Notes from the November 2012 IFRS Interpretations Committee meeting

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http://www.iasplus.com/en/meeting-notes/ifrs-interpretations-committee-meeting-2014-13-14-november-2012

Investors Predict U.S. Will Adopt IFRS

U.S. investors expect the country will eventually support International Financial Reporting Standards, but the process will take time and require substantial investment in staff and training, according to new research from the Association of Chartered Certified Accountants.

Fifty-seven percent of investors anticipate the SEC will one day require reporting under IFRS, with more investors agreeing than disagreeing that the long-term benefits of adoption would outweigh the costs, 41 percent compared to 29 percent.

The SEC already allows over 400 multinational companies based abroad to file their financial reports in IFRS without first reconciling it with U.S. GAAP. However, despite a decade-long convergence effort between the U.S. Financial Accounting Standards Board and the International Accounting Standards Board, many differences remain between the two sets of standards and the SEC has held off on making a decision on whether to allow U.S. companies to report their financial results in accordance with IFRS.

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It appears more likely that even if the SEC decides to allow IFRS to be incorporated into the U.S. financial reporting system, it will continue to call it U.S. GAAP because of the many references to U.S. GAAP in legal documents and loan covenants.

ACCA’s research was published in a report, IFRS in the U.S.: An investor’s perspective. The research was conducted for ACCA by Forbes Insights, surveying 493 U.S.-based investors.

“The ACCA’s findings are consistent with anecdotal feedback we hear from the US investor community,” said IASB chairman Hans Hoogervorst in a statement. They also lend further credence to the argument that the USA is well prepared for a successful transition to IFRS.”

The most significant challenges identified by investors are the one-off transition matters, while longer-term concerns are rated less highly. The most informed investors polled believe it will take U.S. corporations some four and a half years to get ready for IFRS. They believe that convergence plans should aim for full convergence, allowing adequate time for investors and industry to adjust. Awareness of IFRS among U.S.-based investors is modest: when asked, only 34 percent of investors felt able to cite specific differences between U.S. GAAP and IFRS.

However, 38 percent of investors said they were comfortable comparing statements prepared under IFRS with statements prepared under U.S. GAAP. Investors saw marginal differences between IFRS and U.S. GAAP, with 22 percent of investors claiming that the quality of disclosures under IFRS is higher, versus 25 percent who favored U.S. GAAP. Among investors with a solid understanding of IFRS, however, the balance shifts to 40 percent to 21 percent in favor of IFRS.

“More investors believe the eventual adoption of IFRS in the USA will result in a net benefit to the American economy than not,” said ACCA technical director Sue Almond in a statement. “In ACCA’s view, U.S. adoption of IFRS would give a tremendous boost to the cause of globally comparable financial reporting, and more importantly, the US and world economies. ACCA has repeatedly called for putting investors at the heart of the standard-setting process globally, and this is why we commissioned this research, to understand what American investors thought about the future of IFRS in the USA.”

“While there are clearly challenges and reservations highlighted in the survey, attitudes to IFRS appear to be changing in the U.S., irrespective of any action by the SEC,” she added. “The more familiar investors are with IFRS, the more confidence they have in the standards, which echoes the experience in countries that have already adopted IFRS.”

Questions remain for the future, as looking ahead ACCA’s report also identified the issues that are most responsible for shaping U.S. investors’ attitudes towards IFRS. By order of significance, these are:

•    Will IFRS adoption lead to reduced complexity for U.S. corporations? 
•    Is IFRS adoption going to lead to a dangerous loss of U.S. influence over the standard-setting process? 
•    Are U.S. corporations likely to see cost savings and synergies emerging as a result of IFRS adoption? 
•    Will IFRS adoption make it easier to compare the performance of U.S. corporations with that of other companies overseas? 
•    Are U.S. auditors likely to second-guess management more frequently as a result of IFRS adoption?

“A better understanding of global standards produces greater assurance—and it will also prompt more investors to learn about the International Accounting Standards Board and the work they are doing on convergence,” said Almond. “The accountancy profession—on the global stage as much as in the USA—will have a significant role to play in educating the business community about global standards and needs to prepare for this.”

ICAN Wants IFRS Training For Accountants

OWING to the complexities of adoption of the International Financial Reporting Standard (IFRS), President of the Institute of Chartered Accountants of Nigeria (ICAN), Mr. Adedoyin Owolabi, has tasked district societies on the need to train members on the standard.

The president, while speaking at a members’ forum organised by ICAN Lagos District and Society, called on serving district society chairpersons to improve the intellectual capacity of their members, specifically with the recent adoption of the IFRS model in the accounting system.

He explained that ICAN attained enormous heights because local districts and societies developed their members, adding that past presidents have come from the various units.

“IFRS ensures a single set of high quality globally converged financial reporting standards. Further, it presents consistent, comparable, unbiased, transparent and relevant information wherever the location of the reporting entity is.

“The speed, with which IFRS had emerged as the leading financial reporting framework, is to say the least, telegraphic and wonderful. It is now the language of accounting in major capital markets. ” Owolabi stated.

He advised members of the accounting profession to educate themselves on IFRS if they wish to remain relevant in the scheme of things in the profession and in the business community.

Chairman of the Lagos and District Society, Patrick Akujobi, lauded the ICAN president for his enduring legacy and enviable track record of leadership.

IASB hosts public forum to discuss disclosure overload

The International Accounting Standards Board (IASB) today announced that it will host a public Disclosure Forum (“Forum”) to consider the challenging area of disclosure overload. The Forum, to be held in London on 28 January 2013, is intended to foster dialogue between preparers, auditors, regulators, users of financial statements and the IASB about how to improve the usefulness and clarity of financial disclosures. Output from the Forum will inform the IASB’s work on its Conceptual Framework.

