Every company at some point makes accounting errors or bookkeeping mistakes; the same is the case with Canadian Small Businesses as well. The notable thing about this is that most of the time these are common bookkeeping mistakes that can be avoided. In order to avoid these accounting errors in Canada, one needs to first understand the standards for accounting in Canada.
The Canadian standards specify the needs and guidelines to follow which can reduce common errors in accounting. In this article, we will be looking at the Canadian Accounting Standards to follow as well as the common accounting mistakes to avoid.
Difference Between US and Canadian Accounting Standards
Accounting in Canada differs from accounting in the USA, as the standards differ in both countries. The parameters on which this difference can be measured are:
- Standards for Audit Reports
- Format of Financial Statements
- Reporting Assets and Liabilities
- Choice of Selecting Accounting Standards
Brief on Canadian Accounting Rules
Just like other countries, Canada also has its own accounting rules and standards which must be followed by businesses. These standards ensure the authenticity and reliability of the financial reporting.
In the past few years, there has been a constant improvement in the Canadian bookkeeping and accounting measures to align them with the international standards. The Canadian GAAP has been made similar to the IFRS rules so that businesses can easily operate globally.
Canada has CSA: Canadian Securities Administrators. This regulatory body ensures compliance with the accounting standards in Canada. It also oversees that the public companies are following the security laws as well as the investors’ interest protection.
Specifics of Canadian Accounting Rules
|What they do
|International Financial Reporting Standards (IFRS)
|This sets the foundation for Canadian accounting which is globally recognized.
|Accounting Standards for Private Enterprises (ASPE)
|These standards are specific to non-publicly accountable businesses and simplify the complex nature of accounting procedures for small businesses.
|This rule book focuses on maintaining integrity in financial reporting and highlights the ethics, assurance, and accounting standards that must be followed by all.
|Canadian Auditing Standards (CAS)
|CAS ensures that the quality of audits is up to the mark and establishes guidelines for auditors.
Common Accounting Errors and Bookkeeping Mistakes Made by Canadian Businesses
So, the truth must be told and before you take it to heart, let’s accept the fact that we all love to do things on our own. However, mistakes in accounting errors and bookkeeping can prove to be costly for your small business. Here are some accounting and bookkeeping mistakes to avoid if you are operating a small business in Canada… or for that matter anywhere.
Putting personal and professional together
It’s not just about lives but also your finances when it comes to avoid common errors in accounting. You must not mix your personal finances with that of your professional. Maintain separate accounts and books for both so that you can track the specifics whenever needed.
Not taking regular follow-ups
Another common accounting error is not maintaining your books regularly. Your financials won’t come to you, it’s you who have to keep them close in the form of noting them down in your books. Keep a regular check on your expenses to make sure you haven’t missed mentioning any amount and that the financials are organized.
Forgetting to check the books
One of the most common bookkeeping mistakes and still a highly possible error is forgetting to reconcile the books. Letting it go one or two times can turn to 20 or 100 before you know. Before your bank statement starts looking like a puzzle, make sure to reconcile your debits and credits.
Letting Deadlines become scarier
There are some guests we do not want to host. Well, penalties are one of those. Do not let penalties come at your door and knock. Stay prepared with your organized statements for the tax season. Deadlines are scary already but with penalties, they can make the whole process scarier.
Doing it your own way
Time for an eye roll here. Oftentimes, individuals take it into their own hands to do the accounting and bookkeeping without having a proper understanding of Canadian standards and rules. Remember, this is not just any common error in accounting but can prove to be a blunder. It is important to save a buck wherever possible while doing business but becoming ignorant in this process can cost you much more than what you have saved.
So, how to avoid these accounting mistakes in Canada?
How about taking help from an expert? If hiring an in-house accountant seems too much of a hassle, you can always choose to outsource your accounting and bookkeeping responsibilities. This is not at all weird or odd, individuals around the globe have been outsourcing expertise. You can choose from a vast pool of knowledge while ensuring that they do not weigh heavy on your pockets.
Here’s what you can get by outsourcing your Canadian bookkeeping process.
Written by – Priyanka Rampal
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