own company, she currently works with a variety of businesses to improve their profitability and handle their taxes.  Please visit her website for more information.