All publicly accountable enterprises in Canada will need to convert to International Financial Reporting Standards (IFRS) by 2011, and for Canadian engineering and construction (E&C) companies, this could mean some unique challenges.
Under IFRS 1, the underlying principle of IFRS is retrospective application of all IFRS standards (with certain mandatory and optional exemptions) at the entity's first reporting period. Where differences exist and there is no exemption available, E&C companies may have to put in significant effort to re-measure various historical transactions under IFRS. Early identification of Canadian GAAP differences and consideration of the exemptions are very important for a successful conversion.
For the Canadian engineering and construction sector, these issues impact such business areas as property, plant and equipment, start-up, borrowing costs, impairment, leases, revenue recognition, joint ventures, variable interest entities, derivatives and hedging, and asset retirement obligations.How PwC can help
Our IFRS team has assisted with IFRS conversion projects in Canada and elsewhere for a wide range of companies across all industries. Our dedicated resources and experience in working with many of the 12,000 companies that have already made the transition have taught us valuable lessons that will help Canadian engineering and construction companies with their own conversion process.