Nancy Anderson, VP, financial reporting and CFO, Real Property Association of Canada, advises REIT CFO's to start early when preparing for convergence with International Financial Reporting Standards (IFRS) convergence.
"The first decision you have to look at making is to analyze your investment properties. They are your biggest asset," Anderson said when speaking to REIT.com during a video interview at REITWise in Hollywood, Fla. in March. "Are you going to go fair value or a deem cost type of thing. Really analyze that and dig deep to determine those impacts."
Anderson said that there will probably be a lot of system and personnel impacts so CFOs should be prepared for a big shake up.
She also said that the decision to converge was made when Canadian companies decided that the Canadian Generally Accepted Accounting Principles (GAAP) was no longer sustainable for them.
"We wanted to have access to larger (international capital) markets," Anderson said. "So the decision had to be, do we want to go U.S. GAAP or do we want to go IFRS?" said Anderson.
She said that the investment community has responded well since the shift was made several years ago and added that the investment community was educated so there weren't any big shocks within the community.
"It was more reading for them to do and layers of information to absorb and push down but ultimately once that happened, it really didn't have any impact other than that," Anderson explained.
As more countries adopt IFRS she said that they should be careful when comparing transactions. She said that the first thing many accounting firms did when advising their clients on IFRS was to look at the European companies. However, she said they sometimes found that that how they account for certain transactions didn't make sense in Canada.
"So I think comparability, within perspective, is the key to it," she said. "There can be differences in how you approach the different transactions based on different markets and different companies, and the different ways they run their businesses," she said.