Investors are being warned about accounting changes that publicly traded Canadian companies need to make in 2011.
They have to begin compiling their financial statements according to International Financial Reporting Standards (IFRS) instead of Canadian Generally Accepted Accounting Principles (GAAP). And the transition will alter accounting figures and financial ratios — as a reportfrom the Certified General Accountants Association of Canada (CGA-Canada) highlights.
“Investors and their advisors need to be particularly vigilant during this transition phase,” cautions Rock Lefebvre, Vice-President, Research and Standards, CGA-Canada. “Comparing financial ratios under the two reporting regimes isnt straightforward.”
Cash-flow analysis may be a much more reliable assessment tool, he adds.