Fiberbuilt Manufacturing Inc. is one of thousands of Canadian private companies currently preparing to adopt new accounting rules for preparing financial statements.
Chris Pollock, controller at the Calgary-based manufacturer of industrial brushes, says he anticipates a smooth transition to the new Canadian generally accepted accounting principles (GAAP) for private enterprises.
But Pollock isn't taking any chances. He's starting to prepare now for Fiberbuilt's move to the new rules, which the Accounting Standards Board released late last year.
Fiberbuilt makes industrial brushes for an amazing range of applications in a dozen industries. The applications range from commercial fruit and vegetable washing to pipeline cleaning in the oil patch. The company is also the world's leading supplier of golf mats for driving ranges.
Pollock says the company, a BDC Financing and Consulting client, will adopt the new accounting standards for its 2010 financial statements. He's already studying the changes and discussing them with Fiberbuilt's outside accounting firm.
"My plan is to consult with the third-party accounting firm that prepares our financial statements," says Pollock, a certified management accountant. "Our year-end is September 30, so we have a few months."
"I want to make sure that we have all the information we need before the year-end so the accounting firm can go ahead with its review and there is no delay in the preparation of the review engagement statements."
Pollock is positive about the new standards, saying they encompass welcome simplifications. They also reduce the burden of disclosure requirements.
Private companies must adopt either Canadian GAAP for private enterprises or the International Financial Reporting Standards, a more complex set of rules designed principally for use by public companies. Companies must choose one for fiscal years beginning on or after January 1, 2011. The vast majority of private companies are expected to select the new private enterprise standards.
Pollock doesn't anticipate a lot of changes to his company's current accounting policies or a large outlay of money to implement the transition. It will mostly be up to Fiberbuilt's accounting firm to ensure the company is on track, he says.
"I certainly think it will take some of my time," he says. "But I'm going to use our auditors as a source of information and reassurance that our accounting policies are in compliance with the new standards. They are the ones we pay and who are charged with ensuring that our financial statements are reported in the fashion that is required by the new standards."
Besides discussing the changes with Fiberbuilt's accountants, Pollock anticipates speaking to the company's bankers, who are the primary users of the financial statements.
"I think banks want to make sure that everything is to the proper standards, and that's why they rely on us to have our review engagement done every year-end."
His advice to other companies is to start preparing for the transition now.
"It's important to familiarize yourself with the new standards and educate yourself," Pollock says. "Take some time and review the documents."
Content in this section is provided in partnership with the Business Development Bank of Canada. BDC provides entrepreneurs with financing, venture capital and consulting services. To find out more go to BDC.ca.
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