Write
a brief essay highlighting the differences between IFRS and accounting
standards for private enterprises noted in this chapter, discussing the
conceptual justification for each.
There are only a few
differences between IFRS and ASPE with respect to reporting errors, and changes
in policies and estimates. Primarily,
ASPE follows historical practice in Canada.
Given that generally the primary users of private enterprise financial
statements are creditors who have access to management; the disclosure has also
been simplified.
These differences are highlighted below:
a)
The
hierarchy of accounting policies to follow when there is no standard is very
similar.
b)
ASPE
has choices in a number of specifically identified accounting policies where a
change in policy can be made without justification as to why it is more
relevant. Examples of these standards
include income taxes, defined benefit pension plans, consolidation of
subsidiaries and development costs. ASPE has these choices to keep the reporting
and measurement of these items more simple, so preparers may choose the simpler
method if they want, even if it results in reliable but less relevant
information.
c)
ASPE
requires that errors be corrected using only retrospective restatement. The
reason for this is to follow historical practice in Canada. IFRS allows partial
retrospective restatement or prospective treatment when the information is
impracticable to determine.
d)
ASPE
does not require an additional opening balance sheet for the earliest period
restated when applying retrospective treatment. This disclosure is not required
in order to keep the notes to a minimal and reduce the preparer’s time.
e)
ASPE
does not require disclosure on issued standards not yet effective. This will simplify the disclosure for the
primary users, who are the creditors.
