ASPE disclosures FAQs

Confused about disclosure requirements under accounting standards for private enterprises (ASPE)? Find helpful frequently asked questions here.

The number of disclosure requirements has been reduced substantially. Does this mean a private enterprise can expect to reduce the number of notes accordingly?

Not necessarily. While the number of requirements has been reduced by approximately one half, not all private enterprises will see a similar reduction in the disclosures they provide. This is because:

  • the number of disclosures depends on the specific transactions and activities undertaken by an enterprise
  • the overall fair presentation requirements in Section 1400, General Standards of Financial Statement Presentation, may result in entities providing disclosures above and beyond those specifically required under ASPE

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When adopting the new standards, is it necessary to disclose information about management compensation and government remittances?

While the Exposure Draft (ED) for accounting standards for private enterprises (ASPE) proposed disclosure of total management compensation, this proposal was not adopted.

However, an enterprise is required to provide separate disclosure of government remittances, as set out in Current Assets and Current Liabilities, paragraph 1510.15. Providing separate disclosures of government remittances payable at the end of the period enables users of financial statements to determine amounts that have super-priority status over other creditors.

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If there are no significant accounting policy changes on adoption of accounting standards for private enterprises (ASPE), what disclosure on adoption is required?

It is entirely possible that an enterprise would not have significant accounting policy changes on adoption of ASPE because the standards were created from existing Canadian GAAP with many optional simplifications. Also, many of the simplifications address transactions that may not be applicable to all private enterprises, e.g. defined benefit pension plans.

General Standards of Financial Statement Presentation, paragraph 1400.16, requires a statement that the financial statements comply with ASPE. First-time Adoption, paragraph 1500.35, requires several disclosures on adoption of ASPE, including the amount of each change to retained earnings at the date of transition and a reconciliation of net income for the year prior to adoption. If there is no change to net income or to retained earnings as a result of adopting ASPE, a statement to that effect might be made in place of a reconciliation. An entity may have changes that are not material and, therefore, might consider not providing reconciliations.

The entity should also consider the requirement in paragraph 1400.05 to “provide sufficient information about the extent and nature of transactions or events having an effect on the entity's financial position, results of operations and cash flows for the periods presented that are of such size, nature and incidence that their disclosure is necessary to understand that effect” and whether the adoption of ASPE is an event that requires disclosure about the effects of adoption even though they are not material.

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How might an organization describe the basis of accounting used to prepare the financial statements?

General Standards of Financial Statement Presentation, paragraph 1400.16, requires an enterprise following Part II of the CPA Canada Handbook – Accounting to state that the financial statements have been prepared in accordance with Canadian accounting standards for private enterprises (ASPE).

An enterprise may wish to refer to Canadian GAAP to meet contractual or legislative requirements. In addition to stating that the financial statements have been prepared in accordance with Canadian ASPE, an enterprise following these standards may make an additional statement that the financial statements have been prepared in accordance with Canadian GAAP.

Each Part of the Handbook represents a form of Canadian GAAP. The accounting standards for private enterprises in Part II of the Handbook are therefore Canadian GAAP. Consequently, making a separate reference to Canadian GAAP might be viewed as redundant; therefore it is up to the individual enterprise to decide whether to do so or not.

Enterprises that wish to refer to Canadian GAAP must do so in a manner that clearly sets out the relationship between Canadian GAAP and ASPE. For example, stating that the statements have been “prepared in accordance with Canadian GAAP and ASPE” would be confusing as it implies that the two are separate bases of accounting, when in fact they are not. ASPE do not prescribe specific language with respect to the basis of presentation disclosure. The following are examples of acceptable disclosure. Other wordings may be equally acceptable.

  • Example using ASPE as the basis of presentation:
    The financial statements were prepared in accordance with Canadian accounting standards for private enterprises.
  • Example using Canadian GAAP as the basis of presentation:
    The financial statements were prepared in accordance with Canadian ASPE. Canadian ASPE are part of Canadian GAAP.

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Is the boilerplate note requiring measurement uncertainty still required when adopting accounting standards for private enterprises (ASPE)?

Section 1508, Measurement Uncertainty, sets out the required disclosures with respect to measurement uncertainty. Financial statement users see high value in such disclosures, as they want to understand the extent to which an enterprise is subject to uncertainty regarding the determination of amounts recognized in the financial statements. However, users have also stated that they find little value in boilerplate disclosures that tell them nothing about measurement uncertainty. Disclosures regarding measurement uncertainty should include information necessary for a fair presentation of the entity’s financial statements and be presented in a manner that is clear and understandable.

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