Introduction
Whether you're a lawyer, geologist, engineer or other professional, as part of your role you'll likely need to have a working knowledge of financial statements. If you're not an accountant and struggle to understand financial statements, you're not alone. With the level of complexity in financial reporting these days, it can be difficult for a professional accountant to keep up to date on financial reporting, let alone a non-financial professional. In this series of posts, I will provide insight into financial reporting and related topics geared toward non-financial professionals who need to understand financial statements as part of their professional roles. A few tips and caveats before we start…
Which accounting standards apply?
Believe it or not, CPA Canada (formerly the Canadian Institute of Chartered Accountants) has four separate accounting handbooks currently in force, each geared toward a different sector. I'll cover the purposes of these separate handbooks and when they should be applied in a future post, but my point for now is that I'll be focusing on Part I of the Handbook, being International Financial Reporting Standards (IFRS), and Part II, Accounting Standards for Private Enterprises (ASPE), which are similar in many respects from a high level. IFRS and ASPE are the accounting standards most commonly applied to private sector entities in Canada and thus will have the most relevance for most of you. It's important to note that ASPE is used specifically within Canada and that although IFRS is applied around the world, there are regional “flavours” to IFRS in various countries and therefore it's important to note that the IFRS I'll be referring to is the one issued by the International Accounting Standards Board, which is the IFRS applied in Canada.
A Canadian perspective with international appeal
It is also important to note that I am writing this series from a Canadian perspective. That being the case, when I refer to guidance, whether it's accounting standards or securities regulations, these references are specific to Canada. Should you be reading financial statements for companies that report outside of Canada it is important that you verify local regulations as they may differ from those in Canada.
Where to find example financial statements?
You may find it useful to look up examples of financial statements as you work through this series so you can see what I'm talking about when I refer to various aspects of financial statements. In Canada, publicly accountable entities file their financial statements (and many other documents) on the System for Electronic Document Analysis and Retrieval (SEDAR), the system used for electronically filing most securities related information with the Canadian securities regulatory authorities. Using SEDAR, you will be able to search for filings for all Canadian public companies as well as certain other types of entities.
Lots of valuable resources to lean on
This series of posts will be fairly high level due to the complexity of the subject matter and the wide variety of scenarios that can exist within any given standard, which cannot be articulated in a brief post. If you're looking for more specific accounting guidance, our accounting firm, BDO Canada LLP, offers timely publications on a variety topics through our online library as well as complementary professional development training, referred to as MYPDR, which you may find useful.
If you're interested in the natural resources industry, I encourage you to check out our LinkedIn group, BDO Global Mining.