Regulation (August 01, 2009)

CANADIAN FIRMS LAG BEHIND IN IFRS CONVERSION

Despite the fast-approaching Jan. 1, 2011 deadline for the implementation of international financial reporting standards (IFRS), more than 12% of public companies and 20% of the private com- panies surveyed by PricewaterhouseCoopers have not yet taken the first step in the conversion process.

PwC surveyed 256 companies — 147 of which were public, 51 were private and 28 were Crown corporations.

There are several reasons for the delay in taking the first step of beginning the initial diagnostic assessments, with 41% of public companies and 54% of private companies stating in the survey that they had other, higher priorities.

About 80% of public companies remain short of the halfway mark of the overall conversion process, the survey found. Private companies were lagging behind public companies, with 51% of the private companies saying that only 20% of their conversion process was complete.

“Our survey shows that companies were more likely to put cost containment at the top of the list of activities rather than IFRS,” said Diane Kazarian, PwC Canada’s national IFRS leader.

OSFI RELEASES DISCUSSION PAPER ON NEW CAPITALTESTING FRAMEWORK

Canada’s solvency regulator, the Office of the Superintendent of Financial Institutions (OSFI), released a discussion paper on developing a new capital-testing framework. The paper, Key Principles for the Future Direction of the Canadian Regulatory Capital Framework for Property & Casualty Insurance, outlines 14 key principles that should be incorporated into any new capital framework.

The paper is intended to help lay the groundwork for introducing a measure for insur-ance risk in 2014.

In addition to “encouraging good risk management,” any new framework should minimize the effects of insurance business cycles, the paper says. It should be part of the supervisory rating and staging process that defines possible supervisoryinterventions too. The full paper is available on OSFI’s Web site: www.osfibsif.gc.ca/osfi/index_e.aspx?ArticleID=3090