July 2009

Investment funds: Transition of Canadian GAAP to IFRS

January 1, 2011 is the official transition date to International Financial Reporting Standards (IFRS) from Canadian GAAP for all publicly accountable enterprises, including investment funds. Even though Canadian accounting standards issued in recent years, particularly S3855, S3862 and S3863, have brought investment fund reporting under Canadian GAAP closer in line with IFRS, various differences still remain that are expected to present challenges for investment funds during this regulatory transition.

CIBC Mellon is dedicated to facilitating the transition to IFRS for its investment fund clients. To support our commitment, we have developed a comprehensive IFRS changeover plan. This changeover plan is based on research, our participation in the Investment Fund Institute of Canada’s accounting sub-advisory group, insight from CICA’s “IFRS Implementation Guidance for Investment Funds” report and closely monitoring and analysing the numerous updates from major public accounting firms.

As part of our changeover plan, we have established a cross-functional IFRS group represented by individuals from our fund valuation, financial reporting and tax, and business solutions teams to oversee our efforts. We have also created specialized working groups to address the different issues that are expected to have the most impact on investment funds. These issues include consolidation, puttable instruments, IFRS 7 (FAS 157 level disclosures), income taxes and effective interest method. The most urgent of the IFRS issues is the changes to S3862, which will require certain FAS 157 pricing level disclosures for fiscal years ending after September 30, 2009. We are currently designing and testing the policies and procedures to implement reporting capabilities for this requirement. Furthermore, we are actively working on creating financial statement templates that are in compliance with IFRS, along with establishing our system readiness.

We are dedicated to making the transition to IFRS seamless for all of our clients, and we will communicate future IFRS changes that affect investment funds as necessary. If you have any questions about CIBC Mellon’s efforts to prepare for IFRS, please contact your relationship manager.

By Cely So Yao, senior manager, investment fund services

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Trade Talk® is provided for general information purposes only and CIBC Mellon Global Securities Services Company, CIBC Mellon Trust Company, CIBC, The Bank of New York Mellon Corporation and their affiliates make no representations or warranties as to its accuracy or completeness. Readers should be aware the content of this publication should not be regarded as legal, tax, accounting, investment, financial or other professional advice nor is it intended for such use.

IN THIS ISSUE

Table of contents A message from our CEO The long and short of it The inflation debate Taking care - CIBC Mellon's inaugural corporate social responsibility review An interview with Harry Culham: Opportunities for institutional investors Investment funds: Transition of Canadian GAAP to IFRS

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