IFRS vs Canadian GAAP
IFRS and Canadian GAAP are two accounting standards, the first is an international standard while the other is applicable to businesses in Canada only. To make accounting uniform so that the results of financial statements are more transparent and nearly similar in different parts of the world, International Accounting Standards Board (IASB) has set guidelines and framework known as the International Financial Reporting Standards (IFRS). In different parts of the world, different accounting principles are in vogue reflecting different traditions and cultures, and Canadian GAAP is no exception. GAAP stands for generally accepted accounting principles and naturally every country has its own GAAP. But like all other countries, Canada is also trying to move forward and switch over to IFRS in letter and spirit. However, differences between IFRS and Canadian GAAP still persist. Let us know more about these differences.
Though Canadian GAAP is very similar to IFRS in style, there are subtle differences which lead to ambiguity when it comes to interpretation of financial results. The three areas where these differences are more prominent are as follows.
In IFRS, impairments are triggered more often but unlike Canadian GAAP, these impairments can be reversed.
This is one area where there are fundamental differences between IFRS and Canadian GAAP.
IFRS allows revaluation of assets such as property, plant and equipment, investment property and intangibles while this is not allowed in Canadian GAAP.
In addition, there are fundamental differences between Canadian GAAP and IFRS in areas of presentation of financial statements, related parties, provisions, and leases.
Apart from these differences, Canadian GAAP is very similar to IFRS. What ever differences that are there arise from difference in perspective and even here Canadian GAAP is trying to adopt the guidelines set forth in IFRS to match it completely.
• IFRS are International Financial Reporting Standards set as guidelines by IASB to make accounting more uniform in different parts of the world.
• Canadian GAAP is the accounting principle generally accepted as standard and these have evolved over a period of tine depending upon traditions.
• There are some minor differences between IFRS and Canadian GAAP but Canada is trying to move forward to embrace IFRS.