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1---
2name: canada-financial-statements
3description: >
4 Use this skill when preparing, reviewing, or advising on annual financial statements for a Canadian company. Trigger on phrases like "ASPE", "IFRS Canada", "Canadian GAAP", "CPA Canada Handbook", "financial statements Canada", "compilation engagement", "review engagement Canada", "audit Canada", "CBCA", "OBCA", "annual return Canada", "CSRE 2400", or any question about preparing and reporting statutory accounts under Canadian corporate law. Covers ASPE/IFRS frameworks, assurance level options, required statements, formats, notes, filing requirements, and audit/review thresholds.
5version: 1.0
6jurisdiction: CA
7category: financial-statements
8depends_on:
9 - financial-statements-workflow-base
10---
11 
12# Canada Financial Statements Skill v1.0
13 
14---
15 
16## Section 1 -- Quick Reference
17 
18| Field | Value |
19|---|---|
20| Country | Canada |
21| Currency | CAD |
22| Filing authority | Corporations Canada (federal); Provincial corporate registries (provincial) |
23| Primary legislation | Canada Business Corporations Act (CBCA); Provincial acts (OBCA, BCBCA, ABCA, etc.) |
24| Supporting legislation | Income Tax Act (R.S.C. 1985, c.1); CPA Canada Handbook |
25| Accounting standards | IFRS (publicly accountable enterprises); ASPE Part II (private enterprises); ASNPO Part III (not-for-profit) |
26| Financial year | Any fiscal year-end chosen by the corporation |
27| CRA filing deadline | 6 months after fiscal year-end (corporate tax return T2) |
28| Annual return | Within 60 days of anniversary of incorporation (CBCA); varies by province |
29| Digital filing | CRA My Business Account (T2); Corporations Canada Online Filing |
30 
31---
32 
33## Section 2 -- Reporting Framework
34 
35| Entity type | Applicable standard | CPA Handbook |
36|---|---|---|
37| Publicly accountable enterprises (PAE) | IFRS as issued by IASB (Canadian-adopted) | Part I |
38| Private enterprises | ASPE (Accounting Standards for Private Enterprises) | Part II |
39| Not-for-profit organizations | ASNPO | Part III |
40| Pension plans | Part IV (specific standards) | Part IV |
41| Private enterprise choosing IFRS | IFRS (permitted but not required) | Part I |
42 
43### Key difference: ASPE vs IFRS
44 
45| Area | ASPE | IFRS |
46|---|---|---|
47| Financial instruments | Simplified (cost/amortised cost focus) | Complex (IFRS 9 — ECL, fair value hierarchy) |
48| Leases | Finance/operating distinction | IFRS 16 — right-of-use model |
49| Revenue | Risks/rewards transfer model | IFRS 15 — five-step model |
50| Goodwill | Amortised over useful life (max 10 years) | Not amortised; annual impairment test |
51| Employee benefits | Simplified pension accounting | IAS 19 — full actuarial measurement |
52 
53---
54 
55## Section 3 -- Size Thresholds
56 
57Canada does not have statutory "size thresholds" determining accounting framework in the way EU countries do. Instead:
58 
59| Criterion | Determining factor |
60|---|---|
61| Public accountability | If securities are publicly traded or entity holds assets in fiduciary capacity → must use IFRS |
62| Private enterprise | May choose ASPE or IFRS |
63| Audit requirement | Determined by corporate statute and shareholder agreement (not size per se) |
64 
65### Audit waiver conditions (CBCA s.163)
66 
67Private corporations may waive the audit if:
68- All shareholders consent annually (unanimous resolution)
69- Corporation is not a distributing corporation (publicly traded)
70- Revenue ≤ specified thresholds do NOT apply federally (it's purely consent-based)
71 
72### Provincial variations (examples)
73 
74| Jurisdiction | Audit waiver condition |
75|---|---|
76| CBCA (federal) | Unanimous shareholder consent (s.163) |
77| OBCA (Ontario) | Unanimous shareholder consent (s.148) |
78| BCBCA (British Columbia) | Shareholder resolution; no exemption for reporting issuers |
79| ABCA (Alberta) | Unanimous shareholder consent |
80| Quebec (QBCA) | Shareholder resolution; restrictions for certain entities |
81 
82---
83 
84## Section 4 -- Required Financial Statements
