To review standard bank/credit agreement covenants and their calculation;
To gain an understanding of how the adoption of IFRS will affect these covenant calculations (for example, balance sheet restatements, the potential for more earnings volatility and the recognition of assets and liabilities that were not previously recognized under Canadian GAAP);
To gain an understanding of the implications for borrowers and (for example, the renegotiation of credit agreement, bond indentures, long term leases; long term contracts).
To understand the implications on agreements and long term contracts. The senior management of Canadian Reporting Entities should also consider how the IFRS transition and adoption will affect shareholder, joint venture, operating, compensation agreements, and any other agreements that use financial information, whether they use GAAP standards or not. The cascading financial reporting requirements (identification of changes to agreements in the MD&A, and revisions to previous filings) also need to be considered.
Who Will Benefit:
Anyone involved in entities with financial covenants who may be affected by adoption of IFRS.