Roundtable Discussion: PSAB’s Exposure Draft, “Intangible Assets, Proposed Section PS 3155”
In February 2025, PSAB issued its Exposure Draft, “Intangible Assets, Proposed Section PS 3155.” This Exposure Draft proposes guidance on defining, recognizing, measuring, and presenting intangible assets, including acquired and internally generated intangibles. Its scope includes software that is not considered integral to any hardware.. This standard will replace PSG-8, Purchased Intangibles.
The Group was asked to consider this session as a roundtable on the Exposure Draft, addressing the comments requested in the Exposure Draft as well as additional questions from PSAB staff. The Group’s input will provide valuable perspectives to the Board and help shape the finalization of the intangible asset standard.
Roundtable discussion on PSAB’s Exposure Draft
The Group noted that demand from interested and affected parties for such guidance is growing, presenting PSAB with an opportunity to develop standards to support how public sector entities manage and disclose information on intangible assets.
Group members shared the following feedback:
- Purpose and scope: One Group member noted that proposed Section PS 3155, INTANGIBLE ASSETS, paragraph PS 3155.002 (e) excludes sovereign or equivalent powers and/or rights provided for in the Constitution, devolved or delegated through legislation or bylaws, or provided for in accordance with Indigenous laws or rights. Free, prior and informed consent, potential benefits for Indigenous Peoples and other potential areas of importance to Indigenous governments, organizations, and communities should be further considered.
PSAB staff noted that PSAB’s Indigenous Advisory Group reflected on a variety of potential issues impacting Indigenous governments, organizations, and communities. The Group discussed how the scope of the Exposure Draft may align with the recognition and presentation requirements in the CPA Canada Public Sector Accounting (PSA) Handbook, taking into account the recognition exclusions set out in other sections, such as FINANCIAL STATEMENT PRESENTATION, Section PS 1202.
PSAB staff noted that to meet the proposed intangible asset definition, the asset must be identifiable. The asset is identifiable if it is either separate or arises from a binding arrangement. One Group member suggested the exclusions in proposed paragraph PS 3155.002 should include a reference to Section PS 1202, to help clarify the intent behind the scope exclusions proposed in intangible assets standard.
- Recognition and measurement: One Group member questioned the interpretation of non-exchange transactions as defined in the Exposure Draft. PSAB staff noted that the definition of the term “non-exchange” is intended to be similar to the definition in REVENUE, Section PS 3400.
REVENUE, Paragraph PS 3400.05 (d) provides the following definition:
- Non-exchange transactions are transactions or events where there is no direct transfer of goods or services to a payor.
Non-exchange transactions are prevalent in the public sector and the term is still considered relevant and familiar. As one member noted, government transfers are often referred to as non-exchange transactions.
Another member raised concerns about the potential for inconsistent application of cloud computing arrangements due to the absence of current guidance in this area. This member expressed concern on how capital assets, expenditures, and development costs may be recognized and measured. PSAB staff noted that separate accounting guidance specific to cloud computing arrangements is being developed as the Exposure Draft does not specifically address cloud computing arrangements. To help address these concerns and support the development of this guidance, the Board established a Cloud Computing Arrangements Task Force. The member suggested reviewing how cloud computing arrangements fit in the scope of the new standard, as they are currently not exempt under proposed paragraph PS 3155.002. Several members observed that the absence of current guidance might lead to inconsistencies in accounting for cloud computing arrangements and expressed support for the Board’s plan to develop accounting guidance in this area.
- Impairment, retirement and disposals: One Group member wondered about the practicality of the impairment proposals, especially when considering the concept of “value in use” introduced in the Exposure Draft. Proposed paragraph PS 3155.009 (j) of the Exposure Draft provides the following definition:
- Value in use of an intangible asset is the present value of the intangible asset’s remaining service potential.
PSAB staff noted that the concept of “value in use” for impairment guidance is consistent with International Public Sector Accounting Standards (IPSAS) 31, Intangible Assets:
- In IPSAS 31, "value in use" refers to the present value of the future cash flows that an entity expects to derive from an intangible asset. It is essentially the estimated amount of cash an asset is expected to generate over its useful life, discounted to reflect the time value of money.
- IPSAS 31 refers to IPSAS 21, Impairment of Non-Cash Generating Assets and IPSAS 26, Impairment of Cash Generating Assets. The impairment guidance introduced in the Exposure Draft is based on IPSAS 21 and given that application of “value in use” is to recognize, that in the public sector, intangible assets are likely going to be used to deliver services, thus the concept of “value in use” was to take into consideration the service potential of the intangible asset.
Given some of the unique features of these assets, professional judgment will be needed. A Group member expressed concern about the significant effort needed to determine value in use.
- Effective date and transitional provisions: Group members expressed concern about the retroactive application, as it would create a burden on preparers and auditors to go back and restate prior years. One member noted that it may not be clear how much work would be involved, especially in going back to determine and demonstrate control; it could also be difficult to assess the other implications introduced in the Exposure Draft. PSAB staff noted that the Exposure Draft contains optionality for transition so that an entity can apply the proposed Section to new transactions and events on or after the effective date, or use a modified retroactive approach whereby some of the assumptions would be based on current year information to help with the application. One Group member noted that the standard may be better positioned as prospective only in terms of a transitional provision.
