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TD BANK GROUP ANNUAL REPORT 2010 MANAGEMENT’S DISCUSSION AND ANALYSIS82
ACCOUNTING
POLICY AREA
OTHER DIFFERENCES IN ACCOUNTING TREATMENT
Provisions and
Contingent
Liabilities
IFRS requires a provision to be recognized when it is more likely than not that an outflow of resources will be required to
settle the obligation, while a provision is recorded when it is probable that an outflow of resources will be required under
Canadian GAAP. IFRS also requires a provision to be recognized when a contract becomes onerous, while Canadian GAAP
only requires recognition of such a liability in certain situations. The Bank is continuing to review all potential obligations to
determine if any additional provisions are required.
Share-based
Payments
Under IFRS, the cost of share-based payments is recognized over the period that an employee provides the service to earn
the award. This period is generally equal to the vesting period, and may include a period prior to the grant date. Under
Canadian GAAP, the Bank does not recognize an expense before the grant date.
Impairment
of Long-lived
Assets
IFRS requires a one-step impairment test for identifying and measuring impairment, comparing an asset’s carrying value
to the higher of its value in use and fair value less cost to sell. Under Canadian GAAP, an impairment analysis based on
discounted cash flows is completed only if the asset’s undiscounted cash flows are below its carrying value.
Previously recognized impairment losses must be reversed when a change in circumstances indicates that the impairment
has been reduced, other than for goodwill and indefinite-lived intangible assets. Reversals of impairment losses are not
permitted under Canadian GAAP.
d) Summary of Other Differences
Below are selected additional changes in accounting policies, which
the Bank expects to have a lower impact on its Consolidated Financial
Statements and which require limited process change.
IFRS generally requires additional disclosures than under Canadian GAAP.
As a result, the Bank expects to have additional disclosures, particularly
with respect to related party transactions, insurance, provisions, financial
instruments and income taxes; along with the IFRS transitional disclo-
sures. In addition, classification and presentation may be different for
some balance sheet and income statement items. The Bank is currently
analyzing the overall impact of the classification and presentation
changes on its Consolidated Financial Statements.
e) Other Developments to IFRS
The IASB continues to make changes to IFRS to improve the overall
quality of financial reporting. A number of the potential areas of
change are mentioned above. In addition, the IASB has a number of
other important ongoing standard setting projects. These projects will
address such matters as accounting for income taxes, leases, provisions
and contingent liabilities, and disclosures pertaining to various topics,
among other items.
The IASB is also in the process of considering significant changes
to accounting guidance on financial instruments, including hedge
accounting and other financial instruments topics such as impairment
of financial assets. It is likely that these changes will not be mandatory
for the Bank until after transition. A new standard dealing with classifi-
cation and measurement of financial assets has already been released
by the IASB. However, this new standard will not be adopted by the
Bank until their mandatory date of fiscal 2014.
The Bank is actively monitoring all of the IASB’s projects that are
relevant to the Bank’s financial reporting and accounting policies and
adjusting its IFRS project plan accordingly.
The differences identified in this transitional disclosure should
not be regarded as an exhaustive list and other changes may result
from the transition to IFRS. Furthermore, the disclosed impacts of
the transition to IFRS reflect the most recent assumptions, estimates
and expectations, including the assessment of the IFRS expected to
be applicable at the time of transition. As a result of changes in circum-
stances, such as economic conditions or operations, and the inherent
uncertainty from the use of assumptions, the actual impacts of the
transition to IFRS may be different than those presented above.
U.S. GAAP
For the future accounting changes related to U.S. GAAP, please see
the Reconciliation of Canadian and U.S. Generally Accepted Accounting
Principles contained in the Bank’s annual report on Form 40-F for
fiscal 2010 filed with the U.S. SEC and available on the Bank’s website
at http://www.td.com/investor/index.jsp and at the SEC’s website
(http://www.sec.gov).