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Amanda Senkowski: Welcome, everyone, and thank you for joining us for today’s webinar on the Public Sector Accounting Board’s Government Not-for-Profit, or GNFP for short, Strategy and Implementation Update.
The objective of this webinar is to provide you with an update on how the implementation is going.
Before we start, I’d like to mention some features of our webinar:
First, we are pleased to offer simultaneous translation of the English presentation to French. This is a function within Zoom that allows you to select the language you would like to listen in. At the bottom of your screen, you will see a button called Interprétation. This will allow you to listen to the webinar in French.
We are also committed to providing closed captioning to promote accessibility of our webinars. As a result, you have the option of turning on closed captioning today. At the bottom of your screen, you can put up subtitles or view a live transcript.
For the French version, we are pleased to provide AVA captioning, which you can access via the link we have posted to the chat.
We also want to bring to your attention the fact that the recordings for today’s webinar will be in English and in French, and available on PSAB’s GNFP Contributions and Financial Statement Presentation Project page. Check back in on the project page regularly if you’re interested in the on-demand version.
If you have any technical issues today, please use your Q&A function, and we will try to respond to your question as soon as possible. We have our Zoom expert, Deven McFadden, available today to assist with any technical issues.
Lastly, today’s webinar qualifies for CPD hours upon successful completion of the webinar quiz. The quiz will be available at the end of this webinar.
Now that we’ve concluded the tech setup, we would like to start today off with a land acknowledgement.
PSAB has a commitment to diversity and inclusion. In keeping with Indigenous protocol and building respectful relationships between Indigenous and non-Indigenous peoples in Canada, it’s customary to acknowledge the traditional territories or ancestral lands of Indigenous peoples on which we reside.
We are meeting virtually, so I would like to acknowledge that the Indigenous peoples are the traditional stewards of the lands and waters where each of us attends this meeting, this afternoon or morning, depending on the locations from which members and presenters are attending.
I’m personally located in Winnipeg, Manitoba, on Treaty 1 Territory, which is the ancestral lands of the Anishinaabeg, Anisininew, Dakota, and Dene peoples. Treaty 1 is also the homeland of the Red River Métis, and ancestral lands of the Inuit. We respect the spirit and intent of the treaties and remain committed to truth and reconciliation for as long as the sun shines, the grass grows, and the river flows.
For a bit of context, the GNFP Strategy and Implementation Plan is a group of projects of the Public Sector Accounting Board, or PSAB. PSAB issues standards and guidance with respect to matters of accounting in the public sector, following a due process. Public sector refers to governments, government components, government organizations and partnerships. The term government refers to many levels of government, including Indigenous, federal, provincial, territorial, and local or municipal governments. Additionally, the term government organizations may include government not-for-profit organizations, which are sometimes referred to as GNFPOs. The proposals that may arise from our work are applicable to public sector entities only. Any entity that applies the Public Sector Accounting Handbook may be impacted by these proposals. The opinions stated in this webinar are those of the presenters and do not necessarily reflect the views of the Board.
My name’s Amanda Senkowski, and I’m a principal for the Public Sector Accounting Board. I’m currently working on the GNFP Strategy Implementation group of projects. On behalf of PSAB and FRAS Canada, it’s my pleasure to introduce today’s speaker, Bill Cox. Bill is a fellowship CPA, fellowship CA, with more than 35 years of experience in accounting and audit, specializing in serving public sector organizations, local governments, First Nations, and not-for-profit organizations. He’s a retired partner from BDO, former PSAB Board member, and current chair of PSAB’s Government Not-for-Profit Advisory Committee. Welcome, Bill.
Let me walk you through our agenda for today.
First, we'll provide a brief recap of the background and objectives of PSAB’s GNFP Strategy and Implementation Plan. Next, we'll share a high-level summary of the recent amendments to the Tangible Capital Assets, section PS 3150. These changes are the result of the first standard-level project under the GNFP Strategy and Implementation Plan. Finally, we’ll give you a brief overview of the Contributions and Financial Statement Presentation Project, which is the second standard-level project of the GNFP Strategy and Implementation Plan.
Now, I welcome Bill to walk you through the next few slides.
Bill Cox: Thank you, Amanda. Great to be here! Nothing better than talking about accounting standards. Makes for a great day for anybody, I’m sure.
As Amanda said, we’re going to start with a bit of a background of how we got here, what our strategy is, what PSAB’s Government Not-for-Profit Strategy is.
And, as you can see on the slide here in the top, where the Board ended up is PSAS is going to incorporate the 4200 series with potential customizations. So that means the Board, using the guidance of our Government Not-for-Profit Advisory Committee, is going to go through the 4200 series and see what’s in there. And if there are things in there that aren’t in the, for lack of a better term, regular PSAS Handbook that are consistent with the Conceptual Framework and would provide more additional good information, then they may come out of the 4200 series and be added to other standards.
