The credit crisis has already impacted the balance sheets of Canadian businesses, and could have long lasting implications for businesses going forward, partners at Ernst & Young said on Tuesday.

Beginning with the near-term as year-end financial reporting season approaches, companies are set to face unprecedented reporting challenges, according to Douglas Cameron, professional practice director at Ernst & Young.

He warned that despite resistance to fair value reporting — particularly in a year marked by drastic swings in asset values — the practice is here to stay.

“Fair value accounting for financial assets and liabilities will be with us for the foreseeable future,” he said.

But companies should familiarize themselves with recent changes by the Accounting Standards Board that allow for the classification or reclassification of securities out of the trading portfolio, into available for sale or held to maturity classes, Cameron said.

“That means that you will no longer be having to necessarily put changes in fair value through earnings as they occur,” he said. “That’s been an important recognition of conditions in the marketplace that people are facing.”

Still, companies will face widespread reporting challenges related to disclosure, Cameron said. Companies will need to spend more time revaluating financial statements and MD&A disclosure around financial risks, foreign exchange levels, the valuation of financial assets and derivatives, and credit and liquidity risks, he said.

“All of those things are going to need to be rethought, simply because we’re in an environment where these issues are rapidly changing.”

In addition, companies can expect higher accounting expenses and funding requirements for pension plans in cases where the value of pension assets has fallen.

Other challenges Canadian business can expect going forward are continued difficulties raising financing, according to Ernst & Young partner Stephen Lewis. He said trouble at major U.S. and international financial institutions is reducing available funds for Canadian firms.

Banks will continue to restrict lending until they witness the full extent of the recession, Lewis added.

Businesses can also expects lengthier due diligence processes, which is already taking twice as long as it used to, according to Lewis.

“You’re going to see a lot more attention paid to doing some original due diligence rather than relying on credit ratings in today’s environment,” he said.

But the credit crunch also offers businesses new opportunities in tax strategies that didn’t exist a few months ago, according to Karen Atkinson, a tax partner with Ernst & Young. She said tax professionals could utilize strategies to preserve cash and monetize losses and other tax deductions for businesses.

“Tax planning can provide some interesting ways to get some cash into your company’s treasuries,” Atkinson said.

She encouraged companies to explore the possibility of recovering taxes from prior years and ensure profits are deferred into the future wherever possible.