On March 31 2005 the Accounting Sta...

On March 31 2005 the Accounting Standards Board (AcSB) released its draft strategic plan for the coming direction of accounting standards in Canada. The plan outlines the broad policy objectives that will guide the AcSB in carrying without its standard-setting mandate.

Background

The public part of the proces started with a May 2004 Invitation to make notes accompanied by a discussion paper outlining the common environment and various alternatives beneath consideration. A series of public roundtable meetings and other consultations with stakeholders were then held. The AcSB received considerable input, including 68 alphabetic characters of comment and oral input from 106 public consultation attendees.

The Board carefully considered this input in developing its tentative conclusions and plans; these were then discussed with the Accounting Standards Oversight Council at a public session in October 2004

Overview

The AcSB intends to engage in separate strategies for the major categories of reporting entities. This direction is based forward the fundamental premise that "one size does not necessarily fit all" when it be due [i]or[/i] owings to meeting the divergent lacks of the full range of Canadian entities. The AcSB is proposing the following separate strategies:

* Public companies - The AcSB will tend to the same point Canadian GAAP with International Financial Reporting Standards (IFRS) through a five-year transitional period, with the objective of having a single risk of globally accepted high-level standards. At the [i]finale[/i] of that period, Canadian GAAP will cease to exist as a separate, distinct basis of financial reporting for public companies. more [i]or[/i] less Canadian public companies (SEC registrants) that wish to report in US GAAP will continue to have that option.

* Private businesses - The AcSB will clarify that GAAP applies merely to entities that have significant external users of their financial statements. The Board will undertake a comprehensive examination of the financial reporting emergencys of these entities and determine the mostly appropriate model for meeting these needs

* Not-for-profit organizations - The AcSB will continue to apply those constituents of GAAP for profit-oriented enterprises that are applicable to their circumstances, and make known other standards dealing with the special circumstances of the not-for-profit sector.

Public companies

For public companies, the AcSB has had a extended held strategy of "harmonizing" with US GAAP while at the same time "converging" with IFRS to the reach possible. The goal was to have Canadian GAAP eventually be substantially the same as a plant of international accounting standards that would be accepted around the world.

The propos strategy change to a defined timeline for tendency to meet with IFRS will be made easier at ever-increasing cooperation between the US Financial Accounting Standards Board and the International Accounting Standards Board.

Private business

The AcSB's "one size does not fit all" statement will have the chiefly impact in the area of appropriate accounting standards for private business. The AcSB will be investigating the legal and other implications of promulgating a statement that "GAAP applies simply to entities that have significant external users of their financial statements."

The AcSB will also undertake a comprehensive examination to identify more clearly the users of private business financial statements, their information destitutions and the most appropriate financial reporting model(s) to appropriate those needs.

The AcSB notes that the possible results of this process include a risk of standards similar to the general ones and a set that is substantially different. The Board further notes that completing this involved and likely lengthy process will hang to some degree on the availability of necessary resources.

Many members and firms will have a zealous interest in the findings of this research, and will likely be encouraging the AcSB to include in the final plan publication an extensive discussion about the research findings and any after plans as they emerge.

"Standards overload"

On a final note, the draft plan includes a commitment to pay particular attention to the issue of standards overload, primarily from one side participation in the development of implementation aids and training programs.

The draft plan also states that the Auditing and Assurance Standards Board (AASB) is developing recently made known strategies that will respond to near of these same issues. The AcSB will work with the AASB and the Public Sector Accounting Board to solve the financial reporting issues it shares with either or both

Comment requested

The draft strategic plan appoints out some very ambitious directions and could potentially change the face of accounting standards in Canada. The AcSB is seeking input upon the strategies themselves, and also welcomes expositions on the additional background information and any challenges members can foresee in applying the propos strategies.

Members are violently encouraged to access the plan at www.acsbcanada.org/index.cfm/ci_id/21832/la_id/1.htm. If you have make anxiouss about current accounting standards, now is the time to bring your expositions forward and influence the time to come of accounting standards in Canada.