What are Accounting Standards
Accounting standards are authoritative standards for financial reporting and are the primary source of generally accepted accounting principles (GAAP). Accounting standards specify how transactions and other events are to be recognized, measured, presented and disclosed in financial statements. The objective of such standards is to provide financial information to investors, lenders, creditors, contributors and others that is useful in making decisions about providing resources to the entity.
In Canada, accounting standards for all entities outside the public sector are issued by the Accounting Standards Board. The AcSB has adopted International Financial Reporting Standards (IFRSs) as the accounting standards to be used by publicly accountable enterprises. Private enterprises and not-for-profit organizations can choose to use separately developed standards for those entities or IFRSs. Separate accounting standards exist for pension plans. Accounting standards adopted by the AcSB (including IFRSs) are published in the CPA Canada Handbook – Accounting. The CPA Canada Public Sector Accounting Handbook is the primary source of GAAP for the public sector.
The Canada Business Corporations Act and provincial corporations and securities legislation generally require companies to prepare financial statements for their shareholders in accordance with GAAP as set out in the CPA Canada Handbook – Accounting. Other legislation applies to financial institutions and certain other types of reporting entity.