It is a widely-held view that not all of the information presented in financial statements is useful. Various factors are cited that affect the clarity and usefulness of disclosed information. Some are critical of what they see as overly burdensome financial reporting requirements. Others point to the application of ‘boilerplate’ disclosure statements by companies, a ‘checklist’ approach used by auditors or a need to meet the perceived ‘compliance’ requirements of regulators.

The Forum will bring together parties with an interest in financial report disclosures (including investors, preparers, auditors, regulators and standard setters) to get a better understanding of the issues related to disclosure overload, and where and how improvements can be made. It will include presentations from invited speakers as well as panel and open discussions, and will discuss;

• The current state of financial report disclosures;
• Identifying and understanding the main concerns preparers, auditors, regulators and users have about disclosures in financial reports, and their possible causes;
• Identifying potential ways that entities can improve the clarity of financial reports within the context of the current IFRS requirements; and
• Providing input into the disclosure and presentation sections of the IASB’s Conceptual Framework project.

Commenting on the Forum, Hans Hoogervorst, Chairman of the IASB said:

"It has become increasingly clear that we are suffering from disclosure overload. However, there are many reasons why this is the case. Standard-setters are not blameless, but neither are preparers, auditors or regulators. So, the idea is to get everybody in a room and see what we can do to address this topic.

However, no one should expect quick wins. One investor’s disclosure clutter is another investor’s golden nugget of information. Taking information away is never easy.

We will proceed with caution, and build upon the impressive work that has already been done by others in this area."

The Forum will be held at a venue in the City of London on Monday 28 January 2013.  It will start at 9:00am and finish at approximately 1:00pm.  If you would like to attend this event please register your interest by emailing kmaybin@ifrs.org. 

End

Press enquiries:

Chris Welsh, Communications Manager, IFRS Foundation
Telephone: +44 (0)20 7246 6495
Email: cwelsh@ifrs.org

Mark Byatt, Director of Communications and External Affairs, IFRS Foundation
Telephone: +44 (0)20 7246 6472
Email: mbyatt@ifrs.org

IFRS adoption will eventually happen, US investors tell ACCA Read more: http://www.accountancyage.com/aa/news/2224876/ifrs-adoption-will-eventually-happen-us-investors-tell-acca#ixzz2CLW6EZDP Accountancy Age - Finance, business and accountancy news, features and resources. Claim your free subscription today.

US INVESTORS expect the country will eventually adopt IFRS, but this will take time and require substantial investment in staff and training, ACCA has said.

According to research surveying nearly 500 US-based investors, many expect the SEC will one day require reporting under IFRS.

More investors agreed than disagreed that the long-term benefits of adoption would outweigh the costs, the report found.

"US adoption of IFRS would give a tremendous boost to the cause of globally comparable financial reporting, and more importantly, the US and world economies," said Sue Almond, technical director at ACCA.

Among the main challenges identified, investors believed it will take four and a half years for most companies to be ready for IFRS, and that awareness of IFRS among US-based investors is modest.

Hans Hoogervorst, chairman of the IASB, said: "The ACCA's findings are consistent with anecdotal feedback we hear from the US investor community. They also lend further credence to the argument that the US is well prepared for a successful transition to IFRS."

Almond added: "While there are clearly challenges and reservations, attitudes to IFRS appear to be changing in the US, irrespective of any action by the SEC."

SEC Still Has Reservations about IFRS

Officials with the Securities and Exchange Commission are taking a wait-and-see attitude toward incorporating International Financial Reporting Standards into the U.S. financial system, even as an increasing number of foreign companies file their financial reports with the SEC using IFRS.

A pair of SEC officials spoke about the status of IFRS in the U.S. during a panel discussion Tuesday at Financial Executives International’s 31st Annual Current Financial Reporting Issues conference in New York, while adding the standard disclaimer that they are only speaking for themselves and not for the SEC. Paul Beswick, acting chief accountant in the SEC’s Office of the Chief Accountant, reviewed the results of the SEC’s staff reports on IFRS, including the final report which outlined many of the problems with IFRS. So far, the SEC commissioners for whom the reports were prepared have not yet made any formal decision about whether to move forward with incorporating IFRS.

“When thinking about sufficient development of IFRS, some areas that the staff focused on were the comprehensiveness of IFRS, the auditability and enforceability and then the comparability among jurisdictions,” said Beswick. “One of the things that both preparers and investors told us was if the information isn’t comparable across jurisdictions, is it really worth it making this effort to go to a single set of standards?”

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He noted that the final staff report was issued on Friday, July 13. “We acknowledge that we issued a report on Friday the 13th,” said Beswick. “It was the Friday before I got named acting chief. You could kind of flip that the other way and [say] it was Jim Kroeker’s last day as chief accountant, so one could then say he wasn’t allowed to leave until he got the report out.”

“I think a number of people were surprised that the final staff report didn’t have a recommendation to the commission,” Beswick added. “I think it’s important to understand that wasn’t really the intent of the work plan. The intent of the work plan really was to be more information gathering, to help inform the commission’s thought process. It is important to highlight, though, that the staff noted, looking directly to the IASB would be a challenge in the U.S. And I think we cited three specific reasons in the report. One is influence on standard-setting. As we surveyed the 42 largest capital markets in the world, only two of them—and they were two of the smallest ones—looked directly to the IASB. All the other ones had what I refer to as a ‘suitability mechanism’ to make sure that the IFRS standards are suitable for their capital markets.”