85 
86Under ASPE (Section 1400, 1521) and CBCA/provincial statutes:
87 
88| Document | ASPE | IFRS |
89|---|---|---|
90| Balance Sheet / Statement of Financial Position | Required | Required |
91| Income Statement / Statement of Comprehensive Income | Required | Required (+ OCI) |
92| Statement of Retained Earnings / Changes in Equity | Required (retained earnings) | Required (full equity) |
93| Statement of Cash Flows | Required | Required |
94| Notes to Financial Statements | Required | Required (full IFRS disclosure) |
95| Comparative information | Encouraged (not mandatory under ASPE) | Mandatory (minimum one prior period) |
96 
97---
98 
99## Section 5 -- Year-End Adjustments Checklist
100 
101| # | Adjustment | Canada-specific notes |
102|---|---|---|
103| 1 | Amortization/depreciation | ASPE 3061; systematic and rational; CCA rates for tax (not accounting) |
104| 2 | Provisions | ASPE 3290; likely, estimable contingencies |
105| 3 | Employee benefits | ASPE 3462; accrued vacation, bonus; pension funding vs expense |
106| 4 | Bad debt allowance | ASPE 3856; incurred loss model (not ECL for ASPE) |
107| 5 | Inventory | ASPE 3031; lower of cost (FIFO/weighted average) and NRV; no LIFO |
108| 6 | Income taxes | ASPE 3465; taxes payable method OR future income taxes method (choice) |
109| 7 | Foreign exchange | ASPE 1651; temporal method; current rate for monetary |
110| 8 | Leases | ASPE 3065; finance/operating classification |
111| 9 | Government assistance | ASPE 3800; cost reduction or income approach |
112| 10 | Goodwill impairment | ASPE 3064; test when events indicate; amortise max 10 years |
113| 11 | Related party transactions | ASPE 3840; measured at exchange amount or carrying value |
114| 12 | Scientific Research & Experimental Development (SR&ED) | Capitalise or expense; ITC recognition |
115 
116---
117 
118## Section 6 -- Income Statement Format
119 
120ASPE does not prescribe a rigid format. Common Canadian presentation:
121 
122```
123Revenue
124Cost of goods sold
125 ─── Gross profit ───
126 
127Expenses:
128 Selling expenses
129 General and administrative expenses
130 Amortization of capital assets
131 Amortization of intangible assets
132 ─── Total expenses ───
133 
134 ─── Income from operations ───
135 
136Other income (expenses):
137 Interest income
138 Interest expense
139 Gain (loss) on disposal of assets
140 Foreign exchange gain (loss)
141 ─── Total other income (expenses) ───
142 
143 ─── Income before income taxes ───
144 
145Provision for income taxes (current and future/deferred)
146 ─── Net income for the year ───
147```
148 
149---
150 
151## Section 7 -- Balance Sheet Format
152 
153Common Canadian ASPE presentation:
154 
155```
156ASSETS
157 
158Current assets
159 Cash and cash equivalents
160 Short-term investments
161 Accounts receivable
162 Inventories
163 Prepaid expenses
164 Current portion of notes receivable
165 
166Capital assets (Property, plant and equipment)
167 Land
168 Buildings (net of accumulated amortization)
169 Equipment (net of accumulated amortization)
170 Leasehold improvements (net)
171 
172Intangible assets
173 Goodwill
174 Patents, trademarks, licences
175 
176Other assets
177 Long-term investments
178 Due from related parties
179 
180Total assets
181 
182─────────────────────────────────────
183 
184LIABILITIES
185 
186Current liabilities
187 Bank indebtedness
188 Accounts payable and accrued liabilities
189 Income taxes payable
190 Current portion of long-term debt
191 Deferred revenue
192 
193Long-term liabilities
194 Long-term debt
195 Obligations under capital leases
196 Future income tax liability (or deferred tax)
197 
198Total liabilities
199 
200─────────────────────────────────────
201 
202SHAREHOLDERS' EQUITY
203 Share capital
204 Contributed surplus
205 Retained earnings
206 
207Total shareholders' equity
208 
209Total liabilities and shareholders' equity
210```
211 
212---
213 
214## Section 8 -- Notes to Financial Statements
215 
216| # | Disclosure | ASPE | IFRS |
217|---|---|---|---|
218| 1 | Significant accounting policies | Required (Section 1505) | Required (IAS 1/IAS 8) |
