International Financial Reporting Standards (IFRS) are a set of accounting standards which have been accepted by many nations globally for a long while. They’re made by the International Accounting Standards Board (IASB;
a group of 15 experts from many different countries). They also are principle based, which is very like what Canada has in place now.

Canada has already got a similar set of 5 rules in place (principle based Canadian GAAP) and has been aligning itself with IFRS for years now. After entirely adopting IFRS, Canadian firms will be in a position to compete more on a global market because their financial statements will be immediately comparable to those of firms from other countries that follow IFRS. It’ll minimize the amount of reconciliations that must be performed to align financial statements used with different standards, and will save on cash and time.

Canada has developed GAAP for Non-public Ventures which is a collection of rules for firms that don’t trade stocks on the stock market. They are simplified, they use a lower number of fair values, and they are easier to follow for the private enterprises. GAAP for Private Enterprises has been “updated” and these new standards are called Accounting Standards for Private Enterprises, or ASPE.

Public enterprises must begin following IFRS for fiscal years beginning on or after January 1, 2011. Non-public companies must select between IFRS and ASPE for financial years beginning on or after Jan 1, 2011 also. For firms running with the calendar year, the 1st fiscal year end in which they must adopt either IFRS or Accounting Standards for Private Enterprises (ASPE) would be December 31, 2011.

A company cannot mix and match which guidelines to observe from which set of standards. They must select one or the other. For full information it is recommended that you seek the advice of a chartered accountant.

Rob Green is an independent Vancouver accounting article writer for TWM & Co., an accounting firm in Vancouver, BC