Financial Instruments – Subsequent Issues

Current Status Next Steps

Conducting research.

To be determined.

BACKGROUND

Since the issuance of Section PS 3450, Financial Instruments, there have been reports of transition and other issues that have been brought to the Public Sector Accounting Board’s (PSAB) attention.

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The objective of this project is to consider these issues as they arise. 

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PROJECT NEWS & DECISION SUMMARIES

PSAB Decision Summary – September 21-22, 2017
The Board received an update on the project as well as the International Public Sector Accounting Standards Board’s recently issued Exposure Draft 62, “Financial Instruments.” The Board asked staff to continue outreach to stakeholders to promote understanding of the IPSASB’s proposals. The Board also discussed the project timeline and requested more information in December.

PSAB Financial Instruments Update – Respond to IPSASB Exposure Draft 62, Financial Instruments
August 24, 2017. Read this update on why PSAB is considering the IPSASB’s financial instruments standard to address current Canadian hedge accounting issues. We encourage stakeholders to respond to the IPSASB exposure draft by December 31, 2017

PSAB Decision Summary – June 22-23, 2017
The Board received an update on the stakeholder consultation regarding the implementation experiences in the not-for-profit sector with Section PS 3450, Financial Instruments, and provided feedback to staff about next steps.

PSAB Decision Summary – December 15-16, 2016
PSAB discussed a draft work plan to evaluate what would be involved from a technical and resource perspective to address the challenges identified by stakeholders in applying Section PS 3450, Financial Instruments. PSAB noted that developing a hedge accounting option could affect entities that have already adopted the standard. The Board requested staff to consult with these entities about their implementation experience to inform PSAB’s future decision.

PSAB Decision Summary – September 26-27, 2016
PSAB received a report on stakeholder consultations across the country. The consultation has resulted in better understanding by all parties of the issues with implementation of Section PS 2601, Foreign Currency Translation, and Section PS 3450, Financial Instruments.

PSAB requested staff to develop a plan to address the technical issues identified in the consultation for PSAB’s consideration at its December 2016 meeting.

PSAB Decision Summary – June 16-17, 2016
PSAB received a staff presentation on issues identified in cross-country meetings with stakeholders. Staff will continue to meet with stakeholders and provide a report to PSAB in September 2016.

PSAB Decision Summary – September 17-18, 2015
PSAB received a report on the results of an informal consultation with senior governments. PSAB requested staff to prepare a comparison document highlighting the similarities and differences that exist with other foreign currency and financial instruments standards.

PSAB Decision Summary – June 18-19, 2015
PSAB approved an amendment to the transitional provisions in Section PS 2601, Foreign Currency Translation, and Section PS 3450, Financial Instruments, to extend the effective date to April 1, 2019 from April 1, 2016.

PSAB deferred considering amendments proposed in the October 2014 Exposure Draft, “Financial Instruments: Transition,” until a later date.

PSAB Decision Summary – March 19-20, 2015
PSAB reconfirmed the need to replace Section PS 2600, Foreign Currency Translation. PSAB continues to be of the view that currency risk would reflect current rates and that derivatives used as hedging instruments needs to be presented separately and not as part of a synthetic instrument.  

While generally supportive of much of the direction in Section PS 2601, Foreign Currency Translation, and Section PS 3450, Financial Instruments, PSAB agreed to further explore the implementation of considerations put forth by stakeholders, particularly in the areas of hedge accounting and linkage to the Concepts Underlying Financial Performance project. To enable due process, PSAB directed staff to prepare an implementation deferral for those stakeholders that continue to apply Section PS 2600, which would also respect early adopters of Sections PS 2601 and PS 3450, for approval at its June 2015 meeting.

PSAB deferred considering amendments proposed in the Exposure Draft, “Financial Instruments: Transition,” until its June 2015 meeting.

Exposure Draft – Financial Instruments: Transition
October 10, 2014. PSAB has issued an Exposure Draft clarifying aspects of the scope of application, and adding new guidance and transitional provisions to Section PS 3450, Financial Instruments. Stakeholders are encouraged to submit their comments, on the form provided, by January 15, 2015.

PSAB Decision Summary – September 15-16, 2014
The extension of the effective date of Section PS 3450, Financial Instruments, gave PSAB the opportunity to meet with stakeholders to determine transitional issues and other concerns. PSAB reviewed a detailed analysis of the transitional issues as well as other concerns raised.

After a thorough discussion and consideration, PSAB approved an exposure draft proposing clarifications in the scope of application and transitional provisions in Section PS 3450.

