What happens when a closing statement clause says “ASPE, consistent with past practice” and past practice was not ASPE-compliant?

The rule

No statute governs the ordering of “in accordance with ASPE” against “consistent with past practice” in a completion-accounts clause. ASPE — the CPA Canada Handbook’s Accounting Standards for Private Enterprises — is a professional standard, not legislation, so “in accordance with ASPE” is not automatically the fallback default; it is one half of a clause that can genuinely conflict with the other half when the target’s bookkeeper has, for years, applied an accounting policy ASPE’s own rules do not actually permit.

When this changes

Where the clause is silent on which half controls, the practical resolution splits the swing: the portion of any restatement that reflects a genuine, consistently applied estimation judgment stays with past practice, and the portion that is simply past practice applying the wrong rule gets corrected to ASPE. The better fix is drafted before signing — state explicitly which controls where the two conflict — rather than leaving an independent accountant to allocate the swing after it has already been discovered.

Where This Plays Out in the Case Files

See it decided in the closing-statement case file, the two-frameworks-two-EBITDAs file and the take-or-pay commitment file.

Sources

• • No statute governs the ordering of “in accordance with ASPE” against “consistent with past practice” in a completion-accounts clause; ASPE is a professional accounting standard, not legislation.
• • Treadstone Law — purchase price adjustment clauses in an Ontario business sale — explains why a purchase agreement should spell out exactly which accounting policies apply to a closing statement.