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Public sector

IPSASB Exposure Draft – Social Benefits

Oct 31, 2017

On October 31, 2017, the International Public Sector Accounting Standards Board (IPSASB) issued Exposure Draft 63, "Social Benefits", which defines social benefits and proposes requirements for recognition, measurement and disclosure of social benefit schemes. Canadian stakeholders are encouraged to provide their comments to IPSASB by March 31, 2018.

These proposals aim to improve consistency, transparency, and reporting by public sector entities of social benefit schemes, which account for a large portion of government expenditure in most jurisdictions.

Review the press release and Exposure Draft on the IPSASB's website.

PSAB In Brief – Statement of Principles: Public Private Partnerships

Sep 28, 2017

On September 28, 2017, the Public Sector Accounting Board (PSAB) released the new In Brief resource that provides a plain and simple overview on technical topics. The inaugural In Brief gives an overview of the key principles developed in PSAB’s recently released Statement of Principles, Public Private Partnerships.

Review the publication on the PSAB's website.

IPSASB Consultation Paper – Accounting for Revenue and Non-exchange Expenses

Aug 31, 2017

In August 2017, the International Public Sector Accounting Standards Board (IPSASB) issued a Consultation Paper that discusses various recognition approaches, implementation and measurement issues for revenue and non-exchange expenses. Canadian stakeholders are encouraged to provide their comments to IPSASB by January 15, 2018.

Review the Consultation Paper on the IPSASB's website.

IPSASB publishes financial instruments ED based on IFRS 9

Aug 24, 2017

On August 24, 2017, the International Public Sector Accounting Standards Board (IPSASB) published an exposure draft (ED) to improve public sector reporting on financial instruments.

ED 62 Financial Instruments is based on IFRS 9, Financial Instruments and is intended to replace IPSAS 29 Financial Instruments: Recognition and Measurement, which is based on IAS 39. The new standard will introduce simplified classification and measurement requirements for financial assets, a forward looking impairment model, and a flexible hedge accounting model. Consistent with the relief provided in IFRS 9, the IPSASB proposes to allow an option for entities to continue to apply the IPSAS 29 hedging requirements.

The IPSASB applied its process for reviewing and modifying IASB documents to the requirements in IFRS 9 with the aim of keeping public sector requirements as closely as possible in line with IFRS while also including appropriate public sector specific modifications where necessary. Therefore, ED 62 includes public sector specific guidance on financial guarantees issued through non-exchange transactions and concessionary loans and examples illustrating how to apply the principles in ED 62 to transactions that are unique to the public sector.

In view of the significant changes proposed, the IPSASB intends to provide a three year implementation period for the new standard. Early adoption will be permitted.

Comments are requested by December 31, 2017.

Review the press release on the IPSASB's website. The IPSASB's consultation page offers access to the ED and comprehensive background material, including a comparison between the requirements in IFRS 9 and those in ED 62.

PSAB Financial Instruments Update – Respond to IPSASB ED, Financial Instruments

Aug 24, 2017

On August 24, 2017, the Public Sector Accounting Board (PSAB) released an update on why they are considering the International Public Sector Accounting Board’s (IPSASB) financial instruments standard to address current Canadian hedge accounting issues. Stakeholders are encouraged to respond to the IPSASB exposure draft by December 31, 2017.

Hedge accounting option

PSAB staff, in collaboration with stakeholders, have identified certain timing issues in PS 3450 that may impact a government’s surplus or deficit in a manner that is unrepresentative of the underlying hedging transactions.

In search of a solution, the Board has followed the work of the IPSASB.

The IPSASB developed a new model that includes a hedging option and was designed for the public sector. PSAB believes this standard would resolve the hedge accounting issues identified in Canada. We are considering the use of this standard.

Fair value considered

PSAB also considered stakeholder concerns about the volatility that will be introduced to the net debt of governments by recording derivative instruments at their fair value each reporting period.

Recording financial instruments at fair value is not within the scope of investigating a hedge accounting option. If PSAB’s stakeholders are in favour of the IPSASB proposal, the Board will consider the implications for net debt in finalizing the hedge accounting requirements for inclusion in the PSA Handbook.

Review the update on the PSAB's website.

IPSASB consults on accounting for revenue and non-exchange expenses

Aug 22, 2017

On August 22, 2017, the International Public Sector Accounting Standards Board (IPSASB) published a consultation paper on potential recognition and measurement approaches for revenue and non-exchange expenses. The paper proposes updating existing IPSAS 23 "Revenue from Non-Exchange Transactions (Taxes and Transfers)" as well as to replace current IPSAS dealing with revenue arising from exchange transactions and construction contracts with an IPSAS based on IFRS 15.

