Laurier Accounting Association

We all know that being a CA is the best career choice, but here are some quick facts to share with your friends

• The average first year compensation for a CA in Ontario is $71,000
• The average compensation for a CA in Ontario is $194,000
• The average compensation for a CA working abroad is $299,000
• 61% of the Globe and Mail's Report on Business (ROB) Top 1000 Companies of 2006 have a CA in at least one of their six highest positions
• 58% of the top 1000 companies in Canada have a CA as their CFO

Attention, all Accounting students: get used to the new four letter word that is going to be dominating the accounting world - IFRS! You're probably asking yourself, "What the heck is IFRS?" IFRS stands for International Financial Reporting Standards. The IFRS is the new version of accounting standard that will replace the Canadian GAAPs on January 1st, 2011.

IFRS isn't something that was conceived overnight; it has been in an extensive five-year transition progress, starting in 2006 when the AcSB (the Canadian Accounting Standards Board) decided to implement it. Currently, IFRS is mandatory (or permitted) in over 100 countries across the globe, and is the primary accounting standard used in the European Union. Many other countries are in the process of converging or switching to IFRS.

But why switch to IFRS, and why now? The answer is very simple: due to ever-increasing globalization, there is a greater need to have similar accounting standards from country to country. It is very time-consuming to sort through financial statements from companies of different countries with different accounting standards. Moreover, it is very costly for companies - especially accounting firms - to train employees on the accounting standards of a new country. By implementing a universal set of accounting standards, companies and investors can make financial decisions more efficiently and cost-effectively. The goal of IFRS is to improve financial reporting with a single set of high quality, consistent and comparable reporting standards.

The advantages of converting to IFRS are many. Firstly, a business can present its financial statements on the same basis as its foreign competitors, therefore making comparisons easier. Secondly, companies with subsidiaries in countries that require IFRS may be able to use one accounting language company-wide. Lastly, companies will benefit if they wish to raise capital abroad as it will be easier for foreign investors to interpret their financial statements.

Not all countries are jumping on the IFRS bandwagon; some critics, including the United States, believe that the IFRS standards are too vague and that something will be lost with the transition to IFRS. Furthermore they believe that U.S. GAAPs are the gold standard of accounting. The FASB (the American version of AcSB) is delaying transition until well into 2014.

The main difference between Canadian GAAPs and IFRS is that GAAPs are known to be highly rules based, while IFRS is known to be highly principled based, meaning that IFRS requires the managers to exercise much more judgment in their valuations. For example, revenue recognition is considered one of the most complex elements of GAAPs because of the differences with types of industries and contracts. Under IFRS, revenue recognition is based on a single standard with general principles applicable to different transactions.

I certainly hope this article has provided you with some general knowledge of the major change that is going to affect the accounting industry, if you still have questions or want more details, visit the CICA IFRS website at http://rmx.cica.ca/ifrs/. Whether you are a first year business student or a fourth year co-op graduate, be ready for 2011.