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Financial Reporting for Private Companies: The Canadian Experience

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  • Morina D. Rennie
  • David W. Senkow

Abstract

The issue of whether small and/or private companies should be allowed to use simplified accounting standards in financial reports has concerned the accounting profession for decades. It has been argued that preparing financial reports in accordance with the large volume of promulgated standards contained in generally accepted accounting principles (GAAP), some of which are relatively complex, has put a significant strain on the resources of small/private business. Moreover, information produced and presented in accordance with at least some accounting standards within GAAP may not be relevant for the users of small/private companies' financial statements. In this paper we look at differential reporting in Canadian GAAP, which gives nonpublicly accountable enterprises the ability to opt out of certain CICA Handbook requirements with unanimous consent of the shareholders. We look at lobbying activity in response to the proposed differential reporting standard and at nonpublicly accountable company experience with the differential reporting opportunity in the period since the standard was promulgated.

Suggested Citation

  • Morina D. Rennie & David W. Senkow, 2009. "Financial Reporting for Private Companies: The Canadian Experience," Accounting Perspectives, John Wiley & Sons, vol. 8(1), pages 43-68, February.
    • Handle: RePEc:wly:accper:v:8:y:2009:i:1:p:43-68
    DOI: 10.1506/ap.8.1.3
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    References listed on IDEAS

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    1. Campbell, Jane E., 1984. "An application of protocol analysis to the "Little GAAP" controversy," Accounting, Organizations and Society, Elsevier, vol. 9(3-4), pages 329-342, October.
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    Cited by:

    1. Peter Carey & Brad Potter & George Tanewski, 2014. "Application of the Reporting Entity Concept in Australia," Abacus, Accounting Foundation, University of Sydney, vol. 50(4), pages 460-489, December.
    2. Wayne Irvine & Stuart H. Jones & Michael Wright, 2010. "Canada Generators Limited," Accounting Perspectives, John Wiley & Sons, vol. 9(4), pages 319-330, December.
    3. Daniel B. Thornton, 2015. "Different Conceptual Accounting Frameworks for Public and Private Enterprises: Commentary on Canada's IFRS Transition and Suggestions for International Empirical Work," Accounting Perspectives, John Wiley & Sons, vol. 14(3), pages 168-189, September.
    4. Sylvain Durocher & Anne Fortin, 2014. "New Canadian Accounting Standards for Private Enterprises and the Adoption Timing Decision," Australian Accounting Review, CPA Australia, vol. 24(3), pages 218-236, September.

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