Private companies have a choice that can save them time and money
TORONTO, May 1 /CNW/ - On April 29, The Canadian Accounting Standards
Board released its long awaited Exposure Draft on Generally Accepted
Accounting Principles (GAAP) for Private Enterprises, recognizing that 'one
size fits all' does not necessarily meet the needs of all private companies.
These proposed new standards provide a cost-effective choice for private
enterprises without compromising the quality of the financial information.
The proposed standards would be effective for annual financial statements
relating to fiscal years beginning on or after January 1, 2011. Early adoption
would be permitted. Private companies in Canada are going to have to make an
important decision over the next few months between adopting the International
Financial Reporting Standards (IFRS) or the proposed GAAP for Private
According to Eric Andrew, national leader of PricewaterhouseCoopers'
(PwC) Private Company Services practice, "Implementing IFRS may not be very
complicated for some organisations but for others it can be a highly complex
and costly change management process that goes beyond the finance and
accounting functions. Private enterprises are going to have to examine their
options and choose a solution that best serves their purposes. We expect many
will adopt the proposed GAAP but some enterprises might choose IFRS depending
on their situation."
The decision around which option to choose will revolve around
considering who the users of the financial statements are going to be and the
cost benefit implications.
- Private enterprises that are closely held, financed locally and are
not planning to access public equity or debt markets will likely
choose the GAAP option.
- Private enterprises that are planning to go public in the near
future, are a subsidiary of an IFRS parent or who are benchmarked
against peers or competitors who use IFRS might conclude they are
better off to adopt IFRS.
For more information, please visit www.pwcifrs.ca
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