CANADA: FIRST COUNTRY TO REQUIRE FINANCIAL STATEMENT DISCLOSURE OF YEAR 2000 UNCERTAINTY
TORONTO, July 8 /CNW/ - The Canadian Institute of Chartered Accountants
(CICA) today released accounting and auditing guidance on the Year 2000 issue,
making Canada the first G7 country to approve guidance for financial statement
disclosures relating to this important business challenge. In keeping with the
chartered accountant's role to serve the public interest, three new assurance
guidelines and one new accounting guideline have been published.
''The Year 2000 issue poses an immediate and significant challenge to
businesses around the world. Through appropriate financial statement
disclosure, these new guidelines will ensure that the public investor is aware
of the issue,'' said Michael H. Rayner, FCA, CICA President and Member of
Industry Canada's Task Force Year 2000.
The accounting guideline provides a balanced approach to disclosures
about the Year 2000 issue. It discusses the nature and extent of Year 2000
information that an entity may wish to disclose, and the most appropriate
vehicle for disclosing this information. In particular, it sets out financial
statement disclosure requirements for two circumstances:
1. In normal situations there is a minimum requirement for financial
statements to disclose the uncertainty the Year 2000 issue causes for
future financial results. Such uncertainty disclosure, normally
beyond the scope of financial statements, is required because of the
pervasiveness of the Year 2000 issue, its potential to cause
significant systems failures, and the fact that it will impact all
entities at approximately the same time.
2. There is a disclosure requirement when management determines that the
entity's ability to continue as a going concern is jeopardized. In
that event, the financial statements will provide explicit disclosure
of the problem.
As well as these minimum disclosure requirements, companies are
encouraged to disclose qualitative information about the Year 2000 issue in
annual reports or other communications with shareholders and other
stakeholders.
Guidelines to help auditors with the Year 2000 were also released. This
guidance notes management's responsibility to take reasonable steps to ensure
that the entity will cope with, and survive the Year 2000 issue. The auditor's
responsibility is related to detecting material misstatements in financial
statements, whether caused by the Year 2000 issue or some other cause. In
response to confusion about the auditor's role, this guidance clarifies that
the auditor is not responsible for providing assurance that an entity is, or
will be, ready for the year 2000.
Copies of these new guidelines, together with the CICA's other Year 2000
publications, are available on the CICA web site at www.cica.ca.
The CICA, together with the provincial and territorial institutes of
chartered accountants, represent a membership of 60,000 professional
accountants in Canada and Bermuda. The CICA sets accounting and auditing
standards for business, not-for-profit organizations and government. It issues
guidance on control and governance, publishes professional literature,
develops continuing education programs and represents the CA profession
nationally and internationally.
For further information: Audrey Gouskos, (416) 204-3265,
Audrey.gouskos@cica.ca
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