All publicly accountable companies in Canada are required to adopt International Financial Reporting Standards (IFRS) as a replacement of Canadian Generally Accepted Accounting Principles (GAAP) for external reporting purposes beginning Jan. 1, 2011, with comparative figures for 2010. For insurance companies in particular, the adoption of IFRS will take place over a multiyear transition period as the accounting requirements for insurance are still being developed by the International Accounting Standards Board (IASB) and are not expected to be effective until at least 2012.
Many of the larger companies in Canada have been dealing with IFRS implementations over the past 18 months or longer in order to be well prepared for the changes to financial reporting introduced under IFRS. Depending on the industry, the changes and impact on systems and IT infrastructure can be quite significant, as is the case with rate-regulated entities or those with capital-asset-intensive businesses. For most insurance companies in Canada, the initial impacts of IFRS adoption in 2011 will not be substantive as the more significant changes are expected after 2012 due to the evolving accounting standards for insurance.
Manulife has been quite fortunate in that we made a conscious decision a number of years ago to invest in an IT platform that is flexible and that can accommodate multiple reporting bases. As a large global organization we report on different accounting bases for every jurisdiction in which we operate -- many of which are live within our general ledger and IT framework. Additionally, due to a collaborative, hands-on relationship that we have built with our vendor, we are able to adapt and modify our systems to meet the continually evolving financial reporting requirements. As a result, we have not needed to make any significant changes to systems to accommodate IFRS.