2007-12-03 CICA Issues Draft Framework for Owner Managed Enterprises

Background

The CICA has released a draft version of a simplified accounting framework aimed at owner-managed businesses. Most owner-manager businesses have straightforward accounting and financial reporting needs when compared to public companies and private businesses with large creditors and/or investors. The goal of the proposed framework is to make the financial statements of these businesses easier to understand and more relevant to their needs. The framework is based on the existing CICA Accounting Handbook but has its focus strictly on supporting owner-managed businesses.

Who is affected

This framework is intended to apply to owner managed enterprises that:

a) do not have public accountability
b) do not publish general purpose financial statements for external users

Eligible enterprises will not be required to follow the framework. They may elect to do so.

Main concepts behind the framework

The proposed framework is based on the following concepts:

• It is largely based on existing accounting sections of the Handbook rather than being linked to IFRS
• It has deliberately been developed as a framework other than GAAP. It offers the ability to depart from some GAAP measures, such as the increased use of fair values, the detailed standards for complex transactions and the volume of disclosure requirements.

Effective date

The framework would be effective for years beginning on or after January 1, 2009, with an option for early adoption.

Comment deadline

The deadline for comments on the proposals is January 31, 2008.

A copy of Framework for Owner Managed Enterprises can be found on the CICA website.