Perspective
The Evolution of Standards
Accounting standards are at the very heart of what we, as professional accountants, do. These standards, established and carefully honed over time by the Canadian Accounting Standards Board (AcSB) define our fundamental approach to the practice of accounting — from the micro issues to the macro challenges; from the very specific rules, to the all-important principles.
To say that the establishment and evolution of accounting standards is a matter of important public policy is an understatement. That's why CGA-Canada has always taken a keen interest in these matters and has weighed in many times on standards issues.
In 1999 we published a groundbreaking national report entitled, The Case for International Accounting Standards in Canada. In it we recommended that Canada adopt the standards established by the International Accounting Standards Board (IASB). It was high time, we argued, for the country to look ahead, and to look to the international arena for strong accounting standards leadership.
There has been much water under the bridge since that landmark report was issued. We've had Enron, WorldCom, and Nortel to name just a few of the corporate casualties littering the road on the way to much needed standards reform. Today it's not uncommon to hear regular references to the global evolution of internationally recognized financial reporting standards. Certainly we are on the move in that direction.
This year marks the deadline for members of the European Union to formally adopt IASB standards as the sole basis for EU financial reporting. The accounting world will be watching closely as the EU moves forward with this initiative. Above all, there will be lessons to be learned as the year unfolds.
Recently, the AcSB decided the timing was right to take a fundamental look at the future of accounting standards in Canada. Releasing the discussion paper, Accounting Standards in Canada: Future Directions, was a wise move for the board at this historic juncture. The AcSB rightly said it's time to ask some fundamental questions about where we are going vis-à-vis harmonization and standard setting in this country. We are certain they received a solid body of thoughtful advice with important assertions to ponder as they move forward.
CGA-Canada had some important things to say to this inquiry. We emphasized the need for a fully independent standard-setting body in Canada, and the importance of maintaining a fully articulated regime of differential reporting to accommodate the unique needs of Canada's economy. Our full AcSB submission can be found in the Advocacy and Research section of CGA-Canada's Web site at www.cga-online.org.
And in the same vein, we are pleased to be partnering with the AcSB through a recently announced two-year special assignment that will add a highly qualified CGA to the Board. This innovative approach will benefit both the Board and CGA-Canada, putting us much closer to issues as they evolve.
In this issue of CGA Magazine we are delighted to present a feature interview with AcSB Chair Paul Cherry. His insights on the current challenges and the future direction of accounting standards make for interesting reading. For at the end of the day, our profession will always be about the very highest of standards, for financial reporting, for performance, and for excellence.
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