Global experience pegs tax as a top IFRS priority: Ernst & Young

    TORONTO, June 6 /CNW/ - Canadian public companies can't afford to leave
the tax team out of their International Financial Reporting Standards (IFRS)
conversion strategy, says Ernst & Young.
    Canada is joining the more than 100 countries that have already adopted,
or permit, IFRS as an acceptable standard. The conversion experience in other
countries has shown that IFRS conversion isn't as simple as swapping one set
of accounting rules for another. It has also shown that tax requires special
attention, since almost every IFRS-related change will have a tax accounting
or reporting implication.
    "We absolutely need tax at the table when we're planning for IFRS,"
explains Fraser Gall, Ernst & Young tax partner. "In 2009, Canada's public
companies will need to quantify the impact of IFRS conversion. They'll also
need to provide IFRS comparables for 2010 when they report in 2011. If they're
going to be ready, now is the time to make tax top of mind."
    Adopting IFRS is more than just a technical accounting exercise, says
Gall. He cites several reasons why tax directors need to get involved now in
planning for the IFRS conversion and reporting:

    1.  IFRS conversions are complex. IFRS changes will affect every aspect
        of the tax lifecycle, from planning through provision to compliance.
        Tax directors need to understand the financial significance and
        business impact of the changes, because of tax's link to cash flow,
        the effective tax rate and the need for tax resources.

    2.  All tax accounts will need to be recalculated for the comparative
        period, as if IFRS had always been the standard.

    3.  As well as changes to the tax accounting standards themselves,
        changes in all other accounting standards will have a tax accounting
        impact. Pre-tax book income and the balance sheet will change,
        requiring tax departments to understand the tax implications of all
        the changes.

    4.  Changes in disclosures and the adjustments required to determine
        taxable income may require redesigning of tax data collection

    5.  Existing methods of conducting business and transactions may need to
        be examined to determine whether accounting changes have current tax
        or tax strategy implications beyond the tax accounting alone.

    6.  The global IFRS conversion experience has highlighted the need for
        much more and earlier training and education for those involved in
        the task of financial reporting.

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