So that’s our goal is to go through those.
You also see the word “potential customizations” there. So, this was a tool that we recommended to the Board, and the Board accepted that this would be a good tool to have. So, it allows, if there’s a case where there’s a situation where a PSAS standard or part of a standard or part of a disclosure requirement would not be appropriate for a not-for-profit organization, but it would be for other government organizations, then there’s the possibility of having a customization and having a slightly different treatment for government not-for-profit organization.
Now, there's nothing… there’s nothing planned to as a customization right now. It’s just a tool that’s available in the future as we work through these standards. And the goal of all of this, as you see from the last bullet point, is to improve comparability and understandability of the financial statements. Because right now, there’s quite a difference between a statement prepared using the 4200 series and a statement prepared using regular PSAS, so we're going to try and tighten that difference by going through the process.
The first part, the first project that we undertook was to look at capital assets. We chose this first for a couple of reasons: One, quite frankly, we thought it would be an easier one to get going with—less issues, easier to sort of get our feet under us, understand how to best communicate with the stakeholders and those interested in what we’re doing, really understand the process. It was a good way to get started.
Having said that, it was surprising, actually. I thought we’d have almost zero issues to look at, but we actually ended up with quite a couple of issues to consider and discuss and make recommendations on, and we’ll just summarize those in the next slide.
So, these are the key issues. We have slides coming up to briefly talk about each of these. So, the first was the definition of tangible capital assets. There was a slight difference between the way TCAs were described in 3150 and in the 4200 series, so we looked at whether we should make any changes there.
The 4200 series had the possibility of a capital asset recognition exemption for very small government not-for-profit organizations. That’s not in regular PSAS, so we looked at whether that would be appropriate to bring across.
Works of art, historical treasures, and collections. This was an area of quite a bit of difference mainly because the concept of a collection was not really developed at all in 3150, and there was some good description of what a collection is and how to account for it in the 4200 series. So a big difference there that we spent some time on.
And the last two that you see there were interesting ones, because, I think, there’s more detail in the 4200 series on both those issues: capital assets purchased below… substantially below fair value, and contributed materials and labour towards tangible capital assets.
More information on the 4200 series, but I think you probably would have got to the same accounting results, using the accounting rules in the regular PSAS Handbook. But, a little more clarification in those sections, so we’ll talk about all of these in just a second.
First of all, definition of tangible capital assets. Really not that much difference between the two, except for the discussion of intangible properties in the 4200 series, and we took that right off the table, because there’s already an intangibles project going on with PSAB. So, we’re not going to look at intangibles. The intangibles project will look at that.
But other than intangibles, there wasn’t too much different, just a little bit of wording difference, and we thought we could, we made some very small tweaks—I don’t think anything that will impact the way anybody’s been accounting for TCAs—just some small tweaks to add some more description to the definition of a tangible capital asset.
When we put out our proposals, we got some feedback, as you see in the middle there, whether we should also refer to “contributed,” “conveyed,” and “betterments” concerns about crown lands not purchased, and unintended consequences related to the timing of the Intangible Assets standard. So we considered all that feedback. We didn’t think we needed to tweak the definition of tangible capital assets any further. We thought it really did encompass everything that it needed to.
But we did make a change in our timing. We extended the effective date for these standards by one year to make sure that it tied in with the timing of the intangibles project. Because the worst possible thing would be to have a situation where you had a government not-for-profit, say, recognizing an intangible asset, and then de-recognizing it for a year, and then bringing it back again when the Intangible Assets section came in. So we didn't want that; we wanted these to line up, and we changed our effective date for that reason.
Capital asset recognition exemption was a fairly easy one for us to look at for a couple of reasons: One is, I think, looking at the history of this, this came across from the old 4400 series back when there was only one Handbook, back in the… good old days, as I like to call it.
That came… that was the 4400 series and came across to the 4200 series in PSAS. And, when that first came into the old, old Handbook, it was a time when not every organization had access to a computer or a spreadsheet. Nowadays, virtually everybody does. Even a very small organization has a treasurer or somebody with a computer. So, it’s really not as relevant as it was. But maybe even more importantly, from our research, we could not find very many government not-for-profit organizations that would even meet the criteria. I’m sure there’s some, but it’s a very small number. So it’s just not something that’s going to be applicable. In the private sector, yes, there’s many small not-for-profit organizations, but in the government sector, not as many.
We did get some feedback saying we should consider the capacity of smaller entities. So we did consider that, but when we, again, looked at our research and found there just was not that many, we decided we did not need to make any changes, which means the exemption is gone.
