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Accounting Standards

There are a variety of different ways to present financial information worldwide. We need to know which standard we are using when analyzing financial issues for a client or a case study. The standard used by the client can change the accounting treatment, and the advice we provide. For example, in Canada the following standards are used, based on the type of company:

Public Companies*: Must use

  • International Financial Reporting Standards (IFRS)

Private Companies: Can choose between:

  • International Reporting Standards (IFRS)

- More complex

- Uses International Accounting Standards (IAS)

  • Canadian Accounting Standards for Private Enterprises (ASPE)

- Less complex

- Uses Generally Accepted Accounting Principles (GAAP)

  • Disclosed Basis of Accounting (DBA)

- Custom reporting basis

- Non-standard and usually based on requirements of stakeholders (eg: lenders, owner arrangements, etc…)

*Public companies in many countries, have no choice but to use the IFRS framework. If our client (or case study) is a public company, and they do not specify which accounting standard they are using, we can safely assume that they are using IFRS. If our client is not yet a public company, but would like to go public in the near future, we may need to counsel them on how to transition to the IFRS reporting framework.

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