Glossary
US GAAP Conversion
A US GAAP Conversion is the work of restating a company’s financial statements from one accounting framework, usually International Financial Reporting Standards (IFRS) or Accounting Standards for Private Enterprises (ASPE), into United States Generally Accepted Accounting Principles (US GAAP), or the reverse. It matters most when a Canadian company lists or raises capital in the US, when a US acquirer buys a Canadian target, or when a business has to report under both frameworks at once. At Treewalk, we handle these conversions inside our public company financial reporting practice, and we do the reconciliation work rather than the audit that sits on top of it.
What it actually is
A conversion is more than swapping one set of statements for another. It is a line-by-line reassessment of accounting policies under a different rulebook, plus the schedules that prove how you got from one number to the other.
The two frameworks agree on most fundamentals and diverge on specific policies. Common areas we look at first:
- Research and development. IFRS lets you capitalize qualifying development costs; US GAAP generally expenses them as incurred.
- Inventory. US GAAP permits the last-in-first-out (LIFO) method; IFRS does not.
- Impairment. IFRS allows reversal of certain prior impairments when conditions improve; US GAAP generally prohibits reversal.
- Presentation and classification. Statement layout, subtotal conventions, and note disclosures differ, so the same facts get shown differently.
US GAAP is set by the Financial Accounting Standards Board, and IFRS is set by the International Accounting Standards Board. The gap between them has narrowed over the years, but it has not closed, which is why a conversion needs a practitioner who works in both.
When you’d need one
You need a conversion when the audience for your numbers changes jurisdiction. The most common triggers we see:
- A US listing or capital raise. A Canadian issuer moving toward a US exchange or a US registration statement has to speak the SEC’s language.
- A cross-border acquisition. A US buyer running diligence on a Canadian target wants the target’s history recast so it lines up with the buyer’s own reporting.
- Dual reporting. Some companies file in Canada and the US at the same time and have to maintain both frameworks in parallel.
We have lived in all three situations. We have acted as the outsourced finance function for companies reporting under US GAAP for their US filings while also meeting Canadian requirements, and we have prepared statements under both frameworks for the same fiscal year. On the deal side, when our transaction advisory team assesses a US target, we work the accounting policy review in US GAAP because that is the standard the target reports under.
The reconciliation schedule is the deliverable people forget to ask for. Auditors, buyers, and regulators do not just want the converted statements. They want the bridge that shows every adjustment between the old framework and the new one, with support behind each line. Build that bridge as you go, not at the end.
How we approach it at Treewalk
We treat a conversion like a controlled restatement, not a one-time cleanup. The sequence we run:
- Scope the differences. We map your existing policies against the target framework and flag every area where treatment changes.
- Quantify the adjustments. Each difference becomes a numbered adjustment with working papers behind it, so nothing is a black box.
- Rebuild the statements. We produce the converted financial statements and notes in the format the end user expects.
- Prepare the bridge. We deliver a reconciliation that ties the original figures to the converted figures, adjustment by adjustment.
- Support the audit. We do not provide audit or attest services. We prepare the file and act as the liaison so your external auditor can review the conversion cleanly.
Because we sit in the outsourced Office of the CFO for many of our public company clients, the conversion is not an isolated project. It connects to the quarterly and annual reporting cycle, the filing calendar, and the board and audit committee materials we already prepare.
What this is NOT
A conversion is not an audit. We prepare and reconcile the statements; an independent auditor provides assurance on them. Treewalk does not offer audit or attest services, and we say so plainly.
It is also not a translation exercise. Nothing here is about currency or language. It is about accounting policy, and the judgment calls that come with applying a different set of standards to the same underlying transactions.
Finally, it is not a one-size template. A development-stage mining issuer and a revenue-generating software company will have completely different adjustment lists, because the policy differences that bite depend on what the business actually does.
Frequently asked questions
How long does an IFRS to US GAAP conversion take?
It depends on the number of years being converted, the complexity of your policies, and how clean the underlying records are. A single-year conversion for a simple entity is far faster than a multi-year recast for a company with capitalized development costs, complex revenue, or acquisitions in the history. We scope the timeline once we have seen your statements.
Is a conversion the same as an audit?
No. A conversion restates your numbers under a different framework and documents how. An audit is an independent opinion on whether the statements are fairly presented. Treewalk prepares and reconciles the conversion, then supports your external auditor. We do not perform the audit ourselves.
Do we need a full conversion if we already report under IFRS?
Not always. Foreign private issuers can often file IFRS as issued by the IASB with the SEC without a full reconciliation to US GAAP. Whether that path is open to you depends on your issuer status and filing. We help you confirm which route applies before you spend money converting.
How is this different from a Big Four style engagement?
We run lean and stay close to your file. The same team that prepares your quarterly reporting handles the conversion, so there is no handoff and no rebuilding of context. You get senior attention on the judgment calls rather than a rotating cast, and we keep the audit liaison work inside the same relationship.
Where to next
If you are weighing a US listing, a cross-border deal, or dual reporting and want to know what a conversion would take, our public company reporting team is the right place to start. It pairs closely with our IFRS financial statement preparation work, and it feeds directly into SEDAR+ filing support on the Canadian side and EDGAR filing on the US side. To talk it through, get in touch through our contact page.
