Essay About Canada’S Legal Adoption And United States

Acct 525 Irfrs and Canada
IFRS ADOPTION – CANADAWEEK 2 ASSIGNMENTJANET LATHAMACCT 525      Canada’s legal adoption of IFRS took place in 2006 and the effective date was January 9, 2011.  This was required by all public traded companies and an IFRS audit was required.  All other companies are permitted to use the IFRS.  The main idea of any accounting system, GAAP or IFRS is to give investors the most accurate and informed information to make a decision of investing. The reason for countries to adopt the IFRS is to put that country on the same playing field as other countries, so that all could be judged under the very same standards.     Canada, as with any other country, the concerns of making this change are several: if the IFRS sufficiently developed and consistent, do investors understand IFRS, understanding the impact on companies, and are the accounting professionals educated and trained for transition to a new set of standards.  IFRS is fair value oriented and GAAP systems are historical based.  The outcome of changing from a GAAP system to IFRS is ultimately the change in retained earnings, which is a concern of any company.  At the time of transition, the cumulative to date activities were measured under Canadian GAAP (which is close to the U.S. GAAP) and the IFRS.  The differences under the two systems is the change in net assets, which leads to the change in retained earnings. Adoption of the IFRS has a significant bearing on the net worth of a company.     On the average, most companies fared well on their transition to the IFRS.  Comparability was easier for global companies and saved time on decision making.  Canada does a lot of business with the United States so this put Canada as being the first country of NAFTA to make the change.     The United States will eventually join IFRS and currently have convergence strategies.  In my opinion, the United States might face more challenge of converting compared to some other countries that are smaller and don’t have an already complex system.  To stay globally connected and to make it easier for investors it would be to our advantage to be judged on the same criteria. The method and costs of converting is a concern for all companies.  Timing of the conversion is important in my mind.  Our government has to become more cohesive and more diligent of getting the US economy back to what it has been and what it needs to be to keep us at being the major player in the global economy.