Canada’s Accounting Standards Board (AcSB) has decided to scrap the standards known as Canadian GAAP, but not in favor of the U.S version.
Instead, reported the Toronto Globe and Mail, during the next five years or so, Canada will align its accounting rules with international financial reporting standards (IFRS).
AcSB chairman Paul Cheery said the decision came after extensive discussions with Canadian companies and investors, who strongly opposed copying the “rules-oriented” U.S. accounting standards, according to the report. “We have done a lot of debating and questioning whether we should be aligning ourselves closer to U.S. GAAP or to international standards,” Cherry reportedly stated.
For many years, of course, Canada has been very sensitive about the growing influence of U.S. culture and business in general.
IFRS has already been adopted by the European Union and Australia, and a number of other countries have plans in place for convergence.
Canadian public companies will still be permitted to use U.S. GAAP if they continue to register with the Securities and Exchange Commission. Companies that currently meet those requirements including media giant Rogers Communications Inc., based in Toronto, and telecom equipment maker Nortel Networks Corp., headquartered in Brampton, Ontario. Each has a market cap that exceeds $14 billion.
“Our fundamental premise and experience is that one size does not necessarily fit all,” Cherry said, according to the report. “For example, developments in global capital markets are important for public companies and their investors, but not so important for private businesses and not-for-profit organizations.”