Background

The concepts on which International Financial Reporting Standards are based are similar to those historically used in Canada. That is not by chance. Canada’s accounting standards-setters have been actively involved in the development of international standards since discussions were first initiated in the mid 1960s.   

The Accounting Standards Board (AcSB) adopted IFRSs as Canadian GAAP in response to a business environment that is increasingly global. This single set of high-quality, global standards that require transparent and comparable information in general purpose financial statements provide an improved basis for decision-making for business and investors. For Canadian businesses financial reporting based on globally accepted standards leads to greater accessibility to worldwide capital markets that could reduce the cost of capital. For those entities with global operations, the need to report in accordance with more than one basis of accounting is reduced. This AcSB Bulletin provides further information on the process the AcSB followed in developing the IFRS strategy.

Generally, pre-changeover Canadian GAAP and IFRSs are based on a similar conceptual framework. They are similar in terms of the style and form of the individual standards. A number of standards are substantially the, same including inventories, segmented reporting and accounting changes.

However, there are a number of differences, both pervasive and subtle, the significance of which varies by industry and individual organization.

IFRSs are now required or permitted in over one hundred countries, including the European Union and much of the Pacific Rim. In the United States, the Securities and Exchange Commission has eliminated the IFRS/US GAAP reconciliation requirement for foreign-owned filers and the Financial Accounting Standards Board (FASB) is working with the IASB to develop converged standards. More information on the convergence of US GAAP and IFRSs is available at IASB website or at www.IFRS.com, a website published by the American Institute of Certified Public Accountants.