The independent Accounting Standards Oversight Council today reported on its meeting last week in Toronto, which considered the Enron failure and its implications for Canadian accounting standards.

“The more significant concerns giving rise to the Enron failure relate to issues outside of accounting standards, issues that are being looked at by others, including the Canadian Institute of Chartered Accountants,” said Thomas Allen, AcSOC chairman. “Nevertheless, from our discussions, it is clear that accounting standards dealing with both special purpose entities and guarantees need to be strengthened to improve financial reporting in Canada. We understand that Canadian guidance is being prepared on a priority basis by the Accounting Standards Board.”

The May 2-3 AcSOC meeting included a full council discussion of external presentations and board research, which was facilitated by the special AcSOC sub-committee formed in February to look at standards in the wake of Enron. There were 10 external presentations from a broad range of constituencies, including from the analyst, preparer, user and accounting communities. Proceedings also included a presentation by AcSB chair Paul Cherry.

“What we heard was that Canadian standard-setters should not be complacent that an Enron-like failure could not happen in Canada,” said Allen. “However, we were able to satisfy ourselves that the program to improve financial reporting standards in Canada is well in hand. AcSOC, through its sub-committee, will continue to monitor developments in this area closely.”

AcSOC is an independent body established by the Canadian Institute of Chartered Accountants to oversee the activities of the AcSB.