Public Sector Accounting Standards (PSAS)

New standard – Financial Statement Presentation

PSAB issued a new financial reporting model (Section PS 1202), including related consequential amendments that responds to the need for understandable financial statements for the public and its elected and appointed representations and replaces Section PS 1201, Financial Statement Presentation. The new standard includes change to the presentation of financial statements, such as:

• changes in the statement of financial position
• adding a new statement of net financial assets or net financial liabilities
• providing the option to present the change in net financial assets or net financial liabilities on the statement of net financial assets or net financial liabilities
• adding a new statement of changes in net assets or net liabilities
• new budget requirements in order to present an amended budget

The statement of operations remains substantially unchanged to the one in superseded Section PS 1201. The new standard includes guidance in various appendices and illustrative financial statements and includes a discussion on going concern.

Effective for fiscal years beginning on or after April 1, 2026, with early application permitted if the Conceptual Framework is adopted at the same time. The accompanying Basis for Conclusions document explains PSAB’s reasoning for key decisions made.

Revised standards – 2022-2023 Annual Improvements

PSAB issued the following narrow-scope amendments in April 2023 as a result of the 2022-2023 annual improvements:

• updated the transitional provisions in Section PS 3160, Public Private Partnerships, to explicitly state that early adoption is permitted and
• updated Section PS 3420, Inter-entity transactions, to clarify the application of accounting guideline, PSG-8, Purchased Intangibles, to inter-entity transactions.

Effective for fiscal years beginning on or after April 1, 2023, with early application permitted.

PSAB issued the following 2022-2023 remaining annual improvements in February 2024:

• Replaced the phrase “summary financial statements” with “financial reports” in all standards where the phrase is used and added a cross-reference to Chapter 3 of the Conceptual Framework for Financial Reporting in the Public Sector to position financial statements as an important type of financial report.
• Clarified the “Introduction To Public Sector Guidelines” and removed outdated guidance related to local governments.
• Replaced the word “power” with “ability” or “authority”, as appropriate, given the use of “power” to reference sovereign or equivalent powers in Chapter 5 of the Conceptual Framework.
• Corrected grammatical errors in the decision tree in Section PS 3050, Loans Receivable.
• Replaced the word “government” with “public sector entity” or “entity”, as appropriate, in Sections PS 1150, PS 2400, PS 3150, PS 3250 and PS 3310.

New framework - The Conceptual Framework for Financial Reporting in the Public Sector

The PSAB issued The Conceptual Framework for Financial Reporting in the Public Sector, which replaces the conceptual aspects of Section PS 1000, Financial Statement Concepts and Section PS 1100, Financial Statement Objectives.

The conceptual framework highlights considerations fundamental for the consistent application of accounting issues in the absence of specific standards. The accompanying Basis for Conclusions document explains PSAB’s reasoning for key decisions made.

Effective for fiscal years beginning on or after April 1, 2026, with early application permitted.

Re-Exposure draft – Employee Benefits, Proposed Section PS 3251

PSAB issued a re-exposure draft proposing to clarify and simplify the proposals related to the discount rate for defined benefit plans. These proposed amendments are in response to feedback received from interested and affected parties on the Exposure draft – Employee Benefits, Proposed Section PS 3251 previously issued in July 2021. Proposed Section PS 3251 would replace Section PS 3250, Retirement Benefits and Section 3255, Post-employment Benefits, Compensated Absences and Termination Benefits.

Comments are requested by January 20, 2025.

Exposure draft – Narrow-scope Amendment: GAAP Designation of PSA Handbook Appendices

PSAB issued an exposure draft proposing narrow-scope amendments to elevate the level of generally accepted accounting principles (GAAP) designated for four CPA Canada Public Accounting Handbook appendices (i.e., what level of GAAP an appendix comprises).

1. Appendix A to Section PS 3400, Revenue;
2. Appendix B to Section PS 3410, Government Transfers;
3. Appendix A to Section PS 3450, Financial Instruments; and
4. Appendix A to Section PS 4270, Disclosure of Allocated Expenses by Not-for-Profit Organizations.

The Exposure Draft proposes that such appendices should be level (i) GAAP, the same as the standard to which they relate. PSAB is also proposing to remove an outdated cross-reference in a decision tree to an accounting framework that no longer exists in the CPA Canada Handbook – Accounting.

The comment period is closed. PSAB is currently deliberating feedback on the Exposure Draft.

Exposure draft – Tangible Capital Assets, proposed amendments to Section PS 3150

PSAB issued an exposure draft aiming to increase comparability and transparency among public sector entities, including government not-for-profit organizations, by amending certain definitions, proposing additional guidance to ensure consistent application of the standard, and clarifying certain topics. This project is the first in a series of projects to implement PSAB’s Government Not-for-Profit Strategy, which encompasses a review of the PS 4200 series standards. Sections PS 4230, Capital Assets held by Not-for-Profit Organizations, and PS 4240 Collections held by Not-for-Profit Organizations, will be withdrawn as a result of the proposed amendments to Section PS 3150.

The proposed amendments would:

• amend the definition of “tangible capital asset”
• add guidance to identify a “collection”
• add disclosure requirements to highlight the importance of works of art, historical treasures, and collections
• add guidance to clarify the accounting treatment for situations addressed by the PS 4200 series.

The comment period is closed. Final Handbook amendments are expected to be issued in 2025.

International Public Sector Accounting Standards Board

Exposure draft – Tangible Natural Resources

IPSASB issued an exposure draft proposing a definition of tangible natural resources, as well as guidance on the recognition, measurement, display and disclosure of tangible natural resources. Prior to the development of this exposure draft, there was no explicit guidance on natural resources in IPSAS, or any other international accounting framework, so these resources were typically not reported in the general-purpose financial statements.

PSAB is encouraging Canadians to respond to this exposure draft so Canadian perspectives are considered in the development of the standard.

Comments are requested by February 28, 2025.

Additional non-authoritative guidance

To stay ahead of the curve, find additional non-authoritative guidance to help you navigate the application of the Public Sector Accounting Standards.

• On-Demand Workshop – Introduction to International Public Sector Accounting Standards (PSAB, 2023)
• Reporting Sustainability Program Information – Amendments to RPGS1 and 3: Additional non-authoritative guidance (IPSASB, 2023)

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