The IPSASB's motivation for the proposed updates is to address some key IPSAS implementation issues, to maintain IFRS convergence, and to address gaps in literature that have been identified in accounting for non-exchange expenses.

For non-exchange transactions with performance obligations the paper discusses two potential revenue recognition approaches, one that maintains the principles within IPSAS 23 and one that builds on recognising revenue when identified performance obligations have been met.

The paper also offers two possible approaches for the recognition of non-exchange expenses. The first one relies on the IPSASB’s Conceptual Framework to determine when a resource provider has a liability and an expense while the second one mirrors the equivalent revenue approach.

The implementation issues addressed relate to the recognition of revenue from capital grants and services in-kind; initial and subsequent measurement of non-contractual receivables; and subsequent measurement of non-contractual payables.

Comments are requested by January 15, 2018.

Review the press release and access the consultation paper and an At a Glance overview of the consultation paper on the IPSASB's website.

PSAB Statement of Principles – Public Private Partnerships

Jul 20, 2017

On July 20, 2017, the Public Standards Accounting Board (PSAB) issued a Statement of Principles that proposes a new standard on public private partnerships. Stakeholders are encouraged to submit their comments by October 17, 2017.

The main fea­tures of the proposals in the Statement of Principles (SOP) are as fol­lows:

  • Public private partnership infrastructure is procured by the public sector entity using a private sector partner whose obligations include: a requirement to build, acquire, improve or refurbish; finance; and maintain and/or operate the infrastructure.
  • Public private partnership infrastructure is recognized as an asset where the public sector entity controls the infrastructure.
  • A liability is recognized where the public private partnership gives rise to an obligation to the public sector entity to sacrifice future economic benefits.
  • Infrastructure and the associated liability are measured initially at cost.

Re­view the Statement of Principles on the PSAB's website.

PSAB Work Plan – 2017-2018

Jun 08, 2017

On June 8, 2017, the Public Sector Accounting Board (PSAB) released its Work Plan, which sets out PSAB’s key activities and project milestones in 2017-2018.

The PSAB's key strategies and objectives are as follows:

  1. Develop standards in accordance with due process and the public interest
  2. Finalize the Conceptual Framework
  3. Review PSAB’s approach to International Public Sector Accounting Standards
  4. Encourage stakeholders to support and accept our standards
  5. Implement a not-for-profit strategy that meets the public interest

Review the Work Plan on the PSAB's website.

PSAB 2017-2020 Strategic Plan – Journey Forward

May 24, 2017

On May 24, 2017, the Public Sector Accounting Board (PSAB) released their new three-year strategic plan.

The key strategies included in the strategic plan are as follows:

  • Strategy 1 — Develop standards in accordance with due process and the public interest
  • Strategy 2 — Finalize the conceptual framework
  • Strategy 3 – Review our approach to International Public Sector Accounting Standards
  • Strategy 4 – Encourage stakeholders to support and accept our standards
  • Strategy 5 – Implement a public sector not-for-profit organization strategy that meets the public interest

Review the Strategic Plan on the PSAB's website.

PSAB Exposure Draft – Revenue, Proposed Section PS 3400

May 01, 2017

On May 1, 2017, the Public Sector Accounting Board (PSAB) issued an Exposure Draft that proposes a framework describing two categories of revenue – exchange and unilateral. Stakeholders are encouraged to submit their comments by August 15, 2017.

The PSAB proposes, subject to comments received following exposure, to issue a new Section on revenue.

The main features of the Exposure Draft are as follows:

  • A framework for revenue is proposed describing two categories of revenue — exchange transactions or unilateral transactions.
  • If the transaction gives rise to one or more performance obligations, it would be an exchange transaction.
  • Performance obligations are enforceable promises to provide goods or services to a payor as a result of exchange transactions.
  • Revenue from an exchange transaction is recognized when the public sector entity has satisfied the performance obligation(s).
  • The performance obligation(s) may be satisfied at a point in time or over a period of time.
  • If no performance obligations are present, it would be unilateral revenues.
  • Unilateral revenues result in increases in the economic resources of a public sector entity without a direct transfer of goods or services to the payor.
  • Unilateral revenues are recognized when a public sector entity has the authority to claim or retain an inflow of economic resources and a past event gives rise to a claim of economic resources.

The new Section would apply to fiscal years beginning on or after April 1, 2021. Earlier adoption is permitted. The Section would be accounted for as a change in accounting policy applied retroactively with restatement of prior periods.

Review the Exposure Draft on the PSAB's Web site.

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