Why Reliable Financial Statements Are Critical For Business Growth And Success


International Financial Reporting Standards (IFRS) has gotten a lot of press over the last few years. It has a reputation of being only for public companies, expensive to apply and responsible for really lengthy financial statements. Private companies often don't even consider IFRS an option when preparing their financial statements. But do they consider any other recognized financial reporting framework? Accounting Standards for Private Enterprises (ASPE) is the private company alternative to IFRS. However, ASPE is not as widely talked about as IFRS. For those that have heard of it, they know it as the cheaper and simpler option of preparing financial statements in accordance with a recognized financial reporting framework in Canada. But even though some may have heard of ASPE and its benefits, there are still many private businesses in Canada that ignore both ASPE and IFRS altogether when preparing their financial statements.

Whether you are an investor in a private company or the owner of one, reliable financial statements are critical for business growth and sustained success. The best way to ensure your financial statements are reliable is by applying an appropriate financial reporting framework. When financial statement preparers ignore the influence of a recognized financial reporting framework such as IFRS or ASPE, they are essentially recording economic transactions the way they personally feel they should, which automatically reduces the reliability of any key number on the financial statements.

Presenting financial statements that don't give the person reading them that 'warm and fuzzy feeling' can be the most expensive business decision an owner can make. Investors and lenders want to feel confident that they are making the right business decisions and reliable financial information is often one of the key factors in that decision-making process. When a company is called on to prepare reliable...

To continue reading