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PSAB - Revenue [Completed]

Effective date:

The new Section will apply to fiscal years beginning on or after April 1, 2022. Earlier adoption will be permitted.

Next steps:

The PSAB expects to issue the new Section PS 3400, Revenue, in Q4/2018.

Last updated:

June 2018

Overview

At its meeting on June 21-22, 2018, the PSAB approved the final Handbook Section PS 3400, Revenue. Details of this new final standard are not yet available, but the Board plans to issue In Brief articles and a podcast to help explain the new Section.

The main fea­tures of the pro­pos­als in the May 2017 Exposure Draft were as fol­lows:

  1. A framework for revenue is proposed describing two categories of revenue — exchange transactions or unilateral transactions.
  2. If the transaction gives rise to one or more performance obligations, it would be an exchange transaction.
  3. Performance obligations are enforceable promises to provide goods or services to a payor as a result of exchange transactions.
  4. Revenue from an exchange transaction is recognized when the public sector entity has satisfied the performance obligation(s).
  5. The performance obligation(s) may be satisfied at a point in time or over a period of time.
  6. If no performance obligations are present, it would be unilateral revenues.
  7. 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.
  8. 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 is intended to enhance the relevance, reliability and comparability of information reported in financial statements by establishing a framework and criteria for recognition and measurement of revenue.  The decision usefulness of information provided to financial statement users would also be enhanced through additional disclosures.

The new Section will require a public sector entity to review existing contracts and terms of arrangement to determine whether a performance obligation is present and therefore accounted for as an exchange transaction.  Otherwise, it would be a unilateral transaction.

The definitions of exchange and non-exchange transactions in Section PS 3510, Tax Revenue, will be deleted to avoid confusion when the new Section on revenue is included in the PSA Handbook.

 

Other developments

April 2018

In April 2018, the staff of the PSAB updated the information in respect of this project to advise that the PSAB expects to issue the new Section PS 3400, Revenue, in Q4/2018.

January 2018

In January 2018, the PSAB staff updated this project to indicate that the PSAB expects to issue the new Section PS 3400 , Revenue, in Q3/2018.

May 2017

On May 1, 2017, the 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.

January 2017

In January 2017, the staff of the PSAB updated the information in respect of this project to advise that the PSAB expects to issue an Exposure Draft in Q2/2017.

April 2016

In April 2016, the staff of the PSAB updated the information in respect of this project to advise that the PSAB expects to issue an Exposure Draft in Q1/2017.

December 2015

In December 2015 the PSAB staff updated the status of this project. An Exposure Draft is to be developed during the first half of 2016.

August 2013

On August 30, 2013, the PSAB issued a Statement of Principles (SOP) that contains proposals that will affect the reporting of a broad range of revenues by public sector entities.

 

Correction list for hyphenation

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