New rules for financial instruments have introduced drastic changes to GAAP, creating scepticism among managers, investors and even accountants, who believe that they will be more complex than ever. However, beyond their apparent complexity, the new rules can be demystified by considering a few fundamental changes
Even the best specialists are sometimes overwhelmed with the quantity and complexity of accounting methods and notes to financial statements. In their drive to turn generally accepted accounting principles (GAAP) into an economic validation tool, for instance, standard setters have added more accounting rules and technical details. All that this has managed to do in some cases is hide economic reality behind complicated and disconcerting rules. Financial statements have become a veritable muddle of information that can be difficult for even a company’s management to follow.
Canadian accounting standards were substantially updated recently. New standards, issued in April 2005 and dealing with financial instruments, comprehensive income and hedging, will apply to fiscal years beginning on or after October 1, 2006 (October 1, 2007, for non-publicly accountable enterprises).
See full Article.
Posts
