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Accounting Standards for Private Enterprises

What You Need to Know about Effects of Climate-related Risks and Opportunities on ASPE Financial Statements: Awareness Document


What’s the issue?

Climate is a topic that interested and affected parties are increasingly challenged with due to its potential effect on an entity’s business model, operations, and related financial information. For example, extreme weather events can disrupt operations and supply chain, damage infrastructure, and increase operational costs.

Why it’s relevant

From a relevance perspective, we are seeing that some entities are starting to consider climate risks in their risk-rating models for their clients. Others are seeing impacts to cost on insurance policies. Climate risks and opportunities exist, whether they are reported or not, and therefore should be assessed, like any other business risk or opportunity.

Additionally, most industries have been, or are likely to be, affected by climate-related risks and opportunities (hereinafter referred to as climate-related matters) and efforts to manage the impacts of climate. This raises questions about how climate-related matters may affect the financial statements of private enterprises in Canada from various perspectives, including financial, physical, and transition risks and opportunities.

ASPE principles for climate-related matters

When preparing financial statements in accordance with Part II of the CPA Canada Handbook – Accounting Standards for Private Enterprises (ASPE), management may need to assess how material climate-related matters should be recognized, presented, and/or disclosed, and how they impact elements of financial statements. While there is no specific climate-related accounting standard, many existing principles within ASPE call for an entity to consider material climate-related matters.

This awareness document highlights certain relationships:

  • sustainability risks and opportunities that may be considered when reporting, disclosing, and analyzing financial statements; and
  • standard interpretation and application when applying both financial accounting standards and sustainability disclosure standards.

Some industries might be impacted more or less by climate-related matters. The assessment and potential disclosures should be tailored accordingly.

What to expect from this series of awareness documents

Over the course of the year, the Accounting Standards Board will publish awareness documents outlining how to consider ASPE standards when assessing climate-related matters. Please note that for not-for-profit organizations, the awareness documents can be adapted as necessary.

What’s new for ASPE users and preparers

The list (not exhaustive) includes:

  • New procurement opportunities – As more entities set carbon-reduction goals, new opportunities will arise to engage with local businesses to provide procurement.
  • Enhanced and/or new financing options – As climate regulations evolve for banks and insurance companies where they may be required to report and disclose climate-related matters information requests and requirements may become necessary.



This awareness document is considered non-authoritative guidance and has been prepared by the Accounting Standards Board staff. It does not form
part of the CPA Canada Handbook – Accounting nor is it part of generally accepted accounting principles. What follows are prompts for practitioners
and other interested and affected parties who are expected to use their best judgment in appropriate circumstances.