Canadian GAAP vs. FRS 102

Attribute	Canadian GAAP	FRS 102
Regulatory Body	CPA Canada	Financial Reporting Council (FRC)
Framework	PE GAAP	IFRS-based
Scope	Applies to Canadian entities	Applies to UK entities
Measurement Basis	Historical Cost	Historical Cost or Fair Value
Financial Statements	Balance Sheet, Income Statement, Cash Flow Statement, Statement of Changes in Equity	Same as Canadian GAAP

Introduction

Canadian Generally Accepted Accounting Principles (GAAP) and Financial Reporting Standard (FRS) 102 are two sets of accounting standards used by companies to prepare their financial statements. While both sets of standards aim to provide a framework for consistent and transparent financial reporting, there are some key differences between Canadian GAAP and FRS 102 that companies need to be aware of.

Scope and Applicability

Canadian GAAP is used by Canadian companies to prepare their financial statements, while FRS 102 is used by companies in the United Kingdom. Canadian GAAP is governed by the Accounting Standards Board (AcSB), while FRS 102 is issued by the Financial Reporting Council (FRC). Both sets of standards are based on the International Financial Reporting Standards (IFRS), but there are some differences in the specific requirements and guidance provided.

Measurement of Assets and Liabilities

One key difference between Canadian GAAP and FRS 102 is the measurement of assets and liabilities. Under Canadian GAAP, assets and liabilities are generally measured at historical cost, while under FRS 102, assets and liabilities are measured at fair value. This difference can have a significant impact on the reported financial position of a company, as fair value measurements can be more volatile and subject to market fluctuations.

Revenue Recognition

Another area of difference between Canadian GAAP and FRS 102 is revenue recognition. Canadian GAAP follows a principles-based approach to revenue recognition, while FRS 102 provides more specific guidance on when revenue should be recognized. This can lead to differences in the timing and amount of revenue recognized by companies following the two sets of standards.

Consolidation and Business Combinations

Consolidation and business combinations are areas where Canadian GAAP and FRS 102 also differ. Canadian GAAP provides specific guidance on when a company should consolidate its financial statements with those of its subsidiaries, while FRS 102 has a more principles-based approach. This can lead to differences in the scope of consolidation and the treatment of business combinations between companies following the two sets of standards.

Disclosure Requirements

Both Canadian GAAP and FRS 102 have specific disclosure requirements that companies must follow when preparing their financial statements. However, the specific requirements and level of detail required can vary between the two sets of standards. Companies need to be aware of these differences and ensure that they are meeting the disclosure requirements of the relevant standard in order to provide users of the financial statements with the information they need to make informed decisions.

Conclusion

In conclusion, while Canadian GAAP and FRS 102 are both based on the IFRS framework, there are some key differences between the two sets of standards that companies need to be aware of. These differences can impact the measurement of assets and liabilities, revenue recognition, consolidation and business combinations, and disclosure requirements. Companies should carefully consider the requirements of the relevant standard and ensure that they are following the appropriate guidance in order to prepare accurate and transparent financial statements.