Before we get into what accounting standards are used in Canada, let’s talk about accounting standards in general.
What are Accounting Standards?
These are the generally accepted rules by which accountants can prepare financial statements. They are referred to as GAAP or Generally Accepted Accounting Principles.
Certified accountants will usually be preparing financial statements using GAAP standards. There is such a thing as non-GAAP reporting, but the reports have less credibility in Canada if non-GAAP principles are used.
And what accounting standards are acceptable in Canada?
Businesses that are publicly accountable are required to use the International Financial Reporting Standards or IFRS. Businesses that are not publicly accountable may use IFRS or they may use Accounting Standards for Private Enterprises (ASPE).
Accounting Standard for Private Enterprises (ASPE) are set by the Accounting Standards Board of the Canadian Institute of Chartered Accountants (AcSB).
There are separate and different accounting standards for Canadian pension plans, and also for not-for-profit entities. These each have their own standards set by the AcSB.
There may be some exceptions to these general rules. For example, if a company must also do reporting in another country, then different rules may apply.
Financial statements can feel overwhelming to business owners, but with a good accountant on your team, things will be much easier for you.
If your accounting has got you down and you’re concerned about your financial statements, we would be happy to help you prepare them. Contact us if you need a certified accountant to help you with that or anything else related to personal or business taxation.
If you have any questions about this article or GST, in general, or you want to make an appointment with an accounting professional at Naicker & Associates, please contact us at (604) 469-9369. We are based in Port Moody, BC.