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TD BANK GROUP ANNUAL REPORT 2010 MANAGEMENT’S DISCUSSION AND ANALYSIS78
KEY ACTIVITIES AND MILESTONES RELATED PHASE STATUS
5. Business Impacts
• Identify significant business impacts of the
transition to IFRS, including forecasting
processes, compensation arrangements,
regulatory capital, hedging activities, and
other material contracts.
Detailed Assessment;
Implementation
• IFRS impacts will be layered into the Bank’s forecasting and
capital processes.
• Significant impacts to the Bank’s compensation arrangements
are not anticipated.
• Process and system changes have been completed to address
changes to the Bank’s hedging activities, largely due to the
impact of securitized assets that no longer qualify for derecogni-
tion under IFRS.
• Identify the impacts of IFRS on the Bank’s
external clients adopting IFRS, and the
impact to their financial statements and
loan covenants.
• The Bank is reviewing disclosures and other available information
related to potential changes in financial statements of external
clients, who are adopting IFRS, in order to assess the potential
impact on the Bank’s lending practices. This will continue
through fiscal 2011.
6. Information Technology
• Identify changes required to information
technology systems and design processes
to prepare an IFRS opening Consolidated
Balance Sheet.
• Determine a solution for capturing financial
information under Canadian GAAP and IFRS
during fiscal 2011.
• Design, develop and test related process
and technology changes.
Detailed Assessment;
Design and Solution
Development
• A solution for capturing financial information under Canadian
GAAP and IFRS during fiscal 2011 was designed and developed
• A reporting environment has been tested and is being imple-
mented to track all transition adjustments from Canadian GAAP
to IFRS and to produce the IFRS opening Consolidated Balance
Sheet, fiscal 2011comparatives, related transitional reconciliations
and note disclosures.
• Test other new processes and information
technology.
Implementation • Testing of other new processes and technology changes, including
the IFRS hedging processes and systems is currently underway.
7. Control Activities: ICFR and DC&P; Including Investor Relations and Communications Plans
•
Identify and update changes in internal
controls based on required process and
technology changes.
• For all significant changes to policies and
procedures identified, assess effectiveness
of ICFR and DC&P and implement any
necessary changes.
• Design and implement internal controls over
the IFRS transition process.
Design and Solution
Development;
Implementation
• Stakeholder involvement has commenced in the design and
implementation of controls and procedures for both the IFRS
transition process and other changes that will have an on-going
impact, as a result of transition.
• Design a communication plan to convey
impacts of the transition to IFRS to external
stakeholders.
•
The Bank is assessing its communication plan regarding the antici-
pated effects of IFRS transition to certain external stakeholders.
• Communicate impact of the IFRS transition
to external stakeholders.
• Communication will continue to be made through the quarterly
and annual reports, with further detail being provided as key
accounting policy and implementation decisions are made.
and (iv) Currency Translation. The application of certain of these
exemptions will have an impact on the Bank’s IFRS opening retained
earnings and may also impact accounting in periods subsequent to
transition to IFRS. These exemptions, coupled with certain other elections
will also have an impact on the Bank’s regulatory capital. However,
OSFI has issued guidance which permits the Bank to phase-in the impact
of IFRS on Tier 1 capital over a five-quarter period beginning in first
quarter of 2012. The Bank has prepared preliminary estimates of the
impact of the significant exemption options it expects to use based
on the most current information available. These estimates may change
significantly as the Bank finalizes its IFRS 1 elections and as further
information becomes available.
b) First-Time Adoption of IFRS
Accounting changes resulting from the transition to IFRS will generally
be reflected in the Bank’s IFRS opening Consolidated Balance Sheet
on a retrospective basis. Where transition has been accounted for on
a retrospective basis, the IFRS opening Consolidated Balance Sheet
will be presented as if IFRS had always been applied and adjustments
for any differences between Canadian GAAP and IFRS will affect IFRS
opening retained earnings. Initial elections upon adoption of IFRS (IFRS
1) specify certain mandatory exceptions to the retrospective application
of certain standards, and permit exemption options for certain other
standards. For the Bank, there are significant exemption options available
in the areas of accounting for the following: (i) Employee Future Benefits,
(ii) Business Combinations, (iii) Designation of Financial Instruments,