Accounting Standards in Transition

Standards in the accounting and auditing industries are undergoing a number of changes. The CICA (Chartered Accountants of Canada) has a web page Canadian Standards in Transition pulling together the standards–both Canadian and international–that are currently in transition. Here is a very brief run-down:

• International Financial Reporting Standards (IFRSs) – for publicly accountable enterprises (PAEs) and government business enterprises (GBEs); optional for private enterprises and others. IFRSs are issued by the International Accounting Standard Board (IASB).
• Accounting Standards for Private Enterprises – “give Canadian businesses the ability to choose to adopt new ‘made in Canada’ standards or International Financial Reporting Standards (IFRSs). Private enterprises must decide which of the sets of standards to adopt for years beginning on or after January 1, 2011. Early adoption is permitted.”
• Not-for-Profit Organizations – the direction of financial reporting for not-for-profit organizations is currently under review; Exposure Drafts from the Accounting Standards Board and the Public Sector Accounting Board are open for comment until July 15, 2010.
• Pension Plans – “Pension plans, and benefit plans that have characteristics similar to pension plans, will follow new accounting standards for pension plans issued by the Accounting Standards Board as of January 1, 2011, rather than International Financial Reporting Standards.”
• Public Sector – changes vary by type of organization
• Canadian Auditing Standards (CASs) – “The Canadian Auditing and Assurance Standards Board (AASB) is adopting International Standards on Auditing (ISAs) as Canadian Auditing Standards (CASs) for the audits of financial statements. Once effective, the CASs will constitute Canadian generally accepted auditing standards (GAAS) for financial statement audits. The CASs come into effect for audits of financial statements for periods ending on or after December 14, 2010.”

The CICA also has an e-newsletter (more like a blog, actually) called In the Loop: Standards in Transition to help keep everyone up to date on the changes. Email subscriptions are also available.

CA Magazine is another good source for discussion on this topic (see the hot topic “IFRS and ISA” in the left menu bar); for example, Commitment to Excellence by Chi Ho Ng from the November 2009 issue explains that “the new quality control system will allow public accounting firms to show their commitment to quality control.”

I have never come across an industry so laden with acronyms–except perhaps librarianship–making understanding of why these changes are taking place difficult for the lay person to determine. Please, if anyone can enlighten us, I would appreciate it!