Conversion Burden
The SEC staff also looked at the burden of conversion. “One of the things we learned in reaching out to a number of specialized industries is that references to U.S. GAAP are buried in literally thousands of pages of U.S. law and U.S. regulations,” said Beswick. “That’s not to say the staff was entirely downbeat on further incorporating IFRS into the U.S. markets. We thought the focus should be more on an endorsement mechanism. But that doesn’t mean it’s a fait accompli. There are still challenges even under an endorsement mechanism.”

Among those drawbacks are fostering a greater consistency in application and enforcement, maintaining U.S. influence in the standard-setting process, and the funding mechanism for the International Accounting Standards Board.

“I think one of the things that took people a little by surprise in the final staff report was the commission’s statement at the front of the report that the commission, while appreciating all the hard work of the staff, wasn’t coming to a final policy decision,” said Beswick. “It wasn’t meant to make a recommendation on the final policy, the threshold policy question.”

Beswick acknowledged that there are benefits in the endorsement mechanism, as it retains influence to make sure the U.S. voice is heard in the standard-setting process. “That’s one of the things, as we did our outreach, we heard pretty consistently: a concern that the uniqueness of the U.S. capital markets needs to be appropriately reflected in the standard-setting process,” he added. “We also thought that an endorsement mechanism might be able to lessen the burden on conversion.”

Beswick noted that Canada has recently converted to IFRS, using a so-called “Big Bang approach.”
“They set a date and said, ‘On this date, everyone is going to incorporate IFRS into their financial reporting,’ and then they quickly started carving out certain industries because IFRS didn’t work in those industries,” Beswick pointed out. He noted that FEI is leading a study in Canada analyzing the cost of converting to IFRS. “I think that will be an interesting data point for people just because Canada is probably the most similar to the U.S. capital markets in that they have an equivalent of [Sarbanes-Oxley Section] 404 and the approach to financial reporting is much more similar in Canada than in some of the other jurisdictions,” said Beswick.

In terms of the development of IFRS, Beswick noted that the SEC staff was fairly positive in its final report about the efforts that the IASB has undertaken over the past 10 years with the standards. “They generally are perceived to be high quality,” he said. “However, there are some notable gaps that continue to exist in IFRS. Regarding the interpretive process, that’s one of the things that we heard loud and clear across all constituents, including overseas, that the interpretive process needs to be improved. The IASB has recently made some changes to their equivalent to the EITF [Emerging Issues Task Force], IFRIC [IFRS Interpretations Committee], and we’re hopeful that process results in more timely addressing of interpretive issues.”

The SEC staff acknowledged in their final report that there have been some notable steps to try to increase global application and enforcement of IFRS, Beswick pointed out. The European Securities and Markets Authority, which oversees all 27 security regulators in Europe, has made efforts to foster greater comparability amongst preparers. In terms of independent standard-setting for the benefit of investors, both the IFRS Foundation and the Monitoring Board of financial regulators overseeing it have both undergone some corporate governance reviews in the last two years, Beswick noted.

“While we think that these are definitely improvements, one of the things that the staff wants to see is how they function,” he added. “Anytime you talk about corporate governance, there’s what’s written down on paper and what actually happens. And I think what we hear is still concern in the U.S. about how it’s going to function in reality. So we’ve been continuing to monitor that.”

The SEC’s final staff report noted that there is a wide spectrum of investor understanding of IFRS, both large and small. “When you talk about the largest investors in the country, they’re already using IFRS in many cases, and they use financial statements that have been prepared under IFRS and make capital decisions based on that,” said Beswick. “But then you think about some of the smaller investors and they don’t have a real understanding of IFRS.”

If the commission were to decide to move forward with IFRS, there would need to be mechanisms in place to improve investor understanding of IFRS, Beswick noted.

In terms of the impact on the regulatory environment, Beswick acknowledged they were surprised about that too. “We clearly understood the importance of U.S. GAAP to the banking regulators,” he said. “We’ve had a long history of that. But we identified many other regulatory agencies that rely on U.S. GAAP as the starting point for their regulatory regime. To give you an example, FERC [Federal Energy Regulatory Commission] relies on U.S. GAAP in the context of overseeing the utilities, the insurance industry.”

Next the SEC staff looked at the audit regulation and standard-setting process and reached out to the Public Company Accounting Oversight Board and to the large accounting firms. “One of the things we learned is that there are already FPIs [foreign private issuers] that are getting audits on PCAOB standards using IFRS, so we thought from the approach of an endorsement mechanism, it wasn’t going to impact audit regulation and audit standard-setting significantly,” said Beswick

The SEC also considered the impact on private companies, even though the SEC technically only has oversight over public companies. “One of the things I do like to highlight is the AICPA did recognize IFRS as a basis for which auditors can issue opinions, and they did it in 2007 or 2008,” said Beswick. “In addition, the FASB has made changes to their processes in response to a Blue-Ribbon Panel where they’re going to further think about how private companies are going to be impacted by their standard-setting process.”

Exit Strategy
As for the impact on issuers, Beswick said the SEC received a lot of helpful feedback from them. “Not surprisingly, there were a couple of things we heard from issuers,” he added. “One was sort of change fatigue. The FASB and the IASB are working on some of the most fundamental standards in terms of accounting, and I think there is concern that there is a certain level of fatigue in the system. We keep having exposure drafts, and people spend a lot of time providing helpful comments. So one of the things we heard is that this needs to be done in a rational manner that doesn’t overtax the system. Also, there’s a real concern about the cost of conversion and the burden it might have, and it’s something the staff is acutely aware of.”

