Foreign Currency Translation

PSAB approved Section PS 2601, replacing existing Section PS 2600, Foreign Currency Translation. The effective date for Section PS 2601 is April 1, 2012 for government organizations and April 1, 2015 for governments. Earlier adoption is permitted. Governments and government organizations adopt Section PS 2601 in the same fiscal year Section PS 3450, Financial Instruments, is adopted.

In view of the Concepts Underlying Financial Performance project, the transition requirements state that PSAB will review the application of this Section for governments by December 31, 2013.

PSAB approved an Exposure Draft (ED) proposing amendments to Section PS 1200, Financial Statement Presentation. The ED contains a presentation model that reports remeasurement gains and losses outside of the statement of operations.

The main features of the ED include the following:

• A statement of remeasurement gains and losses is introduced.
• The statement of remeasurement gains and losses reports:

  (a)	exchange gains and losses associated with monetary assets and monetary liabilities denominated in a foreign currency that have yet to be settled;
  (b)	amounts reclassified to the statement of operations upon derecognition or settlement; and
  (c)	other comprehensive income reported when a government includes the results of government business enterprises and government business partnerships in the government’s summary financial statements.

• The proposed amendments would apply to the financial reporting period a government implements the proposed new PSA Handbook Section on Financial Instruments and associated amendments, including proposed amendments to Section PS 2600, Foreign Currency Translation.

PSAB reviewed two options to the proposals contained in the ED issued in October 2009 — hedge accounting and an alternative presentation model. The Board requested the task force to draft a Re-exposure Draft with a presentation model that would report remeasurement gains and losses outside of the statement of operations for its consideration in September 2010.

PSAB completed its review of the application of Section PS 2601, Foreign Currency Translation, and Section PS 3450, Financial Instruments, for governments, and confirmed that the principles are fundamentally sound.

The request for additional time to implement the standards was supported. PSAB views the extension as an opportunity to address transitional issues and concerns prior to the effective date.

PSAB approved an amendment to the transitional provisions to extend the effective date to April 1, 2016 from April 1, 2015, which will be issued in the Handbook in March 2014.

PSAB reviewed the wording in the transitional provisions in Section PS 2601, Foreign Currency Translation, and Section PS 3450, Financial Instruments, to clarify its intent regarding the effective dates for adoption. PSAB approved amendments to the transitional provisions in these two Sections and agreed that exposure of the changes is not required given the change is simply clarification of an implementation intent. The relevant amendments state that the Sections apply to fiscal years beginning on or after April 1, 2015. For those government organizations that applied the CICA Handbook – Accounting prior to adopting the CICA Public Sector Accounting Handbook, the Sections apply to fiscal years beginning on or after April 1, 2012.