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Different Conceptual Accounting Frameworks for Public and Private Enterprises: Commentary on Canada's IFRS Transition and Suggestions for International Empirical Work

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  • Daniel B. Thornton

Abstract

Prior research, coupled with demographic data relating to the needs of financial statement users, suggests that Canada's strategy of adopting International Financial Reporting Standards (IFRS) for public firms, while simultaneously basing Accounting Standards for Private Enterprises (ASPE) on a classic conceptual framework featuring reliability, conservatism and verifiability, is a rational strategy that confers a comparative advantage on Canada's private enterprises relative to their peers in other countries. I propose research projects that could examine this inference as a testable hypothesis, thereby providing empirical evidence that standard setters could weigh when determining whether the strategy is successful and worth preserving. I also explain why conservatism can coexist with unbiased fair values of private enterprises' equity securities and their derivatives. Résumé Les études précédentes, conjuguées aux données démographiques relatives aux besoins des utilisateurs des états financiers, donnent à penser que la stratégie du Canada quant à l'adoption parallèle des Normes internationales d'information financière (IFRS) pour les sociétés ouvertes et de Normes comptables pour les entreprises à capital fermé (NCECF) fondées sur un cadre conceptuel classique qui met l'accent sur la fiabilité, la prudence et la vérifiabilité, est une stratégie rationnelle qui confère un avantage comparatif aux sociétés à capital fermé du Canada par rapport à leurs homologues des autres pays. L'auteur suggère des projets de recherche qui porteraient sur l'étude de cette inférence à titre d'hypothèse à vérifier, ce qui fournirait des données empiriques susceptibles d'éclairer les normalisateurs dans l'évaluation du succès de la stratégie et du bien‐fondé de son maintien. L'auteur explique également pourquoi la prudence peut coexister avec des justes valeurs objectives des titres de capitaux propres des sociétés à capital fermé et de leurs dérivés.

Suggested Citation

  • 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.
    • Handle: RePEc:wly:accper:v:14:y:2015:i:3:p:168-189
    DOI: 10.1111/1911-3838.12048
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