ASPE general adoption: Frequently asked questions

Do you have general questions about adopting accounting standards for private enterprises (ASPE)? Read helpful frequently asked questions here.

Why is the CPA Canada Handbook – Accounting now divided into parts?

The CPA Canada Handbook – Accounting (Handbook) now consists of five parts. Each part contains standards applicable to certain enterprises:

  • Part I: publicly accountable enterprises (IFRS) and government private enterprises
  • Part II: private enterprises
  • Part III: not-for-profit organizations
  • Part IV: pension plans
  • Part V: pre-changeover accounting standards, including a complete archive of the Handbook

The Handbook is the only authoritative source for guidance on Canadian generally accepted accounting principles (GAAP). The segregation in Parts was necessary as different standards were created for different sectors, and various pieces of regulation and legislation make reference to specific parts.

Private enterprises can chose whether to adopt IFRS (Part I) or ASPE (Part II) of the Handbook. In either case, a private enterprise may then state that its financial statements have been prepared in accordance with Canadian GAAP.

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Who can use accounting standards for private enterprises (ASPE)?

Any private enterprise, as defined in the preface of the Handbook, can adopt ASPE. There are no qualifiers such as unanimous consent from shareholders.

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What's the difference between 'publicly accountable enterprise' and 'private enterprise' and how should I decide which standards to follow?

Deciding whether an enterprise is publicly accountable is a matter of professional judgement. Here are some questions to help you make the determination: :

  • Is the enterprise considered to be publicly accountable, irrespective of the words used in the definitions?
  • Does the enterprise manage financial resources entrusted by a broad group of clients, customers or members who are not involved in the management of the organization? If yes,
  • What is (are) the primary business(es)?
  • Is holding and managing these financial resources an integral part of these primary businesses? (i.e. could business be conducted without holding and managing the financial resources? If yes, the reasons for holding the financial resources may be incidental to the primary business.
  • Has receiving, holding and managing the financial resources created a new primary business and would those financial resources be considered an integral part of the business?

The definitions of publicly accountable enterprises and private enterprises in Canadian GAAP were based on the description of small and medium-sized organizations in IFRS for small and medium-sized entities (SMEs). The IFRS Foundation has published training material for IFRS for SMEs. Find a discussion of the description of an SME and helpful examples in Module 1, paragraphs 1.3 and 1.4.

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Can a Canadian private enterprise use International Financial Reporting Standards (IFRS) for small and medium-sized entities (SMEs)?

Although a private enterprise can use IFRS, IFRS for SMEs are not included in Part I of the Handbook. Accordingly, an enterprise using IFRS for SMEs cannot state that its financial statements comply with Canadian GAAP. Paragraph 1.5 in the Introduction to Part I of the CPA Canada Handbook – Accounting addresses this issue.

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Will these standards apply to not-for-profit organizations in the future?

Not-for-profit organizations that are not subject to CPA Canada – Public Sector Accounting Handbook can choose whether to apply accounting standards for not-for-profit organizations contained in Part III of the CPA Canada Handbook – Accounting (Handbook), or IFRS in Part I of the Handbook.

A not-for-profit organization adopting the standards in Part III will also apply accounting standards for private enterprises found in Part II, to the extent a topic is not addressed in Part III. However, not all of Part II is applicable for not-for-profit organizations. The new reporting framework is effective for annual financial statements for fiscal years beginning on or after January 1, 2012. More information can be found on the Accounting Standards Board website.

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What is the effective date of accounting standards for private enterprises (ASPE) and what is the earliest date an enterprise can adopt these standards?

Part II of the CPA Canada Handbook – Accounting (Handbook) is effective for annual financial statements relating to fiscal years beginning on or after January 1, 2011. The standards were published in December 2009 and earlier application was permitted for organizations that had not yet issued 2009 financial statements.

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What is the date of transition for a group of enterprises with different reporting periods?

The date of transition for the consolidated group is that of the parent company. Refer to Consolidated Financial Statements, paragraph 1601.34, which notes that the subsidiary normally prepares statements for a consolidation purposes for a period that exactly or nearly coincides with the fiscal period of the parent.

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Section 1506 Accounting Changes requires disclosures about future changes in accounting standards. Do private enterprises have to make these disclosures when adopting the new standards?

No. Refer to Accounting Changes paragraph 1506.03, which specifically notes that the Section does not apply to changes in the basis of accounting.

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