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The following is an update on the status of
CICA's draft simplified non-GAAP Accounting Framework For
Owner-Managed Enterprises (FOME), which was designed to meet the
needs of companies without significant external users of their
financials.
The CICA released FOME
last November 2007 and requested comments by January 31, 2008. To
support member understanding of the initiative, the national and
provincial institutes conducted wide-ranging consultations and
presentations in December and January. The events were extremely
well attended and generated a tremendous response, including close
to 300 letters of comment (letters can be viewed here).
Members provided
thoughtful feedback, providing substantive input on approach or
content. The feedback showed widespread support for the framework.
Most members also expressed common views on a number of issues,
including:
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Considerable support for GAAP for all private
enterprises, initially based on FOME or a Handbook derivative that
would be both simplified and self-contained;
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A general desire to
avoid multiple GAAP solutions for the various sectors of
non-publicly accountable enterprises and, more specifically,
little or no support for different standards for private companies
with significant external users of their financial statements and
those without significant external users.
Earlier in the year, the
Accounting Standards Board (AcSB) had issued an Invitation to
Comment on three proposed GAAP options for non-publicly
accountable enterprises with significant external users. The AcSB
has now decided to discuss a possible simplified form of GAAP for
all non-publicly accountable enterprises and has indicated that it
will consider the comments received on FOME as part of this
process.
CICA is pleased
with the AcSB's decision to consider the feedback received from
all respondents. This is consistent with the Foreword to FOME
released last November in which the CICA indicated that it would
strongly support the AcSB adopting a simplified financial
reporting model as Canadian GAAP for owner-managed businesses.
CICA believes the ideal solution is an approach that allows for
two reporting models under GAAP - IFRS for publicly accountable
enterprises and another comprehensive and self-contained
simplified framework for all non-publicly accountable entities,
potentially including many not-for-profit organizations.
It is
important that any solution developed be timely and relevant to
the market it serves. The CICA will be conveying these views to
the AcSB and urging it to complete its deliberations quickly. We
will continue to update members as work progresses.
March 5, 2008
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