Canada approves plan for convergence with IFRSs

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11 Jan 2006

Canada's Accounting Standards Board (AcSB) has ratified a new Strategic Plan for the Direction of Accounting Standards that will significantly affect the way financial reporting will be carried out in Canada in the future.

The AcSB will pursue separate strategies for three major categories of reporting entities: public companies, private businesses and not-for-profit organisations.

  • For public companies, the AcSB's objective is to move to a single set of globally accepted high-quality standards. The AcSB has concluded that this objective is best accomplished by converging Canadian GAAP with International Financial Reporting Standards (IFRSs) over a transitional period. Australia and the European Union have already adopted IFRS and other countries have convergence programs underway. The AcSB will develop and publish a detailed implementation plan for achieving convergence later this year. The AcSB expects that the transition period will take approximately five years, but the precise timing will depend on many factors, and will be continuously monitored throughout the process. At the end of that period, Canadian GAAP will cease to exist as a separate, distinct basis of financial reporting for public companies.
  • For private businesses, the AcSB has begun, as a matter of urgency, a comprehensive examination of their financial reporting needs and will determine the most appropriate model for meeting those needs.
  • For not-for-profit organisations, the AcSB will continue to apply those elements of GAAP for profit-oriented enterprises that are applicable to their circumstances, and develop other standards dealing with the special circumstances of the not-for-profit sector.

The AcSB recognizes that some Canadian public companies that have significant market followings in the United States might prefer to use US GAAP. The Canadian Securities Administrators already permit those Canadian public companies that are SEC registrants to use US GAAP instead of Canadian GAAP.

The AcSB expects to publish a final version of its strategic plan by 31 March 2006.

Click to view the Strategic Plan for the Direction of Accounting Standards (PDF 139k).

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