I just returned from the Canadian Tax Foundation’s Ontario Conference where Ruth Cummings (KPMG LLP) and Jane Bowen (University of Ontario Institute of Technology) gave a presentation on the new standards set out in the “Accounting Standards for Private Enterprises” (ASPE) and the “International Financial Reporting Standards” (IFRS).
For privately-owned corporations, the new standards don’t appear to be revolutionary, but they might result in adjustments that will affect retained earnings, for example. A tax practitioner who uses retained earnings as a (very) rough and ready gauge of safe income will need to keep these possible adjustments in mind. A lawyer or accountant who is advising a party to a share or asset purchase agreement will also need to keep the changes in mind. Standard representations and warranties that refer to “generally accepted accounting principles” might need to be modified to specify what policies the vendor or target has adopted under the new standard.
