Accounting Standards For Private Enterprises

Your First ASPE Financial Statements – Presenting the Opening Balance Sheet

Private companies in Canada are working diligently towards the preparation and release of their first set of financial statements prepared in accordance with the new Canadian Accounting Standards for Private Enterprises (ASPE).  Similar to their public company counterparts who will be releasing their first annual reporting in accordance with International Financial Reporting Standards (IFRS), private companies will provide certain prescribed transition disclosures in their first ASPE financial statements.  For private companies, the requirements are codified in Section 1500 of Part II of the Handbook, First-time Adoption.

Section 1500 provides specific guidance regarding the opening balance sheet.  It states that “An entity prepares and presents an opening balance sheet at the date of transition to accounting standards for private enterprises. This opening balance sheet is the starting point for the entity's accounting under accounting standards for private enterprises.” 

There has been some confusion around what the word “presents” means in this context.  Is it acceptable to present the opening balance sheet in a note to the financial statements or should it be presented as a third column on the face of the balance sheet?  Some preparers of financial statements had, earlier in 2011, noted that financial statement preparation software might not be able to accommodate the third column on the face of the balance sheet and suggested that disclosure in the notes to the financial statements should suffice.

We would direct preparers of the first ASPE financial statements to the Frequently Asked Questions published by CICA.  Question 8 and the response thereto are as follows:

Can the opening balance sheet be presented in the notes?

Paragraph 1500.04 requires an enterprise to prepare and present an opening balance sheet. A footnote in Section 1521, Balance Sheet, states that some of the line item presentation requirements in paragraph 1521.05 may be satisfied through note disclosure. Some have asked whether this allows for the opening balance sheet to be presented in the notes to the financial statements.

The footnote in Section 1521 specifically refers to the line item presentation of assets and liabilities. It does not address presentation of comparative information for an entire financial statement.

Paragraph 1400.04 states that fair presentation requires information to be provided in a manner that is clear and understandable.  Paragraph 1400.06 states that information should be presented in a manner that enables users of financial information to understand them without undue effort. Paragraph 1400.12 requires that financial statements be prepared on a comparative basis.  Users generally find the inclusion of balance sheets for different years in a single statement more useful, clear and understandable. 

Accordingly, the opening balance sheet should be presented on the face of the balance sheet.

Therefore, preparers of initial ASPE financial statements should ensure that the opening balance sheet is presented on the face of the balance sheet as a third column and not as a disclosure in the notes to the financial statements.

Should you have any questions, please do not hesitate to contact your KPMG EnterpriseTM adviser directly or our Concierge Services at

Robert Young
Robert Young
National Assurance
and Professional Services Practice
KPMG Enterprise