2021

Article – Increasing the accountability value of public sector financial statements

Feb 24, 2021

On February 24, 2021, CPA Canada published an article on how PSAB’s proposals aims to increase the accountability value of public sector financial statements. Financial statements are a tool for holding public sector entities accountable for the use of taxpayer dollars.

Review the full article on CPA Canada's website.

COVID-19 and its potential effect on the financial self-sufficiency of government business enterprises

Apr 08, 2021

On April 8, 2021, the Public Sector Accounting Board (PSAB) released guidance on how to evaluate a government business enterprise's financial self-sufficiency or viability during the COVID-19 pandemic.

The COVID-19 pandemic may impair the viability of some GBEs, and/or their financial self-sufficiency from revenue outside their controlling government’s reporting entity. “How to Evaluate a GBE’s Financial Self-Sufficiency” examines factors affecting a GBE’s current and future financial performance, which could include the COVID-19 pandemic. It also:  

  • draws on and magnifies CPA Canada Public Sector Accounting Handbook guidance for meeting the financial self-sufficiency criteria in the GBE definition; 
  • outlines factors, changes in factors, and questions for controlling governments to consider; and 
  • represents an important new starting place for comprehensively evaluating a GBE’s financial self-sufficiency.

Review the press release and guidance on the PSAB's website.

Exposure Draft – Employee Benefits, Proposed Section 3251

Jul 28, 2021

On July 28, 2021, the Public Sector Accounting Board (PSAB) issued Exposure Draft – “Employee Benefits, Proposed Section 3251,” which outlines principles for the first of several phases of the revised employee benefits standard. In this first phase, the Board focused on discount rate guidance and deferral provisions. Comments are requested by November 25, 2021.

The main features of the Exposure Draft are as follows:

  • Accounting guidance for short-term employee benefits, post-employment benefits, other long-term employee benefits and termination benefits have all been considered in this Exposure Draft.
  • Accounting for defined benefit plans results in a public sector entity recognizing the following amounts in surplus or deficit: current service cost, any past service cost and gain or loss on settlement, and net interest on the net defined benefit liability (asset).
  • Revaluations of the net defined benefit liability (asset) are recognized in net assets and are not reclassified to surplus or deficit in subsequent periods.
  • The discount rate used to discount post-employment benefit obligations is determined based on an assessment of the post-employment benefit plan’s funding status.
  • A simplified approach is used to account for other long-term employee benefits as they are not usually subject to the same degree of uncertainty as the measurement of post-employment benefits. This simplified method does not recognize revaluations in net assets.

Review the exposure draft and In Brief on the PSAB's website.

Exposure Drafts – Revised Conceptual Framework for Financial Reporting in the Canadian Public Sector

Jan 11, 2021

On January 11, 2021, the Pub­lic Sec­tor Ac­count­ing Board (PSAB) issued two Exposure Drafts together with related supporting information in respect of its project to develop a new Conceptual Framework for financial reporting in the Canadian public sector. Com­ments on the Exposure Drafts are re­quested by May 12, 2021.

The Exposure Drafts propose:

  • replacing Section PS1000, Financial Statement Concepts, and Section PS1100, Financial Statement Objectives, with a new 10 chapter Conceptual Framework; and
  • making consequential amendments to various other Sections in the PSA Handbook.

The Conceptual Framework will not be a standard and will not override specific standards. Hence, the changes to the existing conceptual framework would not have an immediate effect on the financial statements of most reporting entities. However, entities could be affected by the changes if they need to use the revised Conceptual Framework to develop or select accounting policies when no standard specifically applies to a particular economic resource, economic obligation, transaction or other event. In such circumstances, the revised Conceptual Framework would be applied prospectively. Applying the new presentation concepts in Chapter 10 of the proposed Conceptual Framework may also lead entities to review their financial statement disclosures.

The Exposure Drafts do not specify a proposed effective date for the new Conceptual Framework. They do, however, state that the PSAB will start using the revised Conceptual Framework once it is issued and that the revised concepts will guide the Board as it develops or amends standards.

For further details, refer to the following material on the PSAB's web­site:

  • Exposure Draft, The Conceptual Framework for Financial Reporting in the Public Sector;
  • Exposure Draft, Consequential Amendments Arising from the Proposed Conceptual Framework;
  • In Brief summary of the proposals;
  • Visual aid in respect of the proposals.

Exposure Drafts – Revised Financial Reporting Model for the Canadian Public Sector

Jan 11, 2021

On January 11, 2021, the Pub­lic Sec­tor Ac­count­ing Board (PSAB) issued two Exposure Drafts together with related supporting information in respect of its project to develop a new Financial Reporting Model for the Canadian public sector. Com­ments on the Exposure Drafts are re­quested by May 12, 2021.

