Adopted, not written: the Handbook’s two parts

Two standards, one Handbook, two very different authors

Canadian accounting standards live in the CPA Canada Handbook – Accounting, and the Handbook has two parts that matter in first year:

• Part I — IFRS, applied by publicly accountable enterprises.
• Part II — ASPE, Accounting Standards for Private Enterprises, available to everyone else.

The body responsible for both is the Accounting Standards Board (AcSB), an independent Canadian board whose members are appointed by the Accounting Standards Oversight Council (AcSOC) and whose funding, staff and premises come from CPA Canada. Three bodies, three roles: AcSOC oversees, CPA Canada funds, the AcSB sets. But "sets" means something different for each part, and that difference is what the midterm tests.

Worked example — tracing two standards into the Handbook

IAS 2 Inventories is the standard behind Module 2's LCNRV rule. It was written by the International Accounting Standards Board (IASB) in London, the body formed to harmonise accounting across borders so that an investor can compare a Canadian retailer with a German one. Canada did not write IAS 2. The AcSB adopted it — took it into Part I of the Handbook essentially as issued. The AcSB participates in the IASB's work and comments on its drafts, and in rare cases it may carve out a provision it judges unsuitable for Canadian conditions before including a standard, but the authorship is the IASB's. Canada adopts IFRS; it does not write it.

Section 3031 Inventories is Part II's counterpart. It was authored by the AcSB itself, designed for the needs of Canadian private companies — simpler disclosure, fewer fair-value measurements, an eye to the cost of compliance for a company whose only readers are a bank and the CRA. Where a Part II section runs parallel to an IFRS standard the numbering often echoes it, but every word is the AcSB's.

So the sentence to remember is: the IASB issues IFRS; the AcSB adopts IFRS into Part I and authors ASPE into Part II.

The foreign distractor

The United States is the standing distractor on this topic. American standards (US GAAP) are set by the FASB, the Financial Accounting Standards Board, with legal authority resting with the SEC. The US has not converged with IFRS: its standards remain detailed and rules-based, and a long-running convergence project stalled on politics and on the sheer difference in approach. Canadian companies listed on US exchanges face that gap directly. But neither the FASB nor the SEC has any role in setting Canadian standards, and IFRS and US GAAP are not "basically the same" — Module 2 meets one concrete difference (US GAAP forbids reversing an inventory write-down; IFRS and ASPE both permit it).

Why the arrangement matters

Adoption rather than authorship is what makes Canadian public-company statements comparable to those in the 140-plus jurisdictions that use IFRS — the whole point of having a public market that foreign investors will fund. Authorship of ASPE is what lets Canada keep a lighter regime for companies that never face those investors. The two parts are two answers to the L1.2 question: how much reporting does this set of owners need?