No Parties After IFRS Adoption in Canada

No Parties After IFRS Adoption in Canada

When measuring the costs of IFRS implementation, there are the not-at-all trivial costs of changing accounting methods.  But there are also opportunity costs of spending time becoming IFRS compliant that you could have spent doing something other things.

“The greater cost has really been the diversion of intellectual capital during this time period from doing more productive pursuits than the IFRS conversion,” opines a vice president at Canadian Tire.  At CFO Journal Emily Chasen reports that IFRS adoption by our neighbors to the north has been anything but easy:

If U.S. regulators want to get a sense of what the transition to International Financial Reporting Standards might be like, they may only have to look to their neighbors to the north where companies were required to switch from Canadian GAAP this year. But they should be prepared for some rather negative reviews.

“This isn’t like a Y2K, where you have a project and when the project’s over you have your party,” Brian Fiedler, vice president of Canadian Tire Corp., told the CFO Core Concerns conference in Chicago this week. “This is one where you are investing significantly.”

Canadian Tire just completed its IFRS conversion and reported results under the international rules for the first time earlier this year. For Fiedler, who said his accountants spent years tediously poring over contracts and assessing how the new rules would impact the company, it didn’t sound like a process he would want to go through again.

“The greater cost has really been the diversion of intellectual capital during this time period from doing more productive pursuits than the IFRS conversion,” Fiedler said.

As the U.S. weighs moving to international rules, it has looked closely at conversion processes in other regions, like Europe and Australia, but perhaps no country that has converted so far has been as similar to the U.S. as Canada. Read Chasen’s full account in “No Parties After IFRS Adoption in Canada.”