What Is Happening On The International Scene When It Comes To Reporting Your Numbers?
The constant expanding and fluidity of the global economy has shrunken our world, creating an interactive village. Increasing business connectivity and cross-border interactions have led to a need for a common financial language and a common yardstick to compare financial performance.
In response to globalization, Canada is actively participating in the international standards scene. In 2011, Canada joined approximately 90 countries by adopting the International Financial Reporting Standards (IFRS), as issued by the International Accounting Standard Board (IASB). To accommodate Canada's unique market, the Canadian accounting standards body – the AcSB – mandates that all publicly accountable enterprises adopt IFRS with adoption remaining optional for all other entities. For these entities, the AcSB has established accounting standards for private enterprises, as well as standards for not-for-profit organizations and pension plans.
Although our major business partner, the United States of America, has not adopted IFRS, it is a member of the IASB, and an active participant in various international projects with the IASB. Furthermore, the Securities and Exchange Commission will accept financial statements prepared in accordance with IFRS, instead of U.S. GAAP (Generally Accepted Accounting Principles), by foreign issuers.
There is divergence in financial reporting frameworks in Canada; however, as changes happen at the international level, they are considered at the national level, thereby, creating more consistency between accounting frameworks in Canada. This is necessary so that Canada continues to set high-quality standards and guidance that meets the needs of Canadian stakeholders.
Some of the recent standards that are being converged with IFRS are accounting for employee future benefit plans and investments in joint arrangements. The major changes in employee future benefits result in eliminating the deferral and amortization approach for gains and losses of defined benefit plans, and requiring measurement of plan assets and obligations as of the balance sheet date. The accounting for an interest in a joint arrangement is expected to be updated so that the nature of an entity's interest in a joint arrangement will determine whether it is accounted for using the equity method or the proportionate consolidation method. No longer will it...
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