ASPE Vs IFRS: What’s the Difference?
Are you in search of the right accounting standard to use in your business? We are taking a close look at ASPE vs IFRS. Each has its own benefits that you need to consider before settling on any one standard.
It is a good idea to get familiar with various accounting standards as a small- or medium-sized business owner in Canada. Within the GAAP framework, there are two standards that you need to know about. So let’s explore ASPE vs IFRS to help in choosing the best one for your needs.
Here’s What We’ll Cover:
GAAP, ASPE, and IFRS
GAAP is an acronym for Generally Accepted Accounting Principles. As a small business owner, ASPE and IFRS are both designed to accommodate your needs. ASPE stands for Accounting Standards for Private Enterprises. And IFRS means International Financial Reporting Standards. Moreover, both ASPE and IFRS are GAAP-approved accounting methods.
What Is ASPE?
ASPE covers the information that you have to include in your financial statements. You can also use ASPE to prepare your opening balance sheets. ASPE furthermore covers disclosure standards and criteria for error correction and accounting changes. Another key feature of ASPE is that it covers how to present your current assets and liabilities.
Is ASPE Right for Me?
First, are you a private company? If your company’s stocks aren’t publicly traded on the stock exchange, you are a private company. As such, your reporting standards are much lower than a publicly-traded company. Therefore, you may only use ASPE to draft your company’s financial statements.
What Is IFRS?
IFRS focuses on efficiency, transparency, and accountability in your record keeping. Designed for publicly traded companies, IFRS is an essential accounting standard. It consists of uniform guidelines that assist you in handling your financial reports.
Is IFRS Right for Me?
As a publicly-traded company, your accounting standards are much higher. As such, you need to use IFRS to ensure complete transparency in your reporting. In doing so, IFRS helps your business foster trust while reflecting financial stability in the global market.
ASPE vs IFRS
If you are a private company, you can choose either ASPE or IFRS. But if you are a publicly-traded company, you must use IFRS. According to Canada’s Centre for Financial Reporting, ASPE is the easier of the two.
So if you are a private business owner looking for a less taxing accounting standard, you should use ASPE. If you do go public, you can always switch over to IFRS in the future.
As a business owner, you need powerful accounting software to assist you in your financial reports. Whether you use ASPE or IFRS, the right accounting software will simplify your efforts and make your accounting much easier.
With FreshBooks, you will have everything you need to better manage your business’s accounting needs. From bookkeeping to client invoices, you will have control over your business’s most critical aspects. And it is all presented in a sleek, user-friendly interface.
If you would like to learn more accounting tips and insights for small businesses in Canada, be sure to check out our Resource Hub. We offer a wealth of useful discussions that will aid you in your business ventures.