Cogeco 2009 Annual Report Download - page 57

56 COGECO CABLE INC. 2009 Consolidated financial statements
viii. HARMONIZATION OF CANADIAN AND INTERNATIONAL ACCOUNTING STANDARDS
In March 2006, the Accounting Standards Board of the CICA released its new strategic plan, which proposed to abandon Canadian
GAAP and effect a complete convergence to the IFRS for publicly accountable entities.
In April 2008, the CICA published an exposure draft as guidance which requires the transition to IFRS to replace Canadian GAAP
as currently employed by Canadian publicly accountable enterprises. In March 2009, the CICA issued its second exposure draft on
that matter which addresses additional IFRS standards, considers comments received to date and clarifies certain matters. In
October 2009, the CICA issued a third exposure draft which addresses additional IFRS standards and completes the process of
incorporating existing IFRS into Canadian GAAP. The changeover will occur no later than fiscal years beginning on or after
January 1, 2011. Accordingly, the Corporation expects that its first interim consolidated financial statements presented in
accordance with IFRS will be for the three-month period ending November 30, 2011, and its first annual consolidated financial
statements presented in accordance with IFRS will be for the year ending August 31, 2012.
IFRS uses a conceptual framework similar to Canadian GAAP, but there are significant differences in recognition, measurement and
disclosure requirements. The Corporation has established a project team including representatives from various areas of the
organization to plan and complete the transition to IFRS. This team reports periodically to the Audit Committee, who oversees the
IFRS implementation project on behalf of the Board of Directors. The Corporation is assisted by external advisors as required.
The implementation project consists of three primary phases, which may occur concurrently as IFRS are applied to specific areas of
operations:
• Scoping and diagnostic phase — this phase involves performing a high-level impact assessment to identify key areas that are
expected to be impacted by the transition to IFRS. The result of these procedures is the ranking of IFRS impacts in order of
priority to assess the timing and complexity of transition efforts that will be required in subsequent phases.
• Impact analysis, evaluation and design phase — in this phase, each area identified from the scoping and diagnostic phase will
be addressed in order of descending priority, with project teams established as deemed necessary. This phase involves
specification of changes required to existing accounting policies, information systems and business processes, together with
an analysis of policy choices permitted under IFRS and the development of draft IFRS financial statement content.
• Implementation and review phase — this phase includes execution of changes to information systems and business
processes, completing formal authorization processes to approve recommended accounting policy changes and training
programs across the organization, as necessary. It will culminate in the collection of financial information necessary to compile
IFRS-compliant financial statements, embedding IFRS in business processes, eliminating any unnecessary data collection
processes and finally the approval by the Audit Committee of the IFRS consolidated financial statements. Implementation also
involves additional staff training with the deployment of revised systems.
The Corporation completed the scoping and diagnostic phase during fiscal 2009, and is now conducting the impact analysis,
evaluation and design phase. As implications of the conversion are identified, impacts on information technology, data systems and
business activities will be assessed. As such, the Corporation has identified the need to implement a new version of the Oracle
financial management and accounting system as a requirement for the transition from Canadian GAAP to IFRS. A project for this
conversion has been initiated and the Corporation expects to have completed its new system implementation by its migration date to
IFRS.
The conversion project is progressing according to the established plan and the Corporation expects to meet its target date for
migration.
C) REVENUE RECOGNITION
The Corporation considers revenue to be earned as services are rendered, provided that ultimate collection is reasonably assured.
The Corporation earns revenue from several sources. The recognition of revenue from the principal sources is as follows:
• Revenue from Cable Television, HSI, Telephony and other telecommunication services are recognized when services are
rendered;
• Revenue generated from sales of home terminal devices is recorded as equipment revenue upon activation of services as
management considers the sale of home terminal devices as a single unit of accounting of a multiple element arrangement;
• Installation revenue is deferred and amortized over the average life of a customer’s subscription for residential customers,
which is four years, and over the term of the contract for business customers. Management considers that installation revenue
is part of a multiple element arrangement and has no standalone value. Accordingly, installation revenue is deferred and
amortized at the same pace as revenue from Cable Television, HSI, Telephony and other telecommunications services are
earned;
• Promotional offers are accounted for as deductions from revenue when customers take advantage of such offers.
Amounts received or invoiced that do not comply with these criteria are accounted for as deferred and prepaid revenue.