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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. Their objective 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 (AcSB). The AcSB adopted IFRS® Standards as the accounting standards used by publicly accountable enterprises. Private enterprises and not-for-profit organizations can choose to use separately developed standards for those entities or IFRS Standards. Separate accounting standards exist for pension plans.

Accounting standards adopted by the AcSB (including IFRS Standards) are published in the CPA Canada Handbook – Accounting.

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.