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In terms of human capital readiness, Beswick said it is largely dependent on whatever method the SEC would use in terms of further incorporating IFRS.

“One of the things we do need to acknowledge is that IFRS is used in the U.S. capital markets,” he noted. “There are close to 500 FPIs that are now using IFRS, and there are also a significant number of subsidiaries of foreign companies, so the use of IFRS is expanding. But that doesn’t mean that should then drive whatever decision the commission should make. I thought somebody made a good point. Before we make this determination, we need to think about an exit strategy. They compared this to the E.U. and the euro and said, ‘Several years ago, the idea of a euro was a great idea, but then when they ran into problems, they didn’t have a great exit strategy.’ So we need to have an exit strategy. If we take the next steps, one of the things we need to think about is what if this doesn’t work and how would we resolve that? I thought that was an important thing the staff really took to heart.”

SEC Corporate Finance Perspective
Craig Olinger, deputy chief accountant of the SEC’s Division of Corporate Finance, spoke alongside Beswick and said the SEC has about 9,000 domestic registrants, mostly using U.S. GAAP, and 1,000 foreign registrants, some of which use IFRS and some U.S. GAAP. Most Canadian companies are now using IFRS or are preparing to switch to IFRS. Companies in Europe are mostly using IFRS, while offshore companies in island nations and China are mainly using U.S. GAAP. Israeli companies are mostly using U.S. GAAP, although some use IFRS. Other parts of the world are using a mixture of IFRS, U.S. GAAP and their home countries’ versions of GAAP, which still need to be reconciled with U.S. GAAP. “That number is shrinking, with most of them moving over to IFRS,” Olinger added.

He said the SEC has seen issues with some of the foreign registrants, particularly those whose operations are in China. “They tend to have interesting consolidation structures,” he said. “VIE [variable interest entity] type issues can come up, and revenue recognition. Some of these are incorporated offshore and they are foreign private issuers. But there are literally hundreds that are domestically incorporated, but their operations are in China as well. There are some interesting revenue recognition issues there, because business practices can be pretty different, and even things that seem pretty basic in the United States aren’t automatically the way things are done over there. We’ve seen some ICFR [internal controls over financial reporting] issues. The question about the basic ability to prepare U.S. GAAP compliant statements when you’re in an environment that’s fundamentally not a U.S. GAAP one can be pretty interesting. Also there are parts of the world where the PCAOB is not allowed yet to do inspections, so we have some risk factor disclosures that we seek along those lines.”

Olinger noted that IFRS is an area that the SEC’s Division of Corporate Finance needs to deal with, notwithstanding the status of whether it is ultimately going to be incorporated into U.S. GAAP. “With hundreds of Canadian companies having come over to IFRS and with other companies coming, we have 400 to 500 companies on IFRS, so it’s number 2 next to U.S. GAAP in terms of quantity of filers,” he said. “So we do look at it carefully. We review IFRS [filings] with the same scope of review that we would do with a domestic issuer. We look for full compliance. We train our staff on IFRS. We try to stay current with what’s going on with IFRS, just as we do with U.S. GAAP. We consult the OCA [Office of the Chief Accountant] on IFRS matters, just as we consult with them on U.S. GAAP matters.”

Olinger noted that the frequent comment areas for IFRS filers are fairly similar to those for U.S. GAAP filers. “It tends to be driven by the nature of their business activities and the complexity of their instruments or the complexity of their business combinations, things like that more so than anything that’s unique to IFRS as a different set of standards,” he said.

Olinger noted that the SEC sometimes send comments to filers on the IFRS 1 standards, which relate to companies that are adopting IFRS for the first time, particularly for Canadian companies. “The population of Canadian companies coming over is a little different,” Olinger observed. “Our pre-existing IFRS filer population had been largely European, mostly big companies, and now we have a lot more smaller Canadian companies, a lot of them in the extractive industry, and those companies tend to have issues of their own, regardless of the GAAP. I think the Canadian regulators have paid a lot of attention to the first-time adoption in Canada, and that’s a good thing. What we’re tending to see in review is probably not so much the IFRS application issues per se, but more the reporting issues where our rules intersect with Canadian rules, like is the assertion of IFRS as issued by the IASB appropriate, the assertion you need to make in order not to reconcile with U.S. GAAP. We’ve seen some things in selected data putting the Canadian GAAP side by side with the IFRS figures, and of course we have some prohibitions against that. So far, there are not a ton of IFRS application issues, but we are continuing to pay attention there.”

Alaris Royalty Corp. Announces $19,000,000 Additional Contribution to KMH Partnership

