Restructurings

BACKGROUND

Restructuring transactions need to be defined and guidance developed on reporting a wide range of restructuring transactions in the public sector such as amalgamations and transfers of programs/operations.

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The CICA Public Sector Accounting (PSA) Handbook has two Sections that address acquisitions of governmental units and government business enterprises.

This project will address the initial recognition and measurement of assets and liabilities transferred in restructuring transactions, as well as related presentation and disclosure issues.

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PROJECT NEWS

Basis for Conclusions – Restructuring Transactions – Section PS 3430
June 1, 2015. 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 Statement of Principles.

PSAB Decision Summary – March 19-20, 2015
PSAB reviewed responses to its August 2014 Exposure Draft, “Restructuring Transactions.” There was general support among the respondents for the proposed standard. After discussing the responses and the changes proposed by staff to address the comments, PSAB approved a new Handbook Section.

Webinar – Restructuring Transactions in the Public Sector
August 27, 2014. Tune in to this webinar on September 30, 2014 (English) and October 2, 2014 (French) to learn about PSAB’s recently issued Exposure Draft on Restructuring Transactions. PSAB is proposing that assets and liabilities transferred in restructurings be measured at their carrying amount.

Questions and Answers – Restructuring Transactions
August 15, 2014. This document is intended to enhance stakeholders’ understanding of the Exposure Draft, “Restructuring Transactions,” and implications of the proposed guidance. The material covers issues raised by PSAB members, other stakeholders and PSAB’s Restructuring Advisory Group.

Exposure Draft – Restructuring Transactions
August 6, 2014. PSAB has issued an Exposure Draft that proposes a new standard on restructuring transactions. Stakeholders are encouraged to submit their comments, on the form provided, by November 28, 2014.

PSAB Decision Summary – June 16-17, 2014
PSAB approved an exposure draft, “Restructuring Transactions,” proposing standards on accounting for and reporting assets and liabilities transferred in restructuring transactions by both transferors and recipients. The proposals would apply to restructuring transactions among entities under common control.

The exposure draft proposes the following:

  • A restructuring transaction is a transfer of an integrated set of assets and/or liabilities, together with related program or operating responsibilities, that does not involve an exchange of consideration.
  • A restructuring transaction would be distinguished from an acquisition based on whether there is an exchange of consideration that is primarily determined based on the fair value of the individual assets and liabilities transferred.
  • Individual assets and liabilities transferred in a restructuring transaction would be derecognized by the transferor at their carrying amount and recognized by the recipient at that same amount with applicable adjustments.
  • The net effect of a restructuring transaction would be recognized as revenue or as an expense by the transferors and recipients.
  • The financial position and results of operations prior to the restructuring date would not be restated.

PSAB Decision Summary – September 23-24, 2013
PSAB reviewed responses to its Statement of Principles. While there was general support for the proposed principles, PSAB felt that additional consultation with an advisory group would be beneficial prior to releasing an exposure draft.

PSAB Decision Summary – June 12-13, 2013
PSAB reviewed an issues paper on the proposed approach to address restructurings among related parties and provided preliminary feedback to staff. The Board is expected to review responses to its Statement of Principles at the September 2013 meeting.

Statement of Principles – Restructurings
February 13, 2013. PSAB has issued a Statement of Principles that addresses the accounting and reporting of a wide range of restructuring activities among public sector entities. Stakeholders are encouraged to submit their comments, on the form provided, by May 17, 2013.

PSAB Decision Summary – December 13-14, 2012
PSAB approved a statement of principles on restructurings that addresses accounting and reporting of a wide range of restructuring activities among entities not under common or joint control. The proposed principles:

  • define a restructuring transaction separate from an acquisition or a government transfer;
  • recognize individual assets and liabilities transferred in a restructuring transaction at their carrying amounts with necessary adjustments;
  • recognize the net assets or net liabilities transferred in opening accumulated surplus or deficit for a new restructured entity and in revenue or expense for an existing restructured entity;
  • recognize restructuring-related costs as expense when incurred;
  • disallow restatement of the financial position or results of operations of the restructured entity prior to the restructuring date; and
  • encourage, but do not require, disclosure of information about the restructuring entities or transferred operations prior to restructuring date.

PSAB Decision Summary – September 20-21, 2012 
PSAB considered various accounting and reporting issues based on the preliminary views formed at the June 2012 meeting. Issues discussed at this meeting include definitions, issues related to accounting policies, recognition, presentation and disclosure. The Board expects to approve a statement of principles at its December 2012 meeting.

PSAB Decision Summary – June 26-27, 2012
PSAB discussed the scope of the restructurings standard, the definition of restructurings and the initial measurement basis for assets transferred and liabilities assumed in a restructuring. The Board formed preliminary views on these issues. It will continue to consider other accounting and reporting issues at its September 2012 meeting.

PSAB Decision Summary – March 21-23, 2012
PSAB approved a revised project proposal and agreed to rename the project “Restructurings” to reflect the revised scope and approach. The project will provide principle-based guidance to a wide range of restructuring activities among public sector entities that are not under common control.

Three PSAB members will provide input to staff in the development of a statement of principles. The need for a task force will be assessed subject to responses to that document.

PSAB Decision Summary – March 22-23, 2010
PSAB reviewed extensive staff research papers on amalgamations, annexations, government (internal) restructurings, and realignments of responsibilities, as well as demergers and divestments.  This was originally constituted as a staff project focusing on amalgamations. Given the broader scope of issues revealed in the research, PSAB re-evaluated that decision and decided to actively seek members to appoint to a task force.  

PSAB Decision Summary – November 23-24, 2009
PSAB provided direction on whether an amalgamation is an acquisition, the characteristics and definition of an amalgamation, the initial measurement basis of amalgamations, and whether an amalgamation created a new entity or a continuation of the predecessor entities.  An exposure draft is expected to be presented to the Board for approval in March 2010.  

PSAB Decision Summary – March 9-10, 2009
PSAB approved a new project on amalgamations and government restructuring. The project will address amalgamation activities, transfer of programs between governments, and restructuring activities involving reallocation of government resources and responsibilities among organizations within a government reporting entity.

 

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.