In the world of accounting, you can present your financial statements in a wide range of ways, and one option is the Accounting Standards for Private Enterprises (ASPE). The ASPE is a set of accounting standards in the Generally Accepted Accounting Principles (GAAP) framework. These fundamentals were created to support the unmet needs of small businesses. Once you’re fully acclimated, your business can prosper from these set of rules.
What Do ASPE Principles Cover?
The Canada Centre of Financial Reporting provides an extensive list of ASPE principles, but you don’t need to know all the tenets of the ASPE as a small business owner. Here are some of its key attributes:
- Information that must included on financial statements
- Preparation of opening balance sheets
- Disclosure standards
- Criteria for accounting changes and corrections of error
- How to present current assets and liabilities
Who Can Use the ASPE?
If your business’ stocks aren’t traded on a public stock exchange, you are considered a private company. Due to the reduced reporting needs of a private enterprise, only these organizations are allowed to use the ASPE when drafting financial statements.
Advantages of ASPE
You create a standardized look at your financial situation that can be understood by anyone in the finance or accounting sector when you use ASPE standards to create your income statements, profit-and-loss reports, and other financial documents. This is extremely helpful when you apply for loans, present information to investors, or prove your financial strength to vendors.
The Choice Between ASPE or IFRS
Publicly traded companies began using the International Financial Reporting Standards (IFRS) at the same time that the ASPE was implemented. While public companies must use the IFRS, private companies can choose one or the other. The Canada Centre for Financial Reporting asserts that the ASPE is simpler and less demanding than the IFRS, and as a result, it makes sense for private businesses to use the ASPE.
If you plan to go public in the near future, you may want to switch to the IFRS. Additionally, you may want to use IFRS if your parent company or your competitors use it.
With this information about the ASPE on hand, you can now call upon an accounting software that allows you to issue accurate ASPE-approved financial statements only possible from proper expense tracking. With these elements in place, it’s easier to understand and comply with ASPE principles. This is just one way to optimize the efficiency of your small business. 4.3 million customers use QuickBooks. Join them today to help your business thrive for free.