The constant expanding and fluidity of the global economy has
shrunken our world, creating an interactive village. Increasing
business connectivity and cross-border interactions have led to a
need for a common financial language and a common yardstick to
compare financial performance.
In response to globalization, Canada is actively participating
in the international standards scene. In 2011, Canada joined
approximately 90 countries by adopting the International Financial
Reporting Standards (IFRS), as issued by the International
Accounting Standard Board (IASB). To accommodate Canada's
unique market, the Canadian accounting standards body – the
AcSB – mandates that all publicly accountable enterprises
adopt IFRS with adoption remaining optional for all other entities.
For these entities, the AcSB has established accounting standards
for private enterprises, as well as standards for not-for-profit
organizations and pension plans.
Although our major business partner, the United States of
America, has not adopted IFRS, it is a member of the IASB, and an
active participant in various international projects with the IASB.
Furthermore, the Securities and Exchange Commission will accept
financial statements prepared in accordance with IFRS, instead of
U.S. GAAP (Generally Accepted Accounting Principles), by foreign
There is divergence in financial reporting frameworks in Canada;
however, as changes happen at the international level, they are
considered at the national level, thereby, creating more
consistency between accounting frameworks in Canada. This is
necessary so that Canada continues to set high-quality standards
and guidance that meets the needs of Canadian stakeholders.
Some of the recent standards that are being converged with IFRS
are accounting for employee future benefit plans and investments in
joint arrangements. The major changes in employee future benefits
result in eliminating the deferral and amortization approach for
gains and losses of defined benefit plans, and requiring
measurement of plan assets and obligations as of the balance sheet
date. The accounting for an interest in a joint arrangement is
expected to be updated so that the nature of an entity's
interest in a joint arrangement will determine whether it is
accounted for using the equity method or the proportionate
consolidation method. No longer will it be an accounting policy
Along with these accounting standards changes, in 2010, Canada
adopted the International Standards on Auditing for audit
engagements. As evident by the accounting standards, where change
is continuous, international and national assurance standards are
also constantly up for review and are updated as required. The
standards for review and compilation engagements are being
contemplated for changes at the international level and likely for
adoption here. While these changes may not seem relevant, they do
impact how we at Crowe Soberman will conduct our engagements and
serve our clients.
Another area that is up for review is professional independence
rules that govern the CA profession. Some of the requirements of
the international code of ethics appear to be more stringent than
Canada's current ethics requirements. One effect of the
proposed convergence of international and national ethics
provisions may have is the introduction of stricter measures with
regards to the services auditors may provide to their audit or
Standards and guidance will continue to change as the global
economy evolves thereby affecting how business is reporting and
also conducted worldwide. The international developments at various
levels have an impact and in turn affect change in Canada.
We will continue to keep you abreast of standards changes that
will affect your businesses.
Rukshana, Partner and Soo-Ling, Senior Manager are members of
Crowe Soberman's Professional Practice Group. Together they
assist in the monitoring of accounting and assurance standards, as
well as standards regarding professional conduct and quality
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Over the past year, we have watched the Canadian dollar drop relative to its U.S. counterpoint impacting Canadian businesses. U.S. goods and services are now more expensive, U.S. sales make a premium and errors when recording foreign exchange transactions can cost you more money.
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