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PSAB - Financial Instruments – Subsequent Issues [ED]

Next Steps:

The PSAB staff is currently conducting further research in respect of this project.  The next steps are to be determined.

Last updated:

December 2017


The amendments are being proposed to clarify aspects of the Section’s scope of application and  add transitional provisions and new guidance, as follows:

Purpose and Scope

Two amendments are proposed:

  • Unless a contractual right or a contractual obligation underlies a receivable or payable, the Section does not apply. By definition, there must be a contract for there to be a financial instrument.

  • Paragraph PS 3450.003(e) (i) is removed because it is redundant. The clause is redundant because the focus of PSG-2, Leased Tangible Assets, is on how a government lessor accounts for a lease liability associated with the lease of a tangible capital asset. A government lessor would not have a receivable under PSG-2.


  • A new paragraph clarifies how a transfer of collateral pursuant to a credit risk management mechanism in a derivative contract is accounted for.

Transitional Provisions

Three clarifications are proposed.

  • Prior to adopting this Section, a public sector entity may have unamortized discounts or premiums attributable to debt buy-backs. To comply with paragraph PS 3450.044, the issuer will derecognize these debt instruments at the beginning of the fiscal year in which Section PS 3450 is first applied. This derecognition is accounted for retroactively without restatement. An unamortized discount or premium associated with the derecognized debt instrument is accounted for as an adjustment to opening surplus/deficit.

  • Prior financial assets or financial liabilities in the cost or amortized cost category may have an associated unamortized discount or premium. When this is the case, the discount or premium is included in the item’s opening carrying value.

  • Derivatives may not have been recognized or may not have been measured at fair value prior to the adoption of Section PS 3450. When this is the case, any difference between the previous carrying value and fair value is recognized in the opening balance of accumulated remeasurement gains and losses.

Applying the Requirements

Appendix A is amended to include guidance explaining that derecognition of a financial asset does not occur if the transferor of a financial asset retains substantially all of the risks and benefits of ownership.

Other developments

December 2015

In December 2015, the PSAB staff updated this project to advise that further research is being conducted and that the next steps are to be determined.

October 2014

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, Financial Instruments.

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