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PSAB: A Revised Conceptual Framework for the Canadian Public Sector [ED]

Comment period ends on June 30, 2021

Next steps

The PSAB will review the feedback from respondents to its two Exposure Drafts in Q2/2021

Last up­dated:

April 2021

Overview

The Public Sector Accounting Board (PSAB) believes that the conceptual framework material in Sections PS 1000, Financial Statement Concepts, and PS 1100, Financial Statement Objectives, require review with a focus on measuring the financial performance of public sector entities. This review was identified as a high priority in the PSAB’s 2010-2013 Strategic Plan in response to a suggestion from the senior government finance community.

As part of the latest phase of this project, on January 11, 2021, the PSAB has issued two Exposure Drafts, together with related supporting information, in order 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 Conceptual Framework; and
  • making consequential amendments to various other Sections in the PSA Handbook.

The new Conceptual Framework would include 10 chapters, as follows: 

  • Chapter 1: Introduction to the Conceptual Framework
  • Chapter 2: Characteristics of public sector entities
  • Chapter 3: Financial reporting objective
  • Chapter 4: Role of financial statements
  • Chapter 5: Financial statement foundations
  • Chapter 6: Financial statement objectives
  • Chapter 7: Financial statement information
  • Chapter 8: Elements of financial statements 
  • Chapter 9: Recognition and measurement in financial statements
  • Chapter 10: Presentation concepts for financial statements

These latest proposals not only consider all of the feedback received from all the documents for comment issued (in 2011, 2012, 2015 and 2018), but they also consider international developments, PSAB’s proposals in other projects on its technical agenda, its strategic objectives and the Joint Working Group’s recommendations.

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.

 

Other de­vel­op­ments

April 2021

On April 21, 2021, the PSAB announced that the comment periods are extended from May 12 to June 30, 2021.

January 2021

On January 11, 2021, the PSAB issued two Exposure Drafts, together with related supporting information, as part of this 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.

September 2020

In September 2020, the PSAB staff updated this project to note that the Board now expects to issue the two exposure drafts and accompanying documents in early2021.

October 2019

In October 2019, the AcSB staff updated this project to note that the Board is developing two exposure drafts (one for a revised conceptual framework and one for a revised reporting model) with two accompanying basis for conclusions documents and the resulting consequential amendments. PSAB expects to issue the two exposure drafts and accompanying documents in 2020.

May 2018

On May 28, 2018, the PSAB issued a Statement of Concepts proposing a revised conceptual framework. Comments are requested by November 28, 2018.

 

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