Canadian publicly traded companies have only seven months to convert their accounting practices to International Financial Reporting Standards (IFRS), and yet half of them are less than 60% of the way through the process, according to a survey sponsored by PricewaterhouseCoopers (PwC).
The new reporting regime comes into effect January 1, 2011, and will require companies to explain possible changes in earnings per share and increases in pension liabilities.
The PwC survey found 28% of companies expect a decline in reported net income, 22% expect earnings per share to fall and 28% expect an increase in pension liabilities in the first year of adoption.
“Under IFRS, greater volatility in financial statements is expected,” says Diane Kazarian, PwC Canada’s national IFRS leader. “Clearly, this will have to be a communications priority in the coming months for CFOs and investor relations executives.”
The survey found IFRS preparedness was highest among larger public companies and those in regulated sectors. Utility companies were furthest ahead, with 73% saying they had completed more than 60% of the process. Insurers were the second “most complete” with 63% of companies saying they were at least 60% finished the process.
“The size of the company usually plays a big role in terms of expertise and available resources,” Kazarian explains. “Chief financial officers in smaller companies often have fewer personnel who are specifically dedicated to the conversion. Larger companies also started earlier due to the complexities of the transition process for them.”
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