As governments enter into trade agreements and lower trade barriers, the economy becomes more global every day. International trade, however, does not happen seamlessly. Oftentimes there are language barriers that hamper effective communication. Other times, international players have language problems of another type: they do not speak the same “business language.” One area where this arises is in the “language” of accounting. What is required, then, is some uniformity.
In an effort to promote uniformity as well as public accountability, the Canadian Accounting Standards Board (ASB) and the Public Sector Accounting Board (PSAB) have adopted, effective January 1, 2011, the International Financial Reporting Standards (IFRS) for publicly accountable enterprises (PAEs) and government business enterprises (GBEs). Private enterprises, for their part, were given the option to adopt IFRSs or the new Canadian standards developed specifically to meet the needs of users of their financial statements for fiscal years beginning on or after January 1, 2011.
The IFRS are a uniform set of global accounting standards developed by the International Accounting Standards Board (IASB). The IFRS are currently in use in over one hundred countries, including countries in the European Union and much of the Pacific Rim, as well as India, Japan, Brazil and now, Canada. The United States will be joining the trend later this year.
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