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PSAB: A Revised Reporting Model for the Canadian Public Sector [ED]

Comment period ends on June 30, 2021

Next steps

The PSAB will start reviewing the feedback from respondents to its two Exposure Drafts in Q3/2021

Last up­dated:

June 2021

Overview

The Public Sector Accounting Board (PSAB) is in the process of developing a new financial reporting model for the Canadian public sector.  The project involves replacing and/or amending the current financial reporting model which is primarily set out in Section PS 1201, Financial Statement Presentation, of the PSA Handbook.

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, which set out the new proposals. Comments on the Exposure Drafts are requested by May 12, 2021.

After considering the relative merits of many reporting models and the extensive input received from stakeholders, the PSAB believes that the proposed reporting model meets user needs and is both pragmatic and strategic.

The Board concluded that:

  • The proposed reporting model responds to the need for understandable financial statements for the public and its elected and appointed representatives. The model would report only elements that the public recognizes from its own finances: assets, liabilities, revenues and expenses.
  • The model is aspirational in that it provides the Board the ability to deal with: (i) current issues, such as remeasurements and performance obligations; and (ii) future issues, such as heritage resources, natural capital and endowments, while ensuring that the economic substance of items, transactions and other events is reflected for improved accountability information.

The Exposure Drafts propose:

  • replacing the existing Section PS1201, Financial Statement Presentation, with a new Section PS1202 of the same name; and
  • making consequential amendments to various other Sections in the PSA Handbook.

The main features of the Exposure Draft relate to the financial statement package, which includes:

  • a statement of financial position (four key amendments are proposed);
  • a statement of net financial assets or net financial liabilities (this is a new statement);
  • a statement of operations (this statement is substantially unchanged);
  • a statement of changes in net assets or net liabilities (this is a new statement);
  • a statement of cash flow (the main amendment to this statement is the isolation of financing activities)
  • accompanying notes and schedules.

The Exposure Drafts also feature new budget requirements.

The proposals affect the presentation of financial statements. As a result, preparers would need to update their financial systems and processes to reflect the revised financial statement presentation. The proposals build on the existing reporting model in Section PS 1201 issued in 2011. However, governments have not yet adopted this model as adopting it is required coincident with governments adopting the financial instrument suite of standards.

Subject to comments received, the PSAB proposes that the effective date of the new Financial Reporting Model will be for fiscal years beginning on or after April 1, 2024 with earlier adoption permitted. The Section is to be applied retroactively with restatement of prior periods.

Section PS 1202 would apply to all entities that prepare financial statements in accordance with the PSA Handbook, except for those applying the PS 4200 series and the reporting model contained therein.

For further details, refer to the following material on the PSAB's website:

  • Exposure Draft, Financial Statement Presentation, Proposed Section PS 1202;
  • Exposure Draft, Consequential Amendments Arising from the Financial Statement Presentation Standard, Proposed Section PS 1202
  • In Brief summary of the proposals;
  • Visual aid to the proposals

 

Other de­vel­op­ments

June 2021

In June 2021, the PSAB staff updated this project to note that the Board now expects to start reviewing the feedback from respondents to its two Exposure Drafts in Q3/2021.

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 has issued two Exposure Drafts, together with related supporting information in respect of this project which set out the new proposals. 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 Principles proposing a revised reporting model for the Canadian public sector. Comments are requested by November 28, 2018.

 

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