Air Canada 2010 Annual Report Download - page 59

2010 Management’s Discussion and Analysis
59
16. ACCOUNTING POLICIES
16.1
The following information is provided solely for the purpose of allowing investors and others to obtain a better understanding
of the Corporation’s IFRS changeover plan and the resulting expected effects on the Corporation’s financial statements and
operating performance measures. Readers are cautioned that it may not be appropriate to use such information for any
other purpose. The accounting policy differences identified in this MD&A should not be considered as complete or final as
further changes, or other effects and other policy differences may be identified. In addition, the information provided reflects
the Corporation’s current assumptions, estimates and expectations, all of which are subject to change. Circumstances may
arise, including changes in IFRS, regulations or economic conditions, which could change these assumptions, estimates or
expectations or the information provided.
The Canadian Accounting Standards Board has confirmed January 1, 2011 as the changeover date for Canadian publicly
accountable enterprises to start using International Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board. Commencing with the first quarter of 2011, Air Canada’s financial results will be presented in
accordance with IFRS. IFRS uses a conceptual framework similar to Canadian GAAP, but there are significant differences in
recognition, measurement and disclosures.
The Corporation has developed a plan to convert its consolidated financial statements to IFRS and has established a
cross-functional IFRS team represented by managers in the areas of Accounting, Taxation, IT and Data Systems, Internal
Control and Processes, Planning, Compensation, Treasury, Investor Relations and Legal. Updates regarding the progress of
the conversion plan are provided to the Corporation’s Audit, Finance and Risk Committee on a quarterly basis.
Summary of the IFRS changeover plan
The plan addresses the impact of IFRS on Accounting policies and implementation decisions, Infrastructure, Business
activities and Control activities. A summary status of the key elements of the changeover plan is as follows:
Key Activities Status
Accounting policies and
implementation decisions
Identification of differences in Canadian GAAP and IFRS
accounting policies;
Selection of the Corporation’s ongoing IFRS policies;
Selection of the Corporation’s IFRS 1 First-time Adoption
of International Financial Reporting Standards (“IFRS 1”)
choices;
Development of financial statement format;
Quantification of effects of change in accounting policies and
application of IFRS 1 exemptions.
As further described below, the Corporation
has identified and quantified the significant
differences between accounting policies under
Canadian GAAP and accounting policy choices
under IFRS, both on an ongoing basis and
with respect to certain choices available on
conversion, made in accordance with IFRS 1.
Infrastructure
Financial reporting expertise
Development of IFRS expertise. The Corporation has provided training for key
employees and stakeholders. Additional training
will be ongoing until full adoption in 2011.
Infrastructure
Information technology and
data systems
Development of systems solution for transition period and
post-convergence period.
The Corporation has determined system
requirements and solutions. The impact with
respect to Information technology and data
systems is due to the change in accounting for
property, plant and equipment. These changes
have largely been implemented at nominal cost.
Business activities
Financial covenants
Identification of impact on financial covenants and business
practices.
The Corporation is in the process of finalizing
its analysis on the contractual implications of
IFRS on any financing relationships and other
arrangements, including discussions with 3rd
parties.
UPDATE ON THE PROGRESS OF THE INTERNATIONAL FINANCIAL REPORTING STANDARDS
CONVERSION PLAN