CALGARY, ALBERTA--(Marketwire - Nov. 9, 2012) - Alaris Royalty Corp. ("Alaris" or the "Company") (TSX:AD) is pleased to announce that it has completed an additional $19,000,000 contribution (the "Contribution") to KMH Cardiology Limited Partnership ("KMH" or the "Partnership") in support of KMH's growth program. Pursuant to the terms of the Contribution, Alaris subscribed for additional non-voting preferred partnership units, which units entitle Alaris to receive an additional $2,814,800 preferred distribution ("Distribution") for the first full year following the Contribution. The Contribution was funded with funds drawn on the Company's senior credit facility.
The Contribution is Alaris' fourth capital contribution to KMH since the Partnership's formation in 2010. To date, Alaris has contributed an aggregate of $48,600,000 to KMH and, after giving effect to the Contribution, the total aggregate distribution payable to Alaris from KMH is $7,350,700, on an annualized basis. Alaris will begin receiving the additional Distribution immediately. Following the Contribution, on an annualized basis distributions from KMH now account for approximately 19.6% of Alaris' total revenue, an increase from 13.1% prior to the Contribution.
"KMH has proven to be a tremendous operator in the stable medical diagnostics industry. We are excited to be growing our partnership and supporting their successful acquisition strategy. Deploying more capital into this industry and with this management team is very positive for Alaris shareholders." - Steve King, President and CEO, Alaris Royalty Corp.
Uses of Capital
KMH will use the net proceeds from the Contribution to acquire a group of four (4) jointly owned Independent Diagnostic Testing Facility centers in the United States. The acquisitions will be accretive to KMH and will result in KMH becoming a larger and financially stronger partner to Alaris. Following these acquisitions KMH will own and operate nine (9) clinics in the United States and eight (8) clinics in Canada.
"KMH is pleased to announce that, with the support and involvement of Alaris, we have taken bold new steps to increase our market penetration and presence in the North American healthcare market." - Neena Kanwar, President and CEO of KMH. Ms. Kanwar further stated, "These new ventures would not have been possible without the full support and confidence of Alaris our major partner in achieving our corporate strategic goal of dominance and pre-eminence in the provision of diagnostic services. KMH is fortunate to be in a position to partner with an organization that has and will continue to support our corporate growth strategy and has enabled us to grow our business and realize true investor value."
Impact on Alaris
On an annualized basis, the transaction increases revenue by $2,814,800 and increases interest expense by $1,140,000; for an expected net earnings increase of $1,674,800, or $0.075 on a per share (basic) basis. Alaris expects that its payout ratio, on an annualized basis, will be reduced to approximately 85% after giving effect to the Contribution.
About Alaris:
The Company provides alternative financing to a diversified group of private businesses ("Private Company Partners") in exchange for royalties or distributions from the Private Company Partners, with the principal objective of generating stable and predictable cash flows for dividend payments to its shareholders. Royalties or distributions to Alaris from the Private Company Partners are structured as a percentage of a "top line" financial performance measure such as gross margin, same clinic sales, gross revenues and same-store sales and rank in priority to the owners' common equity position.
About KMH:
KMH provides access to rapidly-evolving medical technology, state-of-the-art diagnostic equipment and highly qualified specialists in Canada and the United States. According to KMH management, KMH has grown from a single facility in 1988 to become the largest provider of Nuclear Cardiology services in North America.
KMH services include Nuclear Medicine, Cardiology and Magnetic Resonance Imaging (MRI) diagnostic services. Physician practice management solutions by KMH further enhance patient care by providing access to specialist consultations and treatment. According to KMH management, more than 85,000 patients visit KMH annually after being referred by physicians, insurance companies, employers and other third party service providers. KMH has successfully administered more than 600,000 cardiology, nuclear cardiology and nuclear medicine diagnostic tests and more than 40,000 magnetic resonance imaging scans. KMH consistently provides a high level of service which has created a strong rapport within the healthcare community. KMH is well recognized by more than 10,000 physicians and has established a preferred provider relationship within the insurance and health services industry.
Non-IFRS Measures
The terms "distributable cash per share" and "payout ratio" (the "Non-IFRS Measures") are financial measures used in this news release that are not standard measures under International Financial Reporting Standards ("IFRS"). The Company's method of calculating the Non-IFRS Measures may differ from the methods used by other issuers. Therefore, the Company's Non-IFRS Measures may not be comparable to similar measures presented by other issuers. Payout ratio means Alaris' annualized dividend per share divided by its distributable cash per share. Distributable cash per share means Alaris' cash flow from operating activities divided by the weighted average number of common shares issued and outstanding in the share capital of the Company over such period. The Non-IFRS measures should only be used in conjunction with the Corporation's annual audited and quarterly reviewed financial statements, which are available on SEDAR at www.sedar.com.
Forward-Looking Statements
This news release contains forward-looking statements as defined under applicable securities laws. Statements other than statements of historical fact contained in this news release may be forward-looking statements, including, without limitation, management's expectations, intentions and beliefs concerning the transaction described herein including: the Distribution payable to the Company; the timing of the payment of the Distribution; the impact of the Contribution on the Company's payout ratio; expected impact on net earnings; and the expected impact of the clinic acquisitions on KMH and its financial position. Many of these statements can be identified by looking for words such as "believe", "expects", "will", "intends", "projects", "anticipates", "estimates", "continues" or similar words or the negative thereof. There can be no assurance that the plans, intentions or expectations upon which these forward looking statements are based will occur.
Statements containing forward-looking information by their nature involve numerous assumptions and significant known and unknown facts and uncertainties of both a general and a specific nature. Key assumptions include, but are not limited to assumptions that: the Partnership will grow and may require capital from Alaris in the future; the Canadian and U.S. economies will grow moderately over the balance of 2012; the businesses of the Private Company Partners will continue to grow; interest rates will not rise in a material nature over the next 12 months; and more private companies will require access to alternative sources of capital. In determining the Company's expectations for economic growth, management primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies.
The forward-looking statements contained herein are subject to numerous known and unknown risks that may cause actual results to vary from those set forth in the forward-looking statements, including, but not limited to risks associated with: general economic conditions and changes in the financial markets; risks associated with KMH and its business; and a change in the ability of the KMH to continue to pay Alaris' preferred distributions. In addition, the information set forth under the heading "Risk Factors" in the Company's Annual Information Form dated March 25, 2011 (a complete copy of which can be found on SEDAR at www.sedar.com) identifies additional factors that could affect the operating results and performance of the Company and may cause the actual results of the Company to differ materially from those anticipated in forward-looking statements.
As forward-looking statements are subject to risks, uncertainties and assumptions and should not be read as guarantees or assurances of future performance. Accordingly, readers are cautioned not to place undue reliance on any forward-looking information contained in this news release as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements. Statements containing forward-looking information reflect management's current beliefs and assumptions based on information in its possession on the date of this news release. Although management believes that the assumptions reflected in the forward-looking statements contained herein are reasonable, there can be no assurance that such expectations will prove to be correct.
The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this news release are made as of the date of this news release and Alaris does not undertake or assume any obligation to update or revise such statements to reflect new events or circumstances except as expressly required by applicable securities legislation.

