Canadian Private Enterprises will soon need to make a choice
Canadian publicly accountable enterprises will be required to use International Financial Reporting Standards (IFRS) for fiscal years beginning January 1, 2011. What about Canadian private companies?
Canadian Private companies will have an option to adopt one of the two following sets of standards:
- International Financial Reporting Standards (IFRS)
- Accounting Standards for Private Enterprises (ASPE)
Both standards would be for annual financial statements relating to fiscal years beginning on or after January 1, 2011.
Which standards is the best choice for your enterprise?
When going through the process of which standard to adopt the following decision tree should be used as a guide:
Private companies should consider IFRS if:
1. Plans to issue equity for growth, obtain external financing from Canadian and Foreign Banks, competing with public companies for access to credit, is a foreign subsidiary whose parent reports in accordance with IFRS .
2. A Private company should consider ASPE if it: Has no plans to access the public equity markets, no plans to obtain debt from outside of Canada, wants current reporting that is simple with minimal complexities, prepare financial statements for owners and tax compliance.
The Advantages of ASPE
Canadian Market place is familiar with the framework, more emphasis on historical cost , any private company can use the ASPE standards regardless of size.
1. Do you agree with the two separate standards?
2. As a professional Accountant, should we specialize in IFRS or ASPE?
3. Do you feel that the public will be confused by adopting two different Accounting Frameworks?