Canada's Accounting Standards Board has agreed to adopt international accounting standards for the country's publicly traded companies over the course of the next five years.

The accounting rules known as Canadian GAAP will cease to exist as a separate basis of financial reporting after the end of the implementation program. The 25-member board also agree to pursue separate strategies for three major categories of reporting entities, including public companies, private businesses and not-for-profit organizations.

"Our fundamental premise and experience is that one size does not necessarily fit all when it comes to meeting the divergent needs of the full range of Canadian reporting entities and their stakeholders," said chairman Paul Cherry, in a statement. "For example, developments in global capital markets are important for public companies and their investors, but not so important for private businesses and not-for-profit organizations."

The European Union and Australia have already adopted the International Financial Reporting Standards, and other countries have convergence programs under way. Currently, the Canadian Securities Administrators already permit Canadian public companies that are U.S. Securities and Exchange Commission registrants to use U.S. GAAP instead of Canadian GAAP.

Cherry said that the decision came after consulting with Canadian companies and investors who repeatedly said they didn't want Canada to copy the "rules-oriented" standards of the United States. Over the course of 2006, the board will set a more detailed timeline for convergence.

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