Canada

The dominant influences on the Canadian accounting environment arise from legal and professional sources. The legal influence consists of the accounting measurement and disclosure requirements in the particular Act under which a Canadian company is incorporated. Early company legislation was closely modelled on the UK system (Anderson, 1977), reflecting the economic and political links of the nineteenth century. However, as these links weakened and Canada’s economic and business interdependence with the US increased, the nature of company legislation shifted from a UK basis to one more closely resembling that of the US. The federal nature of the Canadian political system is a significant element of the auditing and accounting environment. The federal system has important implications for the nature of the auditing profession (discussed below). Also, the federal system has resulted in differences between the accounting requirements of the various federal and provincial Acts (OECD, 1980). However, these differences have diminished in importance since the early 1970s, and now the legislation in the provinces closely follows national legislation such as the Canada Business Corporations Act and the Ontario Securities Act.