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 - Financial Instruments – Narrow Scope Amendments [ED]

Next steps:

Re Phase II, the PSAB plans to re­view the com­ments from stake­hold­ers on its Ex­po­sure Draft in Q2/2020. Phase I is completed.

Last up­dated:

April 2020



In con­junc­tion with the de­ci­sion to move for­ward with Sec­tion PS 3450, Fi­nan­cial In­stru­ments, the Pub­lic Sec­tor Ac­count­ing Board (PSAB) in­ves­ti­gated an number of ac­count­ing is­sues brought for­ward by stake­hold­ers dur­ing re­cent con­sul­ta­tions.

Phase I

The initial phase of this project was to de­velop op­tions for PSAB to ad­dress the fol­low­ing: (i) the ac­count­ing treat­ment of a bond re­pur­chase; (ii) certain application issues; and (iii) im­prove­ments to the tran­si­tional pro­vi­sions.

On Jan­u­ary 31, 2019, the PSAB re­leased an Ex­po­sure Draft that pro­posed, sub­ject to com­ments re­ceived fol­low­ing ex­po­sure, to amend Sec­tion PS 3450, "Fi­nan­cial In­stru­ments". The Ba­sis for Con­clu­sions, which ac­com­pa­nied the Ex­po­sure Draft, ad­dresses al­ter­na­tive views and the Board po­si­tion, with its rea­sons. Com­ments were re­quested by May 1, 2019.

The PSAB approved the necessary amendments to Section 3450 at its meeting on December 12-13, 2019.

On April 1, 2020, the amendments to Section 3450 were issued to the PSA Handbook. In summary, the amendments are as follows:

Bond repurchase transactions

The most substantive issue addressed relates to the accounting treatment for bond repurchase transactions. Specifically, the amendments no longer require bond repurchase transactions to be treated as extinguishments, unless they meet the criteria set out in paragraph PS 3450.043 (legally discharged) or paragraph PS 3450.048 (exchange of debt).

Section application

The following amendments have been made: (i) clarification that Section PS 3450 does not apply unless a contractual right or a contractual obligation underlies a receivable or payable; (ii) clarification on how a transfer of collateral pursuant to a credit risk management mechanism in a derivative contract is accounted for; and (iii) addition of application guidance confirming that derecognition of a financial asset does not occur if the transferor retains substantially all the risks and benefits of ownership.

Transitional provisions

The following clarifications have been made: (i) controlling governments should use the carrying    values of the financial assets and liabilities in the records of its government organizations when consolidating a government organization; (ii) any unamortized discount, premium, or transaction costs associated with a financial asset or financial liability in the cost or amortized cost category should be included in the item's opening carrying value; and (iii) in cases where derivatives were not recognized or were not measured at fair value prior to adopting Section PS 3450, any difference between the previous carrying value and fair value should be recognized in the opening balance of accumulated remeasurement gains and losses.

The amendments are effective for fiscal years beginning on or after April 1, 2021, with earlier application permitted.

Phase II

Phase II deals with the Scope ex­clu­sion of cer­tain ac­tiv­i­ties by the Fed­eral gov­ern­ment. Sec­tion PS 2601, For­eign Cur­rency Trans­la­tion, ex­cludes for­eign ex­change bal­ances “in­tended to sus­tain for­eign ex­change re­serves and or­derly con­di­tions in the for­eign ex­change mar­ket for the Cana­dian dol­lar or to pro­vide as­sis­tance to for­eign coun­tries.” PSAB in­ves­ti­gated whether de­riv­a­tives that are used as part of such ac­tiv­i­ties should be ex­cluded from the scope.

On Jan­u­ary 3, 2020, the PSAB re­leased an Ex­po­sure Draft that pro­poses a spe­cific amend­ment to per­mit the Fed­eral gov­ern­ment of Canada to pre­sent for­eign ex­change gains or losses di­rectly in the state­ment of op­er­a­tions for those fi­nan­cial in­stru­ments as­so­ci­ated with Canada’s for­eign re­serves. Com­ments were re­quested by March 4, 2020.


Other de­vel­op­ments

April 1, 2020

On April 1, 2020, the amendments to Section 3450 in respect of Phase I were issued to the PSA Handbook.

March 2020

On March 31, 2020, the PSAB released the Basis for Conclusion, which describes the Board’s amendments to Section PS 3450, Financial instruments. This includes changes to the accounting treatment of bond repurchase transactions, clarification of transitional provisions, and other minor improvements.

January 2020

On January 3, 2020, the PSAB released an Exposure Draft that proposes a specific amendment to permit the Federal government of Canada to present foreign exchange gains or losses directly in the statement of operations for those financial instruments associated with Canada’s foreign reserves. Comments are requested by March 4, 2020.

January 2019

On January 31, 2019, the PSAB released an Exposure Draft that proposes, subject to comments received following exposure, to amend Section PS 3450, "Financial Instruments". The Basis for Conclusions, which accompanies the Exposure Draft, addresses alternative views and the Board position, with its reasons. Comments are requested by May 1, 2019.

August 2018

In August, 2018, 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 Q1/2019.


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.