Summary
Group members suggested some clarifications may be helpful to the scope of the proposed standard, specifically related to sovereign powers and cloud computing arrangements. Some Group members noted potential implications for consideration that involve cloud computing but acknowledged that PSAB has a separate project to provide guidance on cloud computing arrangements as part of its broader Intangible Assets project. Group members also discussed the use and application of the new term, “value in use.” They identified potential challenges related to the transitional provisions, suggesting clarifications may be helpful. No other significant issues with the proposed standard, including the proposed consequential amendments, were raised.
Accounting for Cryptocurrency
At its meeting on April 26, 2019, the Group discussed various issues related to the accounting treatment of cryptocurrency. Many of the issues discussed at this meeting remain relevant today, as the use of cryptocurrency is complex, and its accounting treatment remains uncertain for many within the public sector. Many different types of cryptocurrencies are on the market, each with their own terms, conditions, and fact patterns. As cryptocurrency continues to gain popularity worldwide as a digital currency that can be substituted for cash, some Canadian public sector entities are considering whether cryptocurrency could be held as an investment and/or used in lieu of cash in transactions with third parties.
The purpose of this submission is to have the Group reexamine the accounting treatment for cryptocurrency, considering its increasing potential use in the public sector and the evolution of accounting standards and guidance.
The Group was asked to provide feedback related to the accounting treatment of a cryptocurrency, specifically:
Issue 1: Can cryptocurrency meet the definition of an asset?
The Group was asked to discuss the following views on whether cryptocurrencies meet the definition of an asset:
View A: Yes, it meets the definition of an asset.
Cryptocurrency meets the definition of an asset because it has future economic benefits, public sector entities can control access to it, and the transaction or event giving rise to it has occurred; or
View B: No, it does not meet the definition of an asset.
Cryptocurrency does not meet the definition of an asset because it may not have future economic benefits and may be subject to factors beyond the entity’s ability to control.
Summary
Group members supported View A and felt that the asset definition is met with cryptocurrencies based on the following points:
- the currency is being used in a transaction, which supports control. Blockchains and keys may provide a level of control over cryptocurrencies; and
- the currency is readily exchangeable for funds or other potential sources of funds.
Group members expressed hesitation about the legitimacy of virtual currencies, noting that some cryptocurrencies may be considered more credible than others. Some Group members emphasized the importance of internal controls and due diligence in assessing the viability and stability of various types of cryptocurrencies and exchanges.
Another Group member shared that cryptocurrency is not currently recognized as legal tender in Canada. Despite its growing popularity, utilizing cryptocurrency remains a risky venture for public sector entities. A Group member acknowledged that the inherent risks likely explain why many public sector entities are not exploring cryptocurrencies.
Generally, members acknowledged that cryptocurrency meets the asset definition, but valuation concerns, recognition, and other risks need to be addressed.
Issue 2: Assuming it can meet the definition of an asset, what type of asset is it?
The Group was asked to deliberate on views regarding the classification of cryptocurrency as an asset. Group members considered the following types of asset classes and discussed which may be most appropriate for cryptocurrency:
View A: Financial instrument asset
A Group member suggested that cryptocurrency could be recognized as an investment. This classification implies that a public sector entity would hold onto cryptocurrency and settle to market on an exchange for the cryptocurrency at a later date. This would become a financial instrument consideration based on the intended use of the cryptocurrency. Another Group member supported this view and shared that, given the volatility and risks associated with cryptocurrencies, this view allows for an assessment of gains and losses that may result from settling the investment. One Group member stated that in the absence of a contract, the definition of a financial instrument as noted in FINANCIAL INSTRUMENTS, Section PS 3450 may not be met.
View B: Inventory held for resale
Group members agreed that cryptocurrency could be inventory if the public sector entity intends to sell it within one year.
View C: Intangible asset
Most Group members supported that cryptocurrency best met the definition of an intangible asset since it is an identifiable, non-monetary economic resource without physical substance.
View D: Cash or cash equivalent
One Group member shared that cryptocurrency is not readily exchangeable for goods and services, and as such, should not be recognized as cash or cash equivalent. However, another Group member suggested that a public sector entity could decide to accept cryptocurrency in lieu of cash to facilitate a transaction.
Summary
Group members acknowledged that the asset classification of a particular cryptocurrency will depend on its specific substance, terms, conditions, and the facts patterns of each arrangement. One Group member noted that public sector entities would have to develop policies and procedures involving the use of cryptocurrencies so that appropriate accounting treatments can be applied. For example, Group members shared that contractual obligations involving the use of cryptocurrency may help determine its asset classification and related recognition and disclosure requirements. As this area continues to evolve, public sector entities will need to consider the risks, as well as guidance on recognition, measurement, and disclosure of cryptocurrency from an accounting and reporting perspective.