Difference Between US GAAP and Canadian GAAP
US GAAP vs Canadian GAAP
There’s really no one size fits all in the realm of accounting for across all jurisdictions around the world. There are different accounting standards like the IFRS (International financial reporting Standards) and the GAAP (acronym for Generally Accepted Accounting Principles). Although there are still some remarkable similarities in both, each GAAP may become country specific and will hold a separate industry standard based on the jurisdiction. This is what makes two GAAPs like that of the US and Canada to be made a little different
US and Canadian GAAP have differences in the following key areas: issuance of financial statements, framework, consolidated financial statements, assets and liabilities or financial instruments, balance sheets, income statement and other accounting or reporting topics. Under the consolidated financial statements, there are the differing protocols for special purposes entities and variable purposes entities, and the terms for associate investments between the two GAAPs.
Basically, US GAAP bases their accounting standards on the AICPA Accounting and Audit guide, whereas the Canadian GAAP bases their standards to their Accounting Guideline *8. Because of this, the former has a different set of inclusions in the issuance of financial statements. The statements will usually include a claim for assets and liabilities, statements of operations, net asset changes, cash flows and an investment schedule. Comparative financial statements are no longer necessary. For the latter, statements for cash flow, income, net asset changes, a full year of investment and other notes are all required. Thus ,it is clear that Canadian GAAP does not require schedules for investments unlike the former.
With regard to assets and liabilities specifically for the initial recognition, Canadian GAAP follows the rules for the IFRS wherein the financial asset purchases are recorded in two possible ways namely: based on the date of trade or based on the date of settlement. For US GAAP however, they only record the regular way purchases and other transactions of securities on a date of trade basis.
Lastly, the reporting of NAV per share is not required in US GAAP, while in Canada, it must be included in the report.
Overall even if both the US GAAP and Canadian GAAP are termed GAAP, they vary in many aspects most likely attributed to the different sources they base their principles:
1. In the US GAAP, their accounting guidelines are influenced by the AICPA’s Accounting and Audit guidebook whereas the Canadian GAAP is under the Accounting Guideline *8.
2. The Canadian GAAP does not require a schedule for investments in the issuance of their financial statements as opposed to its mandated need for the US GAAP.
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