This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice ( for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

PSAB - Section PS 3450, Financial Instruments [Completed]

Effective date:

Fiscal years beginning on or after April 1, 2012 for government organizations and April 1, 2016 for governments.

Transitional provisions:

Fiscal years beginning on or after April 1, 2012 for government organizations and April 1, 2016 for governments. Early adoption permitted.

Last updated:

October 2014


This new Section establishes standards for recognizing and measuring financial assets, financial liabilities and non-financial derivatives.

The main features of the new Section are:

  1. Items within the scope of the Section are assigned to one of two measurement categories: fair value, or cost or amortized cost.
  2. Almost all derivatives, including embedded derivatives that are not closely related to the host contract, are measured at fair value.
  3. Fair value measurement also applies to portfolio investments in equity instruments that are quoted in an active market.
  4. Other financial assets and financial liabilities are generally measured at cost or amortized cost.
  5. Until an item is derecognized, gains and losses arising due to fair value remeasurement are reported in the statement of remeasurement gains and losses.
  6. Budget-to-actual comparisons are not required within the statement of remeasurement gains and losses.
  7. When the reporting entity defines and implements a risk management or investment strategy to manage and evaluate the performance of a group of financial assets, financial liabilities or both on a fair value basis, the entity may elect to include these items in the fair value category.
  8. New requirements clarify when financial liabilities are derecognized.
  9. The offsetting of a financial liability and a financial asset is prohibited in absence of a legally enforceable right to set off the recognized amounts and an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously.
  10. New disclosure requirements of items reported on and the nature and extent of risks arising from financial instruments.

Of note, the transition requirements state that PSAB will review the application of this Section for governments by December 31, 2013.

Other developments

October 2014

Most recently, on October 10, 2014.the PSAB issued an ED clarifying aspects of the scope of application, and adding new guidance and transitional provisions to Section PS 3450. The proposals do not intend to change the scope of application of Section PS governments or government organizations.  See separate item.

December 2013

In December 2013 meeting, the PSAB completed its review of the application of Section PS 2601, Foreign Currency Translation, and Section PS 3450, Financial Instruments, to governments, and confirmed that the principles are fundamentally sound. In addition, in response to a request for additional time by governments to implement these standards, the PSAB approved an amendment to the transitional provisions to extend the effective date by one year to April 1, 2016 from April 1, 2015.

June 2013

In June 2013, the PSAB approved amendments to the transitional provisions in this Section and agreed that exposure of the changes is not required given the change is simply clarification of an implementation intent.

July 2011

In July 2011, PSAB issued a Basis of Conclusions document in respect of its new Section PS3450.

March 2011

In March 2011, PSAB approved new Section PS 3450, Financial Instruments, and two amended standards, Section PS 1201, Financial Statement Presentation, and Section PS 2601, Foreign Currency Translation (replacing the existing Section PS 1200, Financial Statement Presentation and Section PS 2600, Foreign Currency Translation, respectively).

November 2010

In November 2010, PSAB amended the 2009 ED to reflect changes arising from the deliberation of responses to the 2009 ED.  The amendments conform the 2009 ED to the financial statement presentation model now in the 2010 ED, Financial Instruments and Foreign Currency Translation: Financial Statement Presentation, specifically the introduction of a new statement of remeasurement gains and losses to report unrealized gains and losses on financial instruments and foreign exchange.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.