Indeed, companies are at varying stages with their adoption efforts. “We’ve seen many companies who are well under way and have their financial statements mocked up in draft form, and we have seen other organizations that are in crunch time and will be from now to December and January,” says Diane Kazarian, national IFRS leader for PricewaterhouseCoopers in Canada.
In general, larger Canadian companies are more ready for the January 1 deadline since they have more internal resources and, because of their complexity, were more likely to begin the switchover project early, says Kazarian. According to a survey earlier this year by FEI Canada and PwC, all companies with annual revenues above $20 billion had more than halfway completed their conversions, whereas only 41% of companies with revenues between $50 million and $249 million were at least 60% of the way toward completion.
CFOs acknowledge the tendency to procrastinate, but warn U.S. finance chiefs not to wait if the SEC moves forward with IFRS. “When you read the accounting standards, they don’t seem drastically different, but when you get into the detailed work you realize it’s a huge amount of work,” says Sarah Davis, CFO of Loblaw, a food distributor. “We were caught off-guard a bit by how much work it was to implement.”
Earlier this year, the SEC said it would decide in 2011 whether to move forward with a time line for requiring U.S. publicly traded companies to apply IFRS to their financial statements beginning in 2015. Unlike Canadian businesses, the United States would likely phase in companies to its three-year plan, based on size.
For now, the SEC is asking for further feedback on the issue. Giving the public until mid-October to respond, the commission wants to know about investors’ readiness for understanding IFRS and how they can get up to speed on the global rules. The commission also wants to know how an IFRS switch will affect business contracts and corporate-governance requirements.