Investors prefer accounting levels close to IFRS: Survey

Majority of investors want the government to keep national accounting standards as close to the international norms (called IFRS) as possible, says a survey conducted by the global accounting firm Ernst & Young.

According to a report — IFRS convergence: an investor's perspective — the firm has found that 55 per cent of Indian investors surveyed are willing to accept only a few departures from the IFRS standards set by the International Accounting Standards Board (IASB), while 28 per cent are in favour of full adoption.

It is to be noted that the Corporate Affairs Ministry has recently notified 35 accounting standards that companies will have to follow while preparing their books as per the International Financial Reporting Standard. The government has been maintaining that IFRS would not be adopted in its purest form, but deviations would be made to suit the needs of the Indian dimension. Thus, calling the norms Indian Accounting Standards.

“There are more than 60 departures from the original IFRS standards, in the norms notified by the MCA. Investors feel that in future, when any upgrading is required and made, the standards should be more closely aligned with the IFRS,” the E&Y IFRS leader Dolphy D'Souza said.

The survey also pointed out that about 89 per cent of the participants said they would prefer to see comparable numbers of two fiscal years, in the first year of adoption itself.

“According to the Ind-AS, companies in the first year of adoption of IFRS, may not provide the comparable figures in their statements,” D'Souza said.

A majority of them also felt that conversion option in a foreign currency convertible bond should be treated as derivative and taken into P&L account at fair value.

While 28 per cent participants believed the requirement in Ind-AS to apply the percentage of completion method to real estate sales was appropriate, 53 per cent were in favour of the completed contract method.

Another 19 per cent felt that an option to choose between the percentage of completion method and complete contract method should be available, the survey revealed.

While the date for the convergence is not yet clear, according to the earlier road map laid by the MCA, in the first phase large firms were to prepare their account books acceding to IFRS norms from April 2011.

The second phase will include companies with a net worth of Rs 500-1,000 crore, which will move to IFRS starting April 2013. Listed companies, having a net worth of Rs 500 crore or less, will converge to the new standards in April 2014.

Primero Amends Financial Statements for Deferred Tax IFRS Transition Adjustment

TORONTO, ONTARIO--(Marketwire - Nov. 8, 2012) -
(Please note that all dollar amounts in this news release are expressed in U.S. dollars unless otherwise indicated.)
Primero Mining Corp. ("Primero" or the "Company") (TSX:P)(NYSE:PPP) announced today that it has re-filed its consolidated financial statements and management discussion and analysis ("MD&A") for the year ended December 31, 2011 to include an IFRS transition adjustment related to deferred income taxes. In addition, the Company has amended its financial statements for the first and second quarters of 2012 but rather than re-filing those statements, has disclosed the amendments in its financial statements for the third quarter of 2012, released today.
In connection with the preparation of its financial statements for the third quarter 2012, the Company identified that during the transition to International Financial Reporting Standards ("IFRS"), it had not taken into account a methodology difference between Canadian Generally Accepted Accounting Principles ("GAAP") and IFRS with respect to translation of deferred tax assets and liabilities denominated in a currency other than the Company's functional currency (the US dollar). IFRS requires that where non-monetary assets and liabilities are measured in the Company's functional currency, but the Company's taxable profit or loss is determined in a different currency (the Mexican peso), changes in the exchange rate give rise to temporary differences that result in deferred tax assets or liabilities. Under Canadian GAAP, these temporary differences were not accounted for. As a result of the appreciation of the Mexican peso against the US dollar in 2010 (after the acquisition of the Company's San Dimas mine) and 2012 and the depreciation of the Mexican peso against the US dollar in 2011, the net cumulative impact of following the IFRS methodology as at June 30, 2012 is a decrease in the deferred tax asset of $12.3 million and an increase in deferred tax expense of the same amount, which subsequently reduced at September 30, 2012 to a decrease in the deferred tax asset of $3.8 million and an increase in deferred tax expense of the same amount. These adjustments do not affect cash taxes payable or the Company's cash flows and, consistent with other companies, are adjusted out of the Company's net income in order to report adjusted net income¹. The 2011 year end and 2012 first and second quarter financial statements have been amended to conform with IFRS.
The amendments to the financial statements of the Company for the years ended December 31, 2011 and 2010 and the six months ended June 30, 2012 are shown below. The amendments for other periods impacted by this adjustment are disclosed in the restated MD&A for the year ended December 31, 2011 or in the financial statements for the three and nine months ended September 30, 2012 which are available on the Company's website at www.primeromining.com and filed on SEDAR at www.sedar.com. The Company has also filed with the United States Securities and Exchange Commission an amendment to its annual report on Form 40-F for the year ended December 31, 2011, which includes the restated financial statements for the years ended December 31, 2011 and 2010 and the amended and restated MD&A for the year ended December 31, 2011. The amendment to the Form 40-F has been filed on EDGAR at www.sec.gov.

