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PSAB Decision Summary – September 26-27, 2019

This summary of decisions of the Public Sector Accounting Board (PSAB) has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on projects, which might change after further deliberations by PSAB. Decisions to publish exposure draft and Handbook material are final only after a formal ballot process.

Standards for Public Sector Entities

Conceptual Framework and Reporting Model

PSAB reviewed the feedback related to the following chapters of the Statement of Concepts, “A Revised Conceptual Framework for the Canadian Public Sector”:

  • Chapter 3, Financial Reporting Objective
  • Chapter 4, Role of Financial Statements
  • Chapter 5, Financial Statement Foundations
  • Chapter 7, Qualitative Characteristics and the Related Considerations
  • Chapter 9, Recognition and Measurement

Some of the feedback received related to:

  • how the notion of service capacity is broad and cannot be fully articulated in financial statements;
  • how some of the control discussion contradicts aspects of Section PS 1300, Government Reporting Entity;
  • including definitions of economic resources and economic obligations;
  • support for the improvements to the qualitative characteristics;
  • the need to document the implication, if any, of removing the term “conservatism” in Section PS 3300, Contingent Liabilities, and Section PS 3320, Contingent Assets;
  • the redundancy in the general recognition and derecognition criteria; and
  • the strong support for removing the recognition exclusions from the conceptual framework.

PSAB also reviewed:

  • revised Chapters 3, 4, 5, 7, and 9 that would be part of the exposure draft for a revised conceptual framework; and
  • the accompanying basis for conclusions document related to Chapters 3, 4, 5, 7 and 9,

and provided their feedback to the Task Force for consideration.

The Board will receive an update on the exposure draft’s development at the December 2019 Board meeting.

Public Private Partnership

PSAB approved the Exposure Draft, “Public Private Partnership.” The document will be issued in November 2019, with comments due by February 29, 2020.

Narrow Scope Amendment – Purchased Intangibles

PSAB approved an exposure draft that proposes to remove the exclusion in the conceptual framework prohibiting recognition of purchased intangibles in financial statements. The exposure draft proposes allowing recognition of intangibles purchased through an exchange transaction. Removing the recognition prohibition on purchased intangibles would address a material imbalance in the statements of financial position of many Indigenous governments that finance the purchase of commercial fishing (and other) licenses with debt but cannot currently recognize the licenses as assets. The proposal may also have implications for other public sector entities that purchase intangibles.

Similar to the current situation for purchased Crown lands and purchased natural resources, no guidance on how to account for purchased intangibles is proposed. For now, reference to the asset definition, the general recognition criteria and the GAAP hierarchy is expected. Accounting for these items may be the subject of future PSAB projects.

Employee Benefits

PSAB received a summary of responses to the three invitations to comment and the Task Force’s deliberations of the key issues. The Board provided feedback to the Task Force for considerations.

2019-2020 Annual Improvements

PSAB reviewed the issues to be included in the 2019-2020 annual improvements and provided feedback. The Board agreed to address two main categories of improvements in the upcoming exposure draft:

  • Updating disclosure requirements in individual standards relating to contractual rights.
  • Clarifying the effective date and the method of application (e.g., prospective, retroactive) for consequential amendments.

The Board also considered other issues that did not meet the annual improvements criteria as they were not widespread in practice, a correction of an error, or clarification of a standard.

Section PS 3260 Consequential Amendments

PSAB discussed recent enquiries with respect to the method of application and the effective date of consequential amendments to Section PS 3260, Liability for Contaminated Sites, which resulted from the issuance of Section PS 3280, Asset Retirement Obligations. The Board clarified its intent that these consequential amendments would follow the same transitional provisions as stated in paragraphs PS 3280.67-.73. That is, they:

  • may be applied using retroactive, modified retroactive, or prospective application; and
  • are effective for fiscal years beginning on or after April 1, 2021.

Financial Instruments – Narrow-Scope Amendments

PSAB discussed the approach to revisit a final narrow-scope amendment for Section PS 3450, Financial Instruments, with respect to the federal government issue. The Board will evaluate the revised amendment and potentially approve an exposure draft for comment at the December 2019 meeting.