Canada. IFRS in Canada: Game changer or neutral mutation?

Abstract

With the advent of International Financial Reporting Standards (IFRS), 2011 was certainly critical for Canadian financial markets on several dimensions. On one hand, Canada’s Accounting Standards Board decision to adopt IFRS for publicly accountable enterprises ended more than 20 years of formal or informal convergence toward U.S. Generally Accepted Accounting Principles (GAAP). On the other hand, for auditors, corporate executives, regulators, analysts and investors, the release of IFRS-based financial statements modified in a fundamental way the informational landscape underlying Canadian financial markets. In light of these events, this chapter aims to achieve two objectives. First, we will present and discuss the institutional context that led Canada’s accounting standardsetter and regulators to adopt IFRS. Second, we will analyze the implementation of IFRS in 2011 as well as its potential implications for key financial markets’ players. Our analysis will be performed through a corporate governance perspective. Ultimately, the chapter’s goal is to assess if Canada’s transition to IFRS was indeed a game changer for financial markets or if, alternatively, it represented a neutral mutation in the country’s institutional landscape with scant market implications.