A Perspective on the Canadian Accounting Standards Board Exposure Draft on GAAP for Private Enterprises

Posted: 25 Aug 2009 Last revised: 11 Jun 2013

See all articles by Karim Jamal

Karim Jamal

University of Alberta - Department of Accounting, Operations & Information Systems

Robert J. Bloomfield

Cornell University - Samuel Curtis Johnson Graduate School of Management

Theodore E. Christensen

University of Georgia - J.M. Tull School of Accounting; University of Georgia

Robert H. Colson

Grant Thornton LLP

Stephen R. Moehrle

University of Missouri at Saint Louis - Accounting Area

Stephen H. Penman

Columbia Business School - Department of Accounting

Gary Previts

Case Western Reserve University - Department of Accountancy

James A. Ohlson

Hong Kong Polytechnic University - School of Accounting and Finance

Thomas L. Stober

University of Notre Dame - Department of Accountancy

Shyam Sunder

Yale University - School of Management; Yale University - Cowles Foundation

Ross L. Watts

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: August 25, 2009

Abstract

The Canadian Accounting Standards Board (AcSB) recently issued an exposure draft to adopt separate GAAP for private enterprises. This new GAAP is justified as being consistent with the current FASB/IASB conceptual framework, but is sensitive to the different cost/benefit considerations facing private entities. We view this proposal as being innovative and responsive to the differential reporting needs of private entities. In this article we explain our reasoning and conclusions on several issues raised by the exposure draft starting with a discussion about the need for a separate conceptual framework for private enterprises. We sketch a preliminary conceptual framework that could be used to develop and justify the type of changes proposed in this exposure draft. We then discuss key issues raised in the exposure draft such as reliance on historical cost as the key basis of measurement, the significant reduction in disclosure requirements for private enterprises, and stopping the emerging issues committee from providing implementation guidance (no EIC’s). We also comment on the mechanism for financing the standard setting board, the need to ensure compatibility between accounting and auditing standards, and a process for adjusting the education system to support this new private enterprise GAAP.

Keywords: Regulatory Competition, Private Enterprises, GAAP

JEL Classification: M41, M40, M49

Suggested Citation

Jamal, Karim and Bloomfield, Robert J. and Christensen, Theodore E. and Colson, Robert H. and Moehrle, Stephen R. and Penman, Stephen H. and Previts, Gary J. and Ohlson, James A. and Stober, Thomas L. and Sunder, Shyam and Watts, Ross L., A Perspective on the Canadian Accounting Standards Board Exposure Draft on GAAP for Private Enterprises (August 25, 2009). Accounting Horizons, Vol. 24(1), March: 129-137; University of Alberta School of Business Research Paper No. 2013-1001. Available at SSRN: https://ssrn.com/abstract=1461249

Karim Jamal (Contact Author)

University of Alberta - Department of Accounting, Operations & Information Systems ( email )

Edmonton, Alberta T6G 2R6
Canada
780-492-5829 (Phone)
780-492-3325 (Fax)

Robert J. Bloomfield

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

450 Sage Hall
Ithaca, NY 14853
United States
607-255-9407 (Phone)
607-254-4590 (Fax)

Theodore E. Christensen

University of Georgia - J.M. Tull School of Accounting ( email )

Athens, GA 30602
United States

University of Georgia ( email )

Athens, GA
United States

Robert H. Colson

Grant Thornton LLP ( email )

Chicago, IL
United States

Stephen R. Moehrle

University of Missouri at Saint Louis - Accounting Area ( email )

8001 Natural Bridge Road
St. Louis, MO 63121
United States
314-516-6142 (Phone)
314-516-6420 (Fax)

Stephen H. Penman

Columbia Business School - Department of Accounting ( email )

3022 Broadway
New York, NY 10027
United States
212-854-9151 (Phone)
212-316-9219 (Fax)

Gary J. Previts

Case Western Reserve University - Department of Accountancy ( email )

Cleveland, OH 44106-7235
United States
216-368-2074 (Phone)
216-368-4776 (Fax)

James A. Ohlson

Hong Kong Polytechnic University - School of Accounting and Finance ( email )

M715, Li Ka Shing Tower
Hung Hom, Kowloon
China

Thomas L. Stober

University of Notre Dame - Department of Accountancy ( email )

Notre Dame, IN 46556-0399
United States
219-631-7614 (Phone)

Shyam Sunder

Yale University - School of Management ( email )

165 Whitney Avenue
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-6160 (Phone)

HOME PAGE: http://www.som.yale.edu/faculty/sunder/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Ross L. Watts

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

E52-325
Cambridge, MA 02142
United States

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