OSFI in 2007 preparing for fair value accounting, pandemics

The Office of the Superintendent of Financial Institutions (OSFI) in 2007 is preparing to move to International Financial Reporting Standards (IFRS).[OSFI] will soon begin to determine the implications for Canadian financial institutions and supervisors, Julie Dickson, OSFIs acting superintendent, told the House of Commons Standing Committee on Finance on May 27, 2007.This will include developing a process for handling changes to accounting standards in data collection and reporting systems, and determining the impact fair value accounting will have on the sector.To put it simply, fair value accounting considers what an asset or liability is worth today, as opposed to using historical, cost-based measurements of value. Proponents argue that fair-value assessment is more transparent than other methods of measurement.OSFI also identified readiness planning as a priority for 2007. As a prudential regulator, OSFI is constantly monitoring the impact of changes in the economic environment on the risk profile of financial institutions, Dickson told the Commons committee. OSFI must have the resources in place to identify and deal with an economic downturn, as well as any other unexpected events such as a pandemic outbreak.As part of enhancing its preparedness, OSFI will carry out table-top exercises against various scenarios, and will emphasize the institutions stress-testing capabilities. This is essential to meeting OSFIs ongoing responsibility of accurate risk assessment and timely, effective intervention.