The Exposure Drafts propose:

  • replacing the existing Section PS1201, Financial Statement Presentation, with a new Section PS1202 of the same name; and
  • making consequential amendments to various other Sections in the PSA Handbook.

The main features of the Exposure Draft relate to the financial statement package, which includes:

  • a statement of financial position (changes);
  • a statement of net financial assets or net financial liabilities (new);
  • a statement of operations (changes);
  • a statement of changes in net assets or net liabilities (new);
  • a statement of cash flow (changes); and
  • accompanying notes and schedules (changes).

The Exposure Draft also features new budget requirements.

The proposals affect the presentation of financial statements. As a result, preparers would need to update their financial systems and processes to reflect the revised financial statement presentation. The proposals build on the existing reporting model in Section PS 1201 issued in 2011. However, governments have not yet adopted this model as adopting it is required coincident with governments adopting the financial instrument suite of standards.

Subject to comments received, the PSAB proposes that the effective date of the new Financial Reporting Model will be for fiscal years beginning on or after April 1, 2024 with earlier adoption

permitted. The Section is to be applied retroactively with restatement of prior periods. Section PS 1202 would apply to all entities that prepare financial statements in accordance with the PSA Handbook, except for those applying the PS 4200 series and the reporting model contained therein.

For further details, refer to the following material on the PSAB's web­site:

  • Exposure Draft, Financial Statement Presentation, Proposed Section PS 1202;
  • Exposure Draft, Consequential Amendments Arising from the Financial Statement Presentation Standard, Proposed Section PS 1202
  • In Brief summary of the proposals;
  • Visual aid to the proposals

IFAC Releases Latest Point of View: Greater Transparency and Accountability in the Public Sector

Jul 19, 2021

On July 19, 2021, the International Federation of Accountants (IFAC) published a Point of View: “Greater Transparency and Accountability in the Public Sector.”

IFAC notes that the public sector is facing a myriad of competing priorities, including an unprecedented global health crisis and climate emergency, and must make critical decisions that will affect generations to come. In this environment, helping citizens understand how public funds are being managed and spent, as well as the reasoning behind and consequences of decisions made, can meet the heightened need for transparency and accountability necessary to retain and grow stakeholder trust.

IFAC’s Point of View explores the need for strong governance and public financial management (PFM), so that governments and public sector entities around the world can make informed, data-driven decisions for people, the planet, and the economy. It also outlines how the accountancy profession, with its public interest mandate, can support the public sector in achieving long-term financial sustainability and resilience, to help create a better world with stronger economies and fairer societies.

Re­view the full Point of View document on the IFAC's web­site.

 

In Brief – Public Private Partnerships, Section PS 3160

Apr 01, 2021

On April 1, 2021, the Public Sector Accounting Board (PSAB) released an overview of PSAB’s new standard on Public Private Partnerships issued in April 2021, which addresses the accounting and reporting of infrastructure procured through public private partnership arrangements.

Review the In Brief on the PSAB's website.

International summary comparison: PSAB’s proposals for a revised conceptual framework and IPSASB’s existing conceptual framework

Mar 26, 2021

On March 26, 2021, the Public Sector Accounting Board (PSAB) released a summary comparison document to provide an overview of the differences between the two conceptual frameworks.

This comparison is helpful given PSAB’s decision to adapt IPSAS principles when developing future standards.

Review the summary on the PSAB's website.

International summary comparison: PSAB’s proposals for a revised reporting model and IPSASB’s existing reporting model

Mar 26, 2021

On March 26, 2021, the Public Sector Accounting Board (PSAB) released a summary comparison document to provide an overview of the differences between the two reporting models.

This comparison is helpful given PSAB’s decision to adapt IPSAS principles when developing future standards.

Review the summary on the PSAB's website.

IPSASB consultation documents on leases

Feb 04, 2021

The International Public Sector Accounting Standards Board (IPSASB) released an exposure draft on leases and a request for information on concessionary leases and other arrangements similar to leases. The Public Sector Accounting Board (PSAB) encourages stakeholders to send comments to the IPSASB by May 17, 2021.

Exposure Draft 75 Leases proposes a model that is aligned with IFRS 16 Leases for lease accounting in the public sector. For lessees, ED 75 proposes a right-of-use model that will replace the risks and rewards incidental to ownership model in IPSAS 13 Leases. For lessors, ED 75 proposes to substantially carry forward the risks and rewards incidental to ownership model in IPSAS 13.

The request for information published alongside ED 75 will provide the IPSASB with further information on the issues that need to be considered in accounting for concessionary leases and other arrangements similar to leases that are quite common in the public sector.

Comments on both documents are requested by May 17, 2021.

Review additional information on the IPSASB's website:

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