Quick answer

The applicable financial reporting framework determines how an organization accounts for transactions and prepares financial statements. In Canada, publicly accountable enterprises (PAEs) generally use International Financial Reporting Standards (IFRS) in Handbook Part I, while qualifying private enterprises may use Accounting Standards for Private Enterprises (ASPE) in Part II or elect Part I when permitted.

A reporting framework is the rule set used for the financial statements as a whole. Generally accepted accounting principles (GAAP) is the broader term for the accepted accounting requirements within that reporting context. Both IFRS and ASPE are forms of Canadian GAAP; saying only “GAAP” does not identify which framework an entity follows. A business cannot switch between them transaction by transaction to obtain a preferred result.

For profit-oriented enterprises—organizations operated to earn a profit—the applicable framework depends on current legal, regulatory, contractual, and Handbook requirements.

Selection of the applicable reporting framework

  1. 01

    Governing requirement

    Check the entity’s legislation, securities regulator, banking or insurance regulator where relevant, financing agreements, owner requirements, and other reporting mandates. A framework choice cannot override a requirement that applies to the entity.

  2. 02

    Public accountability assessment

    Public accountability is a formal reporting category, not a general description of an organization. Within the profit-oriented context here, it covers an entity that has issued, or is issuing, debt or shares traded in a public market, or that holds financial assets for a broad group of outsiders in a fiduciary capacity as a primary business—that is, holding and managing those assets on behalf of others. Confirm the current Handbook definition and any regulator-specific rule or exception for the actual entity.

  3. 03

    Applicable Handbook part

    Part I incorporates IFRS Accounting Standards in Canada. Part II contains Accounting Standards for Private Enterprises. A private enterprise may choose Part I or Part II when its obligations permit either basis.

  4. 04

    Reporting period and relevant facts

    Even after the framework is known, the answer can change with effective dates, transition rules, choices allowed by a standard, whether the information could matter to users’ decisions, and the transaction’s specific facts.

Labels are not a complete classification test

“Public,” “private,” “listed,” and “regulated” are clues, not a complete classification test. A securities issuer should check the current National Instrument 52-107 (NI 52-107) (opens in a new tab) for its jurisdiction. This securities rule sets acceptable accounting principles and auditing standards for the financial statements it covers, so the issuer should also confirm any amendment or exemption that affects the entity.

IFRS and ASPE in the CPA Canada Handbook

IFRS Handbook Part I

International Financial Reporting Standards

Part I is the IFRS branch of Canadian generally accepted accounting principles. It is the normal basis for Canadian publicly accountable enterprises when their governing requirements do not provide a different permitted basis.

A private enterprise can also elect Part I when that choice is available and appropriate for its reporting obligations and users.

ASPE Handbook Part II

Accounting Standards for Private Enterprises

Part II is the Canadian domestic framework for private enterprises. Being privately owned does not by itself settle every reporting obligation, so the entity still checks the requirements that apply to it.

ASPE and IFRS cover many of the same accounting topics, but a topic’s recognition, measurement, presentation, or disclosure can differ. A treatment under one framework cannot be assumed to apply under the other.

Other Canadian reporting branches

The Canadian Accounting Standards Board (AcSB) sets standards for entities outside the public sector. Handbook Part III contains Accounting Standards for Not-for-Profit Organizations (ASNPO), and Part IV addresses pension plans; Part I may also be available in some not-for-profit contexts. Public-sector entities look to the applicable Public Sector Accounting Standards (PSAS) and related requirements rather than assuming Part I or Part II applies.

Scope and effects of the reporting framework

The applicable requirements determine whether an item is recognized, how it is measured, where and how it is presented, and what must be disclosed. The analysis must also consider effective dates and the specific facts of the transaction. Broad shortcuts such as “IFRS means fair value” or “ASPE means historical cost” are not reliable substitutes for the topic standard.

Bookkeeping mechanics still organize the result: a supported event is recorded in accounts, posted to the ledger, and summarized for reporting. The mechanics do not choose the accounting treatment.

Standards update — September 2026

IFRS 18 replaces IAS 1 for annual reporting periods beginning on or after January 1, 2027, with earlier application permitted by the IASB. For an earlier period, IAS 1 remains relevant unless IFRS 18 is adopted early. IFRS 18 is incorporated into CPA Canada Handbook Part I in the branch for standards issued but not yet effective. The remaining entity-level questions are the reporting period, early-adoption choice, and consistent application of the consequential amendments and transition requirements.