Publicly traded companies preparing for the upcoming overhaul from Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS) can obtain easy access to IFRS documents with an upcoming release of DisclosureNet.
DisclosureNet Version 5, scheduled for release by Toronto-based XPI Inc. in late November or early December, will feature an IFRS module that includes standards and documents companies can use to research best practices.
The IFRS module will include “the full and complete IFRS standards, which includes the standards themselves, the basis of conclusions and the interpretations,” said XPI president and CEO Stephane Jasmin.
“As more companies in Canada start to file in IFRS, then those documents are going to be available for our customers,” said Jasmin. The module will also include a full repository of filings from the U.K., which adopted IFRS in 2005.
By January 2011, all Canadian publicly traded companies will have to report using the global accounting standards. Conversion to IFRS remains optional for Canadian privately held companies.
Professional services firm KPMG LLP says the conversion should allow companies “easier access to international capital, funding and investment opportunities.”
“Using IFRS should enable Canadian companies to increase their global reach, providing shareholders and regulators with financial information that has enhanced comparability and transparency,” states KPMG’s documentation on the transition to IFRS in Canada.
According to PricewaterhouseCoopers LLP (PwC), “the globalization of business and finance has lead to the need for a set of common, high-quality, and ‘simplified’ accounting standards.”
IFRS has been adopted by over 100 countries and represents approximately 45 per cent of the world’s capital markets, according to a PwC whitepaper on five key questions a CIO needs to ask about IFRS. “In fact, once Canada makes the transition, the United States will be the only G8 country not to have done so,” states PwC.
“Although it may be easy to dismiss this looming transition as an issue solely for the accountants, the implications and ramifications of IFRS will hit home for everyone within a company, including the IT function,” states PwC.
The average IFRS IT project, according to PwC, could take anywhere from a couple months up to two years. “Since IT systems support and enable the financial process, this could represent small-, medium or large-scale changes to not only the financial systems themselves, but also supporting interfaces and data,” states PwC.
“One of the most significant challenges in converting from Canadian GAAP to IFRS is determining which GAAP differences will impact the organization,” states a PwC whitepaper on the potential impact of IFRS on the Canadian technology sector.
XPI originally developed DisclosureNet in 2002 for accounting firms that needed to be able to access notes in financial statements, Jasmin explained. The solution has since grown to incorporate all security filings.
DisclosureNet is currently used by accountants, investors, law firms and regulators such as the Ontario Securities Commission to perform targeted searches and receive alerts on corporate disclosure documents filed within SEDAR, SEDI and EDGAR.
“We basically have a real-time feed to regulators in Canada and the United States and that information flows to our system and we make it searchable using an online solution,” said Jasmin.
In development for the past two years, Version 5 is “almost a rebuild of the platform,” according to Jasmin. “We’ve done a great deal in terms of the lookup of information … in addition to full text search, there’s about 30 additional search criteria that’s available within the system,” he said.
Another significant feature is the ability to share information with other users, including those who don’t have DisclosureNet accounts, Jasmin pointed out. Users can create folders and sub-folders, drag documents into those folders and send their research to colleagues or clients who receive a link to the information via an e-mail message.
Version 5 will also be able to read information from image-based PDFs. One of the challenges in the current security filing system in Canada is that all of the information is filed in PDF format and companies are allowed to file image-only documents, said Jasmine.
“Rather than creating a PDF from an electronic document which contains text and the image of the document, they simply scan an image-only to PDF. One of the challenges with that is it makes it difficult to search the contents of that document,” he said.
“We’ve developed an engine that actually does an optical character recognition of the document and therefore makes it searchable. We also have intelligence to look within the documents and identify whether there are actually sections of the document that contain image-only as well,” said Jasmine.
It’s critical for our clients to gain access and when they perform a search, to know that it is a comprehensive search and nothing has been missed, said Jasmine. “With this release, we are going to be one of the only companies that provides this capability,” he said.