As at and for the year-ended December 31, 2011
(In thousands of United States dollars except per share amounts)
	As previously reported	Adjustment		As restated
Deferred tax asset	15,781	(15,438	)	343
Deferred tax recovery (expense)	7,918	(18,185	)	(10,267	)
Retained earnings (including net income impact for same period)	32,596	(15,438	)	17,158
Net income	67,829	(18,185	)	49,644
Earnings per share ($/share)	$0.77	($0.21	)	$0.56

As at and for the year-ended December 31, 2010
(In thousands of United States dollars except per share amounts)
	As previously reported		Adjustment	As restated
Deferred tax asset	6,555		2,747	9,302
Deferred tax recovery (expense)	(859	)	2,747	1,888
Retained earnings (deficit) (including net income impact for same period)	(35,233	)	2,747	(32,486	)
Net income (loss)	(31,458	)	2,747	(28,711	)
Earnings (loss) per share ($/share)	($0.85	)	$0.07	($0.78	)

As at and for the six months ended June 30, 2012
(In thousands of United States dollars except per share amounts)
	As previously reported		Adjustment		As restated
Deferred tax asset	14,055		(12,299	)	1,756
Deferred tax recovery (expense)	(4,272	)	3,319		(1,133	)
Retained earnings (including net income impact for same period)	66,179		(12,299	)	53,880
Net income	33,583		3,319		36,722
Earnings per share ($/share)	$0.38		$0.04		$0.42

(1) Adjusted net income is a non-GAAP measure. This non-GAAP performance measure does not have any standardized meaning and is therefore unlikely to be comparable to other measures presented by other issuers. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Company's performance. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Refer to the year end 2011 MD&A for a reconciliation of adjusted net income to reported net income.

About Primero
Primero Mining Corp. is a Canadian-based precious metals producer that owns 100% of the San Dimas gold-silver mine in Mexico. Primero is focused on delivering superior, sustainable value for all stakeholders with low-risk exposure to precious metals. The Company has intentions to become an intermediate producer by building a portfolio of high quality, low cost precious metals assets in the Americas.
Primero's website is www.primeromining.com.
CAUTIONARY NOTE ON FORWARD-LOOKING INFORMATION
This news release contains "forward-looking statements", within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation, concerning the business and operations of Primero. All statements, other than statements of historical fact, are forward-looking statements. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "potential", "expects", "is expected", "promising", "budget", "scheduled", "targeted", "is targeting", "estimates", "forecasts", "intends", "anticipates", "believes", "if realized", "in the near future" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will continue", "will allow", "occur" or "be achieved" or the negative connotation thereof.
Forward-looking statements in this news release include, but are not limited to, statements regarding the anticipated implications of amendments to financial statements and management's belief regarding the Company's intentions to become an intermediate gold producer.
The assumptions made by the Company in preparing the forward-looking information contained in this news release, which may prove to be incorrect, include, but are not limited to, the assumptions set forth herein and in the management's discussion and analysis and the Company's annual report on Form 40-F for the year ended December 31, 2011, as amended, on file with the U.S. Securities and Exchange Commission and its most recent Annual Information Form on file with the Canadian provincial securities regulatory authorities as well as the expectations and beliefs of management and that there are no significant disruptions affecting operations; that development and expansion at San Dimas proceeds on a basis consistent with current expectations and the Company does not change its development and exploration plans; that the exchange rate between the Canadian dollar, Mexican peso and the United States dollar remain consistent with current levels or as set out in this news release; that prices for gold and silver remain consistent with the Company's expectations; that production meets expectations and is consistent with estimations; that there are no material variations in the current tax and regulatory environment or the tax positions taken by the Company; that the Company can access financing, appropriate equipment and sufficient labour; and that the political environment within Mexico will continue to support the development of environmentally safe mining projects.
Forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause the actual results, performance or achievements of Primero to be materially different from those expressed or implied by such forward-looking statements, including impact of amendments to financial statements; the timing of financial statement amendments; the ability to maintain effective controls over financial reporting; the risks that the Company may not be able to achieve planned production levels; the Company may not be able to expand production at San Dimas; the Company may be required to change or may experience delay in its development and exploration plans with a negative impact on production; the Company may not discover mineralization in minable quantities; the exchange rate between the Canadian dollar, the Mexican peso and the United States dollar may change with an adverse impact on the Company's financial results; the Company may not be able to become an intermediate gold producer by building a portfolio of high quality, low cost precious metals assets in the Americas. Certain of these factors are discussed in greater detail in Primero's annual report on Form 40-F for the year ended December 31, 2011, as amended, on file with the U.S. Securities and Exchange Commission, and its most recent Annual Information Form and management's discussion and analysis, as amended, on file with the Canadian provincial securities regulatory authorities and available at www.sedar.com.
Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. In addition, although Primero has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Forward-looking statements are made as of the date hereof and accordingly are subject to change after such date. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of our operating environment. Primero does not undertake to update any forward-looking statements that are included in this document, except in accordance with applicable securities laws.

International Financial Reporting Standards: What You Need To Know

There are many accounting standards in the world, with each country using a version of their own generally accepted accounting principles, also known as GAAP. These allow firms to report their financial statements in accordance to the GAAP that applies to them. The complication lies within whether the firm does business in multiple countries. How can investors then deal with multiple standards, which ones are accurate, and how can corporations be compared based upon their financials? The answer to these questions lies within the adoption of the International Financial Reporting Standards, or IFRS, which is being developed and supported by the International Accounting Standards Board (IASB).
With more and more countries adopting the IFRS as their accounting standard, over 120 as of April 2011, investors and analysts should be well advised on how this transition affects company's reporting, and what it means moving forward. To do this, this article will look at the background of IFRS, the benefits, its goals, the fundamental differences between IFRS and U.S. GAAP, and go into a few of the major changes that occur within the various financial statements when converting to IFRS from U.S. GAAP.


