Section PS 3450 - Financial Instruments
Effective date: |
(i) Government organizations - April 1, 2012 (ii) Governments – April 1, 2021. Earlier adoption is permitted |
Published by the PSAB: |
June 2011 |
Overview
This Section establishes standards on how to account for and report all types of financial instruments including derivatives. Financial instruments include primary instruments (such as receivables, payables and equity instruments) and derivative financial instruments (such as financial options, futures and forwards, interest rate swaps and currency swaps). Derivative financial instruments meet the definition of a financial instrument and, accordingly, are within the scope of this Section.
In general, a government should recognize a financial asset or a financial liability on its statement of financial position when, and only when, a government becomes a party to the contractual provisions of the instrument. From a measurement perspective, all items all items within the scope of this Section are assigned to one of two measurement categories:
- fair value; or
- cost or amortized cost.
A government should disclose information that enables users of its financial statements to evaluate the significance of financial instruments for its financial position and changes in its financial position.
History of Section PS 3450
Date |
Development |
Comments |
June 2011 |
This new Section establishes standards for recognizing and measuring financial assets, financial liabilities and non-financial derivatives. Effective for: (i) Government organizations – fiscal years beginning on or after April 1, 2012; and (ii) Governments – fiscal years beginning on or after April 1, 2015. Earlier adoption is permitted. Sections PS 1201 Financial statement presentation, and PS 2601 Foreign currency translation, are to be adopted at the same time. |
|
May 2012 |
Amended transitional provisions |
The transitional provisions for this Section have been amended to clarify that the measurement provisions are applied prospectively. A new transitional provision has been added that applies to government organizations transitioning from the standards in Part V of the Handbook – Accounting with items classified as available for sale. |
February 2013 |
Clarification and new transitional provisions |
The Section has been amended to clarify that the requirements in Section PS 3100 Restricted assets and revenues, apply when reporting on externally restricted assets that are financial instruments. As well, a new transitional provision has been added. |
August 2013 |
Clarification of the effective dates |
This Section has been amended to clarify the effective dates for governments and government organizations. |
March 2014 |
The transitional provisions have been amended to extend the effective date for governments by one year to fiscal years beginning on or after April 1, 2016. Earlier adoption is permitted. |
|
June 2015 |
The transitional provisions have been amended to extend the effective date for governments by three years to fiscal years beginning on or after April 1, 2019. Earlier adoption is permitted. |
|
March 2018 |
The PSAB (i) concluded that the PSA Handbook sections on foreign currency and financial instruments were appropriate for public sector entities including governments, and (ii) approved an extension of the effective date for governments of Sections PS 3450, Financial Instruments, and PS 2601, Foreign Currency Translation, to fiscal years beginning on or after April 1, 2021. Earlier adoption is permitted. |
|
April 2020 |
This Section has been amended to improve specific areas. The main features of the amendments include: (i) changes to the accounting treatment for bond repurchase transactions; (ii) clarification on aspects of the Section's application; and (iii) addition of new guidance to the transitional provisions. The amendments are effective for fiscal years beginning on or after April 1, 2021, with earlier application permitted. |
|
October 2020 |
The amendments permit the federal government to present exchange gains and losses related to its foreign reserves, including the associated derivatives, directly in the statement of operations. |
|
November 2020 |
Amendments to effective date for governments |
The transitional provisions have been amended to extend the effective for governments by one further year to fiscal years beginning on or after April 1, 2022. Earlier adoption is permitted. |
April 2021 |
Narrow-scope amendments to financial instruments – Phase III |
Phase III consisted of two proposals, as follows: (i) a proposal to clarify the presentation of derivatives, namely that public sector entities may present the remeasurement impact of derivatives separately on the statement of change in net debt; and (ii) a proposal to allow all public sector entities to make an accounting policy election to recognize exchange gains and losses, including the exchange gain or loss component of changes in fair value, directly in the statement of operations. These amendments are effective for fiscal years beginning on or after April 1, 2022, with earlier application permitted. Transitional provisions have also been introduced in Section PS 2601. |
Note: The above summary does not include details of consequential amendments made as the result of other projects.
Public Sector Accounting Discussion Group meetings
- March 3, 2016 - Section PS 3450 vs. IFRS 9 vs. ASPE – A Presentation on Financial Instruments
Amendments under consideration
- None