PSAB recently issued the Conceptual Framework for Financial Reporting in the Public Sector (the Conceptual Framework) and Section PS 1202, Financial Statement Presentation (the Reporting Model) with an effective date beginning on or after April 1, 2026. Statement of Recommended Practice (SORP) 1, Financial Statement Discussion & Analysis, provides useful guidance in the preparation of a public sector entity’s financial statement discussion and analysis (FSD&A). The FSD&A enhances financial statement users’ understanding of the information conveyed in financial statements.
The following narrow-scope amendments are proposed in our Exposure Draft.
- Remediate inconsistencies between existing Statement of Recommended Practice 1 (SORP-1) and the new Conceptual Framework and Reporting Model. To address inconsistencies between SORP-1 and the new Conceptual Framework and Reporting Model, PSAB proposes to amend:
- the qualitative characteristics of financial reporting to align with the new Conceptual Framework;
- guidance for the analysis of cash flows to include net cash available after operating, capital, and investing activities; and
- footnote references and the presentation of guidance to align with the structure of the Conceptual Framework and Reporting Model.
- Develop guidance for the new Conceptual Framework and Reporting Model concepts. The proposed narrow-scope amendments include new guidance intended to reflect key concepts in the Conceptual Framework and Reporting Model that are absent from existing SORP-1. The proposed guidance is intended to support the development of FSD&A related to:
- accumulated remeasurement gains and losses as a component of net assets;
- analysis of financial and non-financial liabilities and the new statement of net financial liabilities; and
- the meaning of the net financial liability indicator.
- Align outdated SORP-1 terminology. Proposed narrow-scope amendments would replace outdated terminology in SORP-1, promoting inclusivity and alignment with the new Conceptual Framework and Reporting Model. With these changes, we aim to improve the clarity of SORP-1 by ensuring the terminology used in a public sector entity’s FSD&A is consistent with its financial statements.