219| 2 | Capital assets / PPE | Required (Section 3061) | Required (IAS 16) |
220| 3 | Financial instruments | Required (Section 3856) | Required (IFRS 7 — extensive) |
221| 4 | Related party transactions | Required (Section 3840) | Required (IAS 24) |
222| 5 | Commitments and contingencies | Required (Section 3290) | Required (IAS 37) |
223| 6 | Income taxes | Required (Section 3465) | Required (IAS 12) |
224| 7 | Revenue | Simplified | Required (IFRS 15 — extensive) |
225| 8 | Leases | Required (Section 3065) | Required (IFRS 16) |
226| 9 | Employee benefits / pensions | If applicable (Section 3462) | Required (IAS 19) |
227| 10 | Subsequent events | Required (Section 3820) | Required (IAS 10) |
228| 11 | Going concern | Required if uncertainty | Required (IAS 1) |
229| 12 | Segment information | Not required | Required (IFRS 8 — listed) |
230 
231---
232 
233## Section 9 -- Filing Requirements
234 
235| Item | Detail |
236|---|---|
237| Corporate tax return (T2) | Filed with CRA within 6 months of fiscal year-end |
238| Financial statements attached to T2 | Required — GIFI (General Index of Financial Information) coded |
239| GIFI | Standard classification system for mapping financial statement lines to T2 |
240| Annual return (CBCA) | Within 60 days of anniversary of incorporation |
241| Provincial annual return | Varies (e.g., Ontario: within 6 months of fiscal year-end) |
242| Public companies (securities filings) | File with provincial securities commissions (e.g., OSC, BCSC) — within 90 days of year-end (annual) |
243| Filing format | T2 electronically via CRA My Business Account or certified tax software |
244| Late filing penalty — T2 | 5% of unpaid tax + 1% per month (max 12 months) |
245| Failure to file penalty | CRA can assess federal penalty + provincial equivalent |
246 
247### Assurance levels for CRA
248 
249| Level | Standard | When used |
250|---|---|---|
251| Audit | CAS (Canadian Auditing Standards) | Required by statute or shareholders; PAEs |
252| Review | CSRE 2400 | Lender requirements; shareholder preference |
253| Compilation (Notice to Reader) | CSRS 4200 | Owner-managed private companies; no assurance |
254 
255---
256 
257## Section 10 -- Audit Requirements
258 
259| Category | Requirement |
260|---|---|
261| Publicly accountable enterprise (PAE) | Mandatory audit (CAS) |
262| CBCA private corporation | Audit required UNLESS unanimous shareholder waiver (s.163) |
263| OBCA private corporation | Audit required UNLESS unanimous shareholder consent (s.148) |
264| Federal not-for-profit (CNCA) | Audit required unless revenue < CAD 50,000 (review permitted < CAD 250,000) |
265| Provincial NPO | Varies by province and revenue thresholds |
266| Registered charity | Audit if revenue > CAD 250,000 (CRA requirement) |
267 
268### Practical guidelines (lender-driven)
269 
270| Loan amount | Typical assurance required |
271|---|---|
272| < CAD 250,000 | Compilation (Notice to Reader) often accepted |
273| CAD 250,000–1,000,000 | Review engagement typically required |
274| > CAD 1,000,000 | Audit typically required |
275 
276### Auditor qualification
277 
278Licensed CPA (Chartered Professional Accountant) holding a public accounting licence issued by a provincial CPA body. Must meet independence and continuing professional development requirements.
279 
280---
281 
282## Disclaimer
283 
284This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional before filing or acting upon.
285 

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Use this skill when preparing, reviewing, or advising on annual financial statements for a Canadian company. Trigger on phrases like "ASPE", "IFRS Canada", "Canadian GAAP", "CPA Canada Handbook", "financial statements Canada", "compilation engagement", "review engagement Canada", "audit Canada", "CBCA", "OBCA", "annual return Canada", "CSRE 2400", or any question about preparing and reporting statutory accounts under Canadian corporate law. Covers ASPE/IFRS frameworks, assurance level options, required statements, formats, notes, filing requirements, and audit/review thresholds.

CAty-2025

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