Guidance is required on the reporting of the use of appropriations by public sector entities that directly access funding under the authority of appropriations.

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An appropriation can be a transfer of:

  • resources directly made to a public sector entity: or
  • an authority for a public sector entity to directly access funding from the consolidated revenue fund or its equivalent.

Section PS 3410, Government Transfers, already addresses the first type of appropriation. This project will address the recognition criteria, presentation and disclosure of the use of the second type of appropriation.



PSAB Decision Summary – March 21-22, 2013
PSAB decided to terminate this project.

Consistent with responses to PSAB’s Statement of Principles, there was no consensus among respondents to its Exposure Draft on the key issue of presentation. Throughout, respondents have requested PSAB to focus its limited resources on other priority projects as few public sector entities that were affected by the proposals prepare audited general purpose financial statements. After deliberation of the responses, PSAB agreed, noting that guidance in Section PS 1201, Financial Statement Presentation, and Section PS 3410, Government Transfers, may be relevant for entities reporting on the use of appropriations.

PSAB Decision Summary – December 13-14, 2012
PSAB reviewed responses to its Exposure Draft on use of appropriations.

Exposure Draft – Use of Appropriations
September 25, 2012. The Board has issued an Exposure Draft that proposes standards for deciding when and how appropriations should be reported. Stakeholders are encouraged to submit their comments, on the form provided, by November 28, 2012.

PSAB Decision Summary – June 26-27, 2012
PSAB approved an exposure draft on the use of appropriations. The exposure draft proposes the following:

  • The use of appropriations should be recognized in the financial statements when the enabling authority is in effect and an eligible transaction has occurred.
  • The use of appropriations should be separately reported in the financial statements.
  • Financial statements should disclose a reconciliation between the use of appropriations and the amounts authorized.

PSAB debated at length whether the use of appropriations should be reported in the statement of operations or in a reconciliation of closing accumulated surplus/deficit.

PSAB is proposing that reporting entities would report the use of appropriations either in the statement of operations in determining the annual surplus or deficit, or in the reconciliation of closing accumulated surplus. The exposure draft will pose specific questions to respondents on the issue of presentation in financial statements.

Statement of Principles – Use of Appropriations
February 27, 2012. PSAB has issued a Statement of Principles that seeks input on key principles and definitions that the Board intends to include in a future exposure draft. Comments, on the form provided, are requested by April 20, 2012.

PSAB Decision Summary – December 15-16, 2011
PSAB approved a Statement of Principles on the use of appropriations.

PSAB agreed that entities who receive their funding from transfers of assets would apply the principles in Section PS 3410, Government Transfers. As a further scope clarification, the Statement of Principles emphasizes that the standard only applies to those entities that are required to or have chosen to issue general purpose financial statements.

The Board agreed that appropriations should be reported in general purpose financial statements and recognized when the authority is in place and an eligible expenditure had been incurred. PSAB was also in general agreement with proposals on presentation and disclosure.

The Board focused its time on considering the Task Force’s analysis of the alternatives for reporting appropriations. After considerable discussion, PSAB agreed that the credit related to the use of appropriations should be reported in the statement of operation.

The Statement of Principles is expected to be issued in February 2012.

PSAB Decision Summary – September 29-30, 2011
PSAB had an extensive discussion of the merits of the proposals in a draft Statement of Principles on accounting for appropriations. As a result, the Board narrowed the application of the proposed principles to appropriations of entities that:

  • are required by law or other authority to prepare and present general purpose financial statements (as contrasted with special purpose financial reports);
  • are required under legislation or other authoritative requirements to base their accounting policies on the PSA Handbook; and most importantly,
  • access their funding directly under the authority of an appropriation.

The proposed principles would not apply to entities that receive their funding through a transfer payment (i.e., those that actually receive and manage the disbursement of the funds). Those entities would apply the principles in Section PS 3410, Government Transfers

Notwithstanding further review by PSAB and the Related Party Transactions Task Force, PSAB generally agreed with the direction taken in the proposals that appropriations should be reported in general purpose financial statements. Similarly, the Board also generally agreed with the direction taken in the proposals that appropriations would be recognized when the authority related to the appropriations had been enacted and, in effect, an eligible expenditure had been incurred. However, it debated the options for how appropriations should be recognized (i.e., as revenue in the statement of operations or as an equity or other transaction in the statement of financial position). 

PSAB asked the Task Force to do further analysis of the pros and cons of the options for consideration by the Board. Proposed principles on recognition criteria and disclosure requirements were reviewed and positive feedback was provided to the task force.

A revised draft statement of principles will be considered by PSAB at its December 2011 meeting.

PSAB Decision Summary – June 23-24, 2011
Due to time constraints, PSAB postponed consideration of this topic until a future meeting.

PSAB Decision Summary – March 24-25, 2011
PSAB considered working drafts of statements of principles and related issues papers on appropriations and related party transactions. The Board provided input to the Task Force and requested further exploration of some issues.

Regarding appropriations, the Board asked the Task Force to further consider the applicability of Section PS 3410, Government Transfers, and whether there was need to distinguish between the substance of appropriations to legal entities versus other reporting entities.

PSAB Decision Summary – December 9-10, 2010
PSAB received an update on reporting of appropriations by government organizations and requested an analysis be undertaken of the rationale for recognition of appropriations in financial statements along with presentation options.

PSAB Decision Summary – September 23-24, 2010
A project proposal was approved by PSAB that will address related party transactions and appropriations.  At its June 2010 meeting, PSAB deferred approving this project proposal due to a lack of staff resources.  Since then, resources have become available.  These two topics were formerly included in the “Entity Level Financial Statements” project; however PSAB has decided that the issues should be dealt with in the broader context of reporting by all public sector entities.

PSAB Decision Summary – June 14-15, 2010
At its November 23-24, 2009 meeting, PSAB discussed the responses to the July 2009 Statement of Principles, “Entity Level Financial Statements,” and agreed with the proposal by the Task Force to reconstitute the project. Two of the topics in that project were related party transactions and appropriations. PSAB asked staff to prepare project proposals on these two topics for consideration at a future meeting.

A project proposal that would address both related party transactions and appropriations was considered by PSAB at its June 2010 meeting. Given the Board’s priority to resolve the issues in the government transfers and financial instruments projects as well as advancing its review of the conceptual framework, the Board elected not to approve the project for inclusion in PSAB’s technical agenda at this time given available staff resources. 


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.