Canadian GAAP to Converge with International Standards
Canada’s Accounting Standards Board (AcSB) has announced that Canada will align its accounting standards for public companies with International Financial Accounting Standards (IFRS). AcSB chairman Paul Cherry said that the decision came after extensive consultation with Canadian companies and investors who opposed copying the “rules-oriented” U.S. generally accepted accounting standards (U.S. GAAP). Canada joins the European Union and Australia, who have already adopted IFRS.
Canadian public companies that wish to use U.S. GAAP can continue to do so if they meet the current requirement that they be registered with the U.S. Securities and Exchange Commission (SEC), the Globe and Mail report says.
The decision to achieve convergence with IFRS, within a period of five years, is part of AcSB’s strategic plan for the future of Canada’s accounting for public and private companies and not-for-profit organizations. “Our fundamental premise and experience is that ‘one size does not necessarily fit all’ when it comes to the divergent needs of the full range of Canadian reporting entities and their stakeholders,” Cherry said, according to a press release from the Canadian Institute of Chartered Accountants. “For example, developments in global markets are important for public companies and their investors, but not so important for private businesses and not-for-profit organizations.”
AcSB has begun, “as a matter of urgency,” a comprehensive examination of the financial reporting needs of private companies, the Institute of Chartered Accountants said. AcSB will continue to apply the provisions of GAAP to not-for-profits as they are “applicable to the circumstances.”
Canadian companies currently registered with the SEC include Rogers communications, Inc. and Nortel Networks Corp., CFO.com says. Each has a market cap that exceeds $14 billion.