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The concepts on which International Financial Reporting Standards are based are similar to those historically used in Canada. That is not by chance. Canada’s accounting standards-setters have been actively involved in the development of international standards since discussions were first initiated in the mid 1960’s. The Accounting Standards Board (AcSB) is adopting IFRSs as Canadian GAAP in response to a business environment that is increasingly global. This single set of high quality, global standards that require transparent and comparable information in general purpose financial statements will provide an improved basis for decision-making for business and investors. For Canadian businesses financial reporting based on globally accepted standards leads to greater accessibility to world-wide capital markets which could reduce the cost of capital. Furthermore, for those entities with global operations, the need to report in accordance with more than one basis of accounting will be reduced. This AcSB Bulletin provides further information on the process the AcSB followed in developing the IFRS strategy. Generally, Canadian GAAP and IFRSs are based on a similar conceptual framework. They are similar in terms of the style and form of the individual standards. A number of standards are substantially the same including inventories, segmented reporting and accounting changes. However, there are a number of differences, both pervasive and subtle, the significance of which will vary by industry and individual organization. IFRSs are now required or permitted in over one hundred countries, including the European Union and much of the Pacific Rim. India, Japan and Brazil have also announced plans to adopt or converge with IFRSs. A map indicating the global reach of IFRS can be viewed on the International Accounting Standard Board (IASB) website. In the United States, the Financial Accounting Standards Board (FASB) is working with the IASB to develop converged standards. The Securities and Exchange Commission has eliminated the IFRS/US GAAP reconciliation requirement for foreign-owned filers. More information on the convergence of US GAAP and IFRSs is available at www.IFRS.com, a website published by the American Institute of Certified Public Accountants. |