Background and Overview of IFRS
International Financial Reporting Standards (IFRS) is a set of international accounting standards that states how certain transactions and events should be reported in financial statements. It is based upon principles rather than hard set rules, which is in contrast to U.S. GAAP, a rules-based accounting standard. As a result of this fundamental difference, IFRS allows management to use greater discretion and flexibility when preparing a company's financials.
In recent years, there has been a trend towards a common globalized accounting standard with IFRS used in many parts of the world, including the European Union, Hong Kong, Australia, Russia and Singapore, among other nations. In January 2011, Canada officially adopted the IFRS standard, with more countries switching from their own accounting requirements to the IFRS standard. As of December 2011, the United States still operates under U.S. GAAP, so it remains to be seen if they will switch as well.


Benefits of IFRS
It is believed that IFRS, when adopted worldwide, will benefit investors and other users of financial statements by reducing the cost of investments and increasing the quality of the information provided. Additionally, investors will be more willing to provide financing with greater transparency among different firms' financial statements. Furthermore, multinational corporations serve to benefit the most from only needing to report to a single standard and, hence, can save money. It offers the major benefit where it is used in over 120 different countries, while U.S. GAAP is used only in one country.


The IASB, in regards to IFRS, has four stated goals:

1. To develop global accounting standards requiring transparency, comparability and high quality in financial statements
2. To encourage global accounting standards
3. When implementing global accounting standards, to take into account the needs of emerging markets
4. Converge various national accounting standards with the global accounting standards


Impact of IFRS on Financial Statements

Differences in the Balance Sheet
A few of the differences on the balance sheet between U.S. GAAP and IFRS include the way inventory, property and equipment, and goodwill, is explained.
Inventory
Two inventory method standards normally used in the past were FIFO (first-in, first-out) and LIFO (last-in, first-out). However, LIFO is not allowed under IFRS, so firms that have used LIFO in the past under U.S. GAAP will soon have to change their inventory method to FIFO.


Property and Equipment
Also known as the fixed assets of the firm, property and equipment are reported at their initial cost less the accumulated depreciation. U.S. GAAP does not allow any upward adjustments of property and equipment, whereas under IFRS they can. This can have a profound impact on a firm's reporting. For example, if equipment is marked down, it results in a loss on a firm's income statement. However, if the asset is then marked back up under IFRS from an increase in value, then the adjustment is recorded as a gain, up to the initial cost. Any further upward adjustment will be reported directly to equity.
Goodwill
An intangible asset, goodwill is treated similarly to property and equipment. Just like with property and equipment, it is reported on the balance sheet at the initial cost less accumulated amortization. Any downward revaluation will cause a loss on the income statement and if it is marked up, which is not allowed under U.S. GAAP, and then a gain is recorded up to the initial cost amount. Any adjustment beyond that will be reported directly to equity.
Differences in the Income StatementThe criteria for revenue and revenue recognition under U.S. GAAP and IFRS are slightly different. The main philosophies are similar but U.S. GAAP provides more industry specific guidance than IFRS. A few of the differences lie within how cost of goods sold is determined, the operating expenses of the firm, and construction contracts.
Revenue Differences in Regards to Construction Contracts
Depending on the accounting method adopted, the revenue and profit for construction projects can be affected. Under U.S. GAAP, if the outcome of a project cannot be estimated, then the completed contract method is required. However, under IFRS, if the outcome of a project cannot be estimated, revenue is recognized only to the extent of contract costs, and profit is only recognized at project completion.
Cost of Goods Sold
Since LIFO is not allowed under IFRS, LIFO firms have to convert their inventory into FIFO terms in the footnotes of the financials. This difference is known as the LIFO reserve, and is calculated between the COGS under LIFO and FIFO. The benefit in doing this is an increase in the comparability of LIFO and FIFO firms. However, since everything is moving towards IFRS, FIFO will be the standard moving forward if the U.S. passes the legislation.
This has an effect on the financials of a firm. In particular, during periods of high inflation, a firm that uses LIFO will report higher COGS and lower inventory as compared to a firm that uses FIFO. Higher cost of goods sold results in lower profitability and lower profits results in lower income taxes. Lower profits will also result in lower equity for the firm, which affects retained earnings in a negative way. In contrast, in a low inflationary period, the effects mentioned are reversed. Something to keep in mind for analysts converting LIFO firms to FIFO.
Operating Expenses
IFRS does not differentiate between expenses and losses, but U.S. GAAP does. With IFRS, any losses that are due to a firm's main business are included in its operating expenses.
Impact of IFRS on Financial Ratios
Beyond the scope of this article, but important to note, is that there's an impact on more than one financial ratio when converting U.S. GAAP to IFRS. Some of them include the current and quick ratios (due to the difference in inventory methods), the interest coverage ratio (as EBIT can be affected by the difference in COGS) and return on assets (net income is affected by the COGS as well), among others. It is up to the analyst or investor to keep these in mind when making an investment decision.
Deadlines for U.S. Adoption
As of December 2011, the SEC has decided it needs a few more months before coming to a final decision on whether the U.S. will adopt IFRS. However, with over 120 countries having already adopted IFRS, the U.S. may not be far behind.
The Bottom Line
There are numerous differences between U.S. GAAP and IFRS, and this article has only touched on a few of the major changes. However, it is evident that IFRS will be the dominant accounting standard moving forward. With this in mind, analysts should take heed when comparing the financial statements of IFRS and U.S. GAAP. They should also make sure to understand the primary characteristics of IFRS, as it may be only a matter of time before the U.S. converts from U.S. GAAP to this standard