7/29/23, 4:27 PM Preface to the CPA Canada Handbook – Accounting Definitions
» Accounting
» Preface to the CPA Canada Handbook – Accounting
» Definitions
CPA Canada Handbook – Accounting
The CPA Canada Handbook – Accounting, available at www.knotia.ca, is
the authorized version of standards approved by the Accounting
Standards Board.
Preface to the CPA Canada Handbook – Accounting
December 2017
1 The Accounting Standards Board determines the contents of the CPA Canada Handbook –
Accounting (Handbook). This Preface explains the applicability of the Handbook to entities that
prepare financial statements in accordance with Canadian generally accepted accounting
principles (GAAP). Requirements for an entity to prepare and issue financial statements are
established by the laws and regulations applicable to the entity or by contract.
2 Entities within the scope of the CPA Canada Public Sector Accounting Handbook refer to that
Handbook to determine the basis of accounting for purposes of their financial reporting.
DEFINITIONS
3 The following definitions have been adopted for the purposes of determining which Part of the
Handbook applies to a reporting entity:
(a) A publicly accountable enterprise is an entity, other than a not-for-profit organization,
that:
(i) has issued, or is in the process of issuing, debt or equity instruments that are, or will
be, outstanding and traded in a public market (a domestic or foreign stock exchange
or an over-the-counter market, including local and regional markets); or
(ii) holds assets in a fiduciary capacity for a broad group of outsiders as one of its
primary businesses.
Banks, credit unions, insurance companies, securities brokers / dealers, mutual funds and
investment banks typically meet the second criterion above. Other entities may also hold
assets in a fiduciary capacity for a broad group of outsiders because they hold and
manage financial resources entrusted to them by clients, customers or members not
involved in the management of the entity. However, if they do so for reasons incidental to
a primary business (as, for example, may be the case for travel or real estate agents, co-
operative enterprises requiring a nominal membership deposit, or sellers that receive
payment in advance of delivery of the goods or services, such as utility companies), that
does not make them publicly accountable.
(b) A private enterprise is a profit-oriented entity that is not a publicly accountable
enterprise.
(c) A not-for-profit organization is an entity, normally without transferable ownership
interests, organized and operated exclusively for social, educational, professional,
religious, health, charitable or any other not-for-profit purpose. A not-for-profit
organization's members, contributors and other resource providers do not, in such
capacity, receive any financial return directly from the organization.
(d) A pension plan is any arrangement (contractual or otherwise) whereby a program is
established to provide retirement income to employees.
(e) A benefit plan is any arrangement whereby an entity undertakes to provide employees
with benefits during and/or after active service in exchange for their services.
» Accounting
» Preface to the CPA Canada Handbook – Accounting
» Applicability
APPLICABILITY
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7/29/23, 4:27 PM Preface to the CPA Canada Handbook – Accounting Definitions
4 Publicly accountable enterprises, other than pension plans and other entities within the scope
of Part IV of the Handbook (see paragraph 8), apply the IFRS® Standards in Part I of the
Handbook.
5 Private enterprises apply either accounting standards for private enterprises in Part II of the
Handbook or the IFRS® Standards in Part I of the Handbook.
6 Not-for-profit organizations apply either accounting standards for not-for-profit organizations
in Part III of the Handbook or the IFRS® Standards in Part I of the Handbook.
7 The choices between accounting standards permitted in paragraphs 5 and 6 apply before, at
and after the mandatory dates for first-time adoption of Part II and Part III of the Handbook
(see paragraph 10).
8 Pension plans, and benefit plans that have characteristics similar to pension plans and provide
benefits other than pensions, apply accounting standards for pension plans in Part IV of the
Handbook. They do not apply IAS 26 Accounting and Reporting by Retirement Benefit Plans,
included in Part I of the Handbook.
9 When an entity can choose the standards in more than one Part of the Handbook as its basis of
accounting, the entity applies only the standards in the Part it has selected unless that Part
specifies otherwise.
» Accounting
» Preface to the CPA Canada Handbook – Accounting
» First-time adoption
FIRST-TIME ADOPTION
10 The Introduction to each Part of the Handbook states the mandatory date for first-time
adoption of that Part.
» Accounting
» Preface to the CPA Canada Handbook – Accounting
» Basis of accounting
BASIS OF ACCOUNTING
12 Parts I-IV of the Handbook require an entity to state in the notes to its financial statements
which set of standards it has applied. An entity that applies the standards in one of those Parts
is permitted, but not required, to make the additional statement that its financial statements are
in accordance with Canadian GAAP.
» Accounting
» Preface to the CPA Canada Handbook – Accounting
» Conceptual framework
CONCEPTUAL FRAMEWORK
13 The objective of a conceptual framework is to facilitate the consistent and logical formulation of
standards and provide a basis for the use of judgment in resolving accounting issues. The
standards set out in each of the Parts of the Handbook are based on common, but not identical,
conceptual frameworks. When exercising judgment, an entity refers to the framework relating
to the standards in the Part it is applying.
» Accounting
» Preface to the CPA Canada Handbook – Accounting
» Due process
DUE PROCESS
14 The Accounting Standards Board updates the standards set out in each Part of the Handbook
only after due process.
» Accounting
» Preface to the CPA Canada Handbook – Accounting
» Official versions
OFFICIAL VERSIONS
15 The Handbook is available in English and French. Handbook contents in English and French
have equal status and effect.
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