IFRS – What’s In It For Me? (Part II)

In my previous blog, I wrote about the positive aspects of a Canadian college student studying the new standards (the IFRS) that will take effect in Canada in 2011. There are four positives and to even things up, below are the negative aspects of this adoption as far as a college student studying accounting is concerned:

NEGATIVE: Your college or university may find it hard to look instructors or professors who are not “capable” of teaching IFRS because of lack of a working knowledge of these standards. Don’t get me wrong, I am not questioning your professor’s capability but let’s face it, the standards as your professors studied them then are rather different from the IFRS that will be adopted in 2011. Your professors studied for a long time to fully-comprehend Canadian GAAP. With so short a time and with so many new standards to study, I’m not really sure the professors have ample time to assimilate and comprehend everything. For their sake and for the students’ sake, I hope they will gain enough expertise and knowledge on IFRS to teach them to college students such as you.

NEGATIVE: A lot of curriculum and other educational materials have inadequate amount of content regarding IFRS. This makes it difficult for students like you to get ample practice on IFRS-related problems. Although some college books (and review books) are now being revised to take into account these new standards, there may not be enough of these materials to meet the needs of the college students.

NEGATIVE: Assuming that you are already into accounting standards, you may need to shift focus from Canadian GAAP to IFRS, which is not an easy thing to do. In the first place, studying any GAAP is big endeavor; shifting from local GAAP to IFRS can be quite daunting. Mention the fact that you’re going to study all these in just a few years and you’ll really be tempted to throw up your hands and give up.

NEGATIVE: Issuances of new IFRS and improvements on the issued ones are ongoing processes. After the first general adoption in 2005, 2009 marks the year when some major improvements and new standards are issued. Fortunately (or unfortunately), since Canada has not yet adopted the IFRS, all these improvements and new standards are already integrated in the IFRS Canada will adopt by 2011. For a student, this means the learning curve for IFRS is still going up (and up and up, with no end in sight, yet).

So there you have it. The four negatives complete the second part of this blog. I hope the negatives I mentioned above don’t put you off from studying accounting and becoming CAs later on. I do hope you will focus on the positives and stay on track to become an accountant (and a CA) someday. Don’t worry about these changes; these are really part of our profession. Dynamism is what keeps the accounting profession (and any profession for that matter) alive. If you need any help about IFRS or if you’re starting to bang your head against the wall (figuratively, I hope), just drop me a note. Till then, good luck!

IFRS – What’s In It For Me? (Part I)

Ok, let’s face it. One of the biggest (if not the biggest) thing that can actually happen to our profession right now is the adoption of the International Financial Reporting Standards, better known as the IFRS. More than 100 countries have already adopted these standards. For the US, this has become a big, BIG issue (even the date of integration is not yet final). For Canada, now on the verge of adopting these standards, the race is on for the conversion. The target date is January of 2011, barely a year and half from now, for publicly-accountable enterprise. The official announcement was made in 2008. Now don’t get me wrong, but I’m not really sure three years is enough time for any company (whether big or small) to completely comprehend and adopt these standards. Heck, even those countries that adopted IFRS in prior years had about 5 years to prepare and even then, I don’t think any company from these countries can really claim that they fully understood these standards.

The adoption of the IFRS has affected a lot of people. Regulators, professionals, the CEOs, the CFOs, auditors, etc. – all these were (and still are being) affected. But for this blog, I’m focusing on the college students who are taking up accounting (and who plan on becoming CAs someday). I mean, poor you having to study something new =). Just kidding. I’m not trying to frighten you away (don’t shift to another course, okay?). Rather I want to dedicate this blog to these college students and basically answer one question that I know these students are asking themselves – IFRS, what’s in it for me? The answer? Plenty. So let me just enumerate some of these. They can be positive and they can also be negative. The positive will give you a chance to rejoice. The negative? Let me delay the answer (and those negative points) in my next blog.

POSITIVE: You will get to learn internationally-accepted standards, which means analyzing and comprehending financial statements of companies from both Canada and other IFRS-compliant countries will become much easier for you. It will also mean that seeking employment in other countries will be a breeze.

POSITIVE: You will learn how to solve accounting problems (based on IFRS) in the relative safety of your classroom. Believe me, making mistakes is a lot easier when you are still students than making these mistakes when you are already out there and working. The worse you can experience in college is flunking your subject; when you’re out there working, the worse is that you can get fired.

POSITIVE: There are already a lot of resources available both offline and online. Resources in the Internet are already piling up and you can have a lot of information in your hands by just going online. The same thing can’t be said five years ago. Also, Canada has the advantage in terms of learning from the experiences and learning curves of the other countries that already adopted the IFRS. These experiences are also found in these resources and can make for very enriching lessons for all concerned.

POSITIVE: Various programs to infuse IFRS in college curricula have already been launched by Big 4 firms making it easier for the various colleges and universities to integrate IFRS in the accounting subjects. Of all the entities that are applying the IFRS, I can easily say that the most resources are with the Big 4 (other than the IASB, that is) because of their international affiliations and groups focused on IFRS and its adoption.

These are the positive aspects of the IFRS for you, college students. I hope you do agree on these aspects. Do watch out for the negatives in my next blog.