What changes when a company goes public

One company, before and after

Kettle Creek Foods Inc. makes maple syrup and preserves in the Eastern Townships. For thirty years it has been owned by the Tremblay family, reports under ASPE, has its statements reviewed rather than audited, and shows them to exactly two outsiders: the bank and the Canada Revenue Agency. Its board is the two founders and their accountant. When it needs money it borrows against the plant.

Now suppose Kettle Creek lists on the Toronto Stock Exchange. Walk down six axes and watch every one of them change.

1. Owners. Before: a family that also runs the company. After: thousands of shareholders who do not work there, cannot see the internal reports, and can sell tomorrow.
2. Standards. Before: ASPE (Part II of the CPA Canada Handbook). After: IFRS (Part I) — required, not chosen, the moment its shares trade on a public market.
3. Audit. Before: a review engagement, because a non-distributing corporation whose shareholders all consent may resolve not to appoint an auditor. After: an auditor appointed by the shareholders every year — for a distributing corporation the CBCA (s. 162–163) gives no exemption.
4. Board. Before: the founders. After: a board with independent directors, an audit committee, and a governance disclosure filed every year (Module 5).
5. Information released. Before: statements to the bank. After: audited annual statements, quarterly interim statements, an MD&A, a proxy circular, and timely disclosure of anything material — all public, all continuous.
6. Financing. Before: bank debt and family money. After: access to the public equity and debt markets, at the price of everything above.

Each axis is a consequence of the first. Once the owners are dispersed outsiders who cannot look inside, everything else exists to let them trust what they are shown. (Sustainability reporting is the newest item on axis 5 — and, as at September 2026, no CSA rule mandates it: material climate risk is disclosable under the existing continuous-disclosure rules, and the Canadian CSDS 1 and 2 standards are voluntary unless a regulator adopts them. Module 6 has the detail.)

Which framework? The two-prong test

The rule is not "public companies use IFRS". It is that a publicly accountable enterprise (PAE) must use IFRS, and a PAE is an entity that either:

• (i) has issued, or is issuing, debt or equity instruments that trade in a public market (an exchange or an over-the-counter market, domestic or foreign); or
• (ii) holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses.

The second prong is the one students miss. A credit union has no listed shares, yet it holds members' deposits for a broad public — so it is a PAE and reports under IFRS. The same goes for banks, insurers and investment dealers. Conversely, a large private manufacturer with two thousand employees and no public instruments is not a PAE, however big it is: private is not a size.

The last piece: a company that is not a PAE may elect IFRS. Kettle Creek could adopt IFRS years before listing — to make the transition smoother, or because a public parent or a lender wants comparable statements. ASPE is the private company's option, not its obligation.

Why the axis matters for the rest of the course

Every module that follows lives on one side of this line or the other: the entries in Modules 2–3 and 6 come in an IFRS version and an ASPE version; the governance and ESG rules of Modules 5–6 apply only on the public side; the statement pack in Modules 8–10 belongs to a public company. When a prompt says "reports under ASPE", it is telling you which column of the contrast table to read.