Final Guidelines for Conversion to International Financial Reporting Standards (IFRSs)

Document Properties

  • Type of Publication: Letter
  • Date: July 30, 2010
  • References: Guideline for Banks / BHC / FBB / T&L / Co-op / Life / P&C / IHC
  • To:
    • Banks,
    • Foreign Bank Branches,
    • Bank Holding Companies,
    • Federally Regulated Trust and Loan Companies,
    • Cooperative Credit Associations,
    • Federally Regulated Life Insurance Companies (incl. Fraternal Benefit Societies),
    • Federally Regulated Property and Casualty Insurance Companies,
    • Insurance Holding Companies

The guidelines referred to in this letter have been revised or rescinded in order to reflect the adoption of International Financial Reporting Standards (IFRSs). Amendments to the following guidelines, which remain in force, are effective for fiscal years beginning on or after January 1, 2011.

C-1 Impairment - Sound Credit Risk Assessment and Valuation Practices for Financial Instruments at Amortized Cost (previously Impaired Loans)
C-2 Collective Allowances - Sound Credit Risk Assessment and Valuation Practices for Financial Instruments at Amortized Cost (previously General Allowances for Credit Risk)
D-1, D-1A, D-1B Annual Disclosures
D-5 Accounting for Structured Settlements
D-6 Derivatives Disclosure
D-9 Source of Earnings Disclosure (Life Insurance Companies)
D-10 Accounting for Financial Instruments Designated as Fair Value Option
E-12 Inter-Segment Notes for Life Insurance Companies

Many of OSFI’s existing guidelines provide additional guidance to FREs when applying Canadian Generally Accepted Accounting Principles (CGAAP) or make reference to CGAAP when providing non-accounting guidance. As these guidelines were not prepared under IFRSs, OSFI has revised them as necessary to reflect the implementation of IFRSs in Canada.

OSFI’s guidelines were reviewed in two phases, as described below.

Phase 1 – Core guidelines:

Phase 1 comprised those guidelines associated with the four IFRSs core policy workstreams identified as having the most impact when moving to IFRSs, namely:

  1. loan provisioning: Guidelines C-1 and C-5,
  2. fair value option: Guideline D-10,
  3. securitization: Guidelines D-3, D-4, D-8, and
  4. insurance: Guidelines D-5, D-7,

as well as the annual disclosure Guidelines D-1, D-1A and D-1B. On April 30, 2010, OSFI issued proposed revisions to these core workstream guidelines and recommendations for rescission for public comment by June 15, 2010.

Phase 2 – Consequential guidelines:

Phase 2 comprised all other OSFI guidelines which may be impacted by the adoption of IFRSs which were not considered in Phase 1, namely:

D-2 Accounting for READC Project Financing
D-6 Derivatives Disclosure
D-9 Source of Earnings Disclosure (Life Insurance Companies)
E-12 Inter-Segment Notes for Life Insurance Companies

As a result of the reviews, OSFI determined that a number of its guidelines will no longer be necessary when IFRSs are implemented. As such, the following guidelines will be rescinded for fiscal years beginning on or after January 1, 2011 but will remain effective for fiscal years beginning before January 1, 2011:

D-2 Accounting for READC Project Financing Arrangements
D-3 Accounting for NHA Mortgage Backed Securities
D-4 Transfers of Financial Assets with Recourse
D-7 Accounting for Reinsurance of Short-Term Insurance Contracts by Property & Casualty Insurance Enterprises
D-8 Accounting for Transfers of Receivables including Securitizations

Questions concerning guidelines applicable to Deposit Taking Institutions should be addressed to Renée Chen, Director, Accounting Policy Division, at (416) 973-2055, by facsimile at (416) 952-1662 or by e-mail at Renee.Chen@osfi-bsif.gc.ca. Questions on guidelines applicable to insurers should also be addressed to Mark Causevic, Director, Accounting Policy Division, at (416) 973-8933, by facsimile at (416) 952-1662 or by e-mail at Mark.Causevic@osfi-bsif.gc.ca.

  • Mark E. White
  • Assistant Superintendent
  • Regulation Sector