In addition, significant attention was given to discussing other concerns identified by stakeholders. Those concerns focused on the issue of recognizing gains and losses rather than their deferral or disclosure only. PSAB confirmed that the principles in the standard are fundamentally sound and requested staff to prepare a document further supporting why this is in the public interest.

PSAB Decision Summary – December 12-13, 2013
PSAB completed its review of the application of Section PS 2601, Foreign Currency Translation, and Section PS 3450, Financial Instruments, for governments, and confirmed that the principles are fundamentally sound.

The request for additional time to implement the standards was supported. PSAB views the extension as an opportunity to address transitional issues and concerns prior to the effective date.

PSAB approved an amendment to the transitional provisions to extend the effective date to April 1, 2016 from April 1, 2015, which will be issued in the Handbook in March 2014.

PSAB Decision Summary – June 12-13, 2013
PSAB reviewed the wording in the transitional provisions in Section PS 2601, Foreign Currency Translation, and Section PS 3450, Financial Instruments, to clarify its intent regarding the effective dates for adoption. PSAB approved amendments to the transitional provisions in these two Sections and agreed that exposure of the changes is not required given the change is simply clarification of an implementation intent. The relevant amendments state that the Sections apply to fiscal years beginning on or after April 1, 2015. For those government organizations that applied the CICA Handbook – Accounting prior to adopting the CICA Public Sector Accounting Handbook, the Sections apply to fiscal years beginning on or after April 1, 2012.

PSAB Decision Summary – December 13-14, 2012
PSAB approved amendments to Section PS 3450, Financial Instruments. In doing so, PSAB revised the proposed wording in the Exposure Draft, “Financial Instruments: Income on Externally Restricted Assets”. PSAB did not consider it necessary to re-expose the revision as it did not represent a significant change.  

The amendments align the reporting of income on externally restricted assets that are financial instruments in Section PS 3450 with the requirements in Section PS 3100, Restricted Assets and Revenues, and address transitional issues that can arise when Section PS 3450 is adopted. Responses to the Exposure Draft supported the proposed changes.

Basis for Conclusions – Financial Instruments: Transitional Provisions
October 2, 2012.  This document sets out how PSAB reached its conclusions. As well, it sets out significant matters arising from comments received in response to its Exposure Draft and indicates how the Board dealt with the issues raised.

Exposure Draft – Financial Instruments: Income on Externally Restricted Assets
August 15, 2012. PSAB has issued an Exposure Draft that proposes amendments to Section PS 3450, Financial Instruments, to align the reporting of income on externally restricted assets that are financial instruments with Section PS 3100, Restricted Assets and Revenues. Stakeholders are encouraged to submit their comments, on the form provided, by October 16, 2012.

PSAB Decision Summary – June 26-27, 2012
PSAB approved an exposure draft proposing amendments to certain paragraphs in Section PS 3450, Financial Instruments. The amendments ensure that the reporting of income on externally restricted assets that are financial instruments aligns with the requirements in Section PS 3100, Restricted Assets and Revenues. The proposed amendments also address transitional issues that can arise when Section PS 3450 is adopted.

This matter was raised by respondents to a previous Exposure Draft, “Financial Instruments – Transitional Provisions.”

PSAB Decision Summary – March 21-23, 2012
PSAB approved amendments to the transitional provisions in Section PS 2601, Foreign Currency Translation, and Section PS 3450, Financial Instruments, for government organizations that have gains and losses on financial instruments in the “available-for-sale” category. Responses to the Exposure Draft indicated support for the proposed changes.

An additional amendment to Section PS 3450 was approved clarifying that the measurement provisions are to be applied prospectively. PSAB did not consider it necessary to re-expose this change as it provides clarification and does not represent a significant change.

As well, PSAB requested staff to research an issue not considered in the Exposure Draft relating to presentation of gains and losses on externally restricted assets and inflows when they are used for the specified purpose.

PSAB Decision Summary – December 15-16, 2011

PSAB approved an Exposure Draft, “Financial Instruments – Transitional Provisions,” that proposes amendments to the transitional provisions of Section PS 2601, Foreign Currency Translation, and Section PS 3450, Financial Instruments, to address balances at the date of transition that are related to hedging instruments, accumulated foreign currency gains and losses for a self-sustaining foreign operation and on financial instruments in the available-for-sale category of government organizations that are transitioning from the CICA Handbook – Accounting.

 

Disclaimer: This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal ballot process.