Chapter 1 is intended to set the stage for developing students’ professional judgement and discussing the criteria by which a professional accountant exercises his or her professional judgement. In this text, the need for professional accountants to apply professional judgement in most areas of financial reporting is emphasized. There are five major topics covered in this chapter: (1) the general approach in Canada to accounting standards for the four different types of economic entities; (2) objectives of financial reporting; (3) development of international accounting standards and the structure of the IASC Foundation and the IASB; (4) the comparability of financial statements when prepared in different countries; and (5) Canadian accounting standards for private enterprise. The chapter explains the structure of the IASB and of IFRS, and why comparability of IFRS-based financial statements may be somewhat illusory when comparing across national borders. The chapter also explains why the CICA has decided to move ahead on their own on standard-setting for private enterprises in Canada. The use of a disclosed basis of accounting (DBA) as an alternative to GAAP-based presentation is also presented. Students will obtain practice in exercising their professional judgement through case analysis. There are three to ten additional cases at the end of each chapter. These cases highlight the existence of alternative accounting policies and raise the question as to what criteria should be used to make a choice. Students need to consider the importance of financial reporting objectives in arriving at decisions. The extent of students’ familiarity with situation-specific objectives will vary from university to university and program to program. For some, this chapter will contain new material and may require substantial study. For these students, a thorough coverage of the cases at the end of this chapter is strongly recommended. The Chapter 1 cases should not be assigned all at once, but they probably should all be covered over the course of the first few weeks of the course, in order to give the students practice at application. Other students may be quite experienced at case analyses that emphasize financial reporting objectives. For these students, this chapter will constitute a review and an update for the introduction of IFRS in Canada. For case-experienced students, coverage of one or two cases may be sufficient to reinforce prior learning.