Works of art, historical treasures, and collections. As I said a couple of slides ago, there really wasn't much to say about collections in… the regular PSAS Handbook.
So much more in the 4200 series. Works of art and historical treasures were discussed in the regular Handbook. So we had a proposal to add some guidance to describe what a collection is, and some disclosure requirements around… just collections for those entities that have them.
We got some feedback. That was great feedback! It said, they're… some concerned about the excessive nature of disclosures and removal of third criteria in the definition of a collection in the way the standard was written, the old 4200 series standard.
So, we considered that, and we realized we didn’t want to put any organization in a situation where they’re really going to be involved with any sort of excessive disclosure. I think most of the concerns probably came from larger organizations, senior governments that would be consolidating maybe many organizations that might each have collections, and the thought being we’re going to end up with a lot of disclosure, and maybe it’s not all relevant. So, as part of our final amendments, we tighten that up quite a bit.
In terms of what the disclosure requirements are, the disclosure requirements will be fairly basic.
For most entities, if you’re an entity whose primary purpose is to house or display a collection, then there’s a little more disclosure that’s required, but we think it’s quite doable and quite practical.
Purchases of Capital Assets Substantially below Fair Value
There wasn’t anything directly related to this in the regular PSAS Handbook.
I think, conceptually, it’s very similar. So, in regular PSAS, if you get a fully donated piece of infrastructure—tangible capital asset—you record that asset at its fair value, with the offsetting amount being revenue.
So, the same concept applies with purchase of capital assets substantially below fair value—is you still record the asset at the fair value, and the difference between what you paid and what the fair value is is a contribution.
So that’s why I say I think you probably would have got to the same conclusion either way. But we thought it was good to have that additional specificity, I guess. You know, now there will be a standard that actually says this—3150 will be amended to actually say this. So I think it’s consistent with where we were.
We did get some feedback saying it can be a challenge to determine the fair value of a tangible capital asset. And probably, particularly in this case where you’re paying something, but you’re not paying the full fair value. Because often you’ll get suppliers saying, “Aren’t we great? We’re giving you this million-dollar asset. And we’re only charging you $200,000.”
But is a million dollars worth of fair value of that just because the supplier says that? Maybe it’s not. So, there can be challenges to determine the fair value of a tangible capital asset. If it’s a kind of asset, like a tractor or something like that, that’s readily purchased, it’s very easy to figure out the fair value. If it’s a special purpose asset, it may be a lot more difficult.
So we took that feedback, and, as you can see in the bottom, the final amendments there. So we narrowed the application of this a bit. We considered that, yes, there may be situations where it’s not really easy or practical to come up with a fair value. And what do we do in that situation? We're probably going to end up with just disclosure of the fact, rather than trying to knock our brains out coming up with a fair value.
And also, there’s some transitional relief in that there was a bit of a worry that, am I going to have to go back now for the last 20 years and look at all the assets that we’ve purchased, and were some of those purchased substantially below fair value or not?
That would be difficult to do, and probably not a good productive use of time. So the transitional relief is to do this on a go-forward basis only, which I think will really help.
Contributive Materials and Labour
A very, very similar concept to the previous one, and similar feedback, and actually similar amendments as well.
So, it’s the same concept. If we’re getting contributed materials and labour towards a tangible capital asset, then to be consistent with the way we’re treating fully donated assets, we should be recording the asset, again, at its fair value, and recording the contributed materials and labour as a contribution.
Again, I think that’s quite consistent with the old PSAS handbook, and most or many users probably would have got to the same conclusion without this additional information. But again, adding this in, I think, is good information—really points users to the consistent and appropriate way to account for this.
We got, when proposing this, we got very similar feedback in regard to the challenge of recording fair value.
And I think, particularly, there’s a challenge for everything, but particularly around labour. That can be really difficult, especially depending on what type of labour it might be. If it’s volunteer labour, for example, that’s always a real challenge because you don’t have professionals doing the work, and is their labour properly valued. Difficult area. So, for that reason, our amendments are really the same as they were in the previous slide that we looked at, narrowing the application of the guidance, adding guidance when fair value cannot be easily determined, ending up with disclosure, and providing that same transitional relief of not having to go backwards to prior to adoption of this standard, but doing it on a go-forward basis, which I think is the most practical result for all.
Transitional Provisions
Originally, we had effective date of April 1, 2029, with retroactive application and restatement of prior periods.
Feedback we got was: “What about the Intangible Asset project?”
It would be a bad situation if this came in before the Intangible Asset standard was done. And it could be pretty burdensome to work backwards.
So, as a result of that, the effective date is amended to April 1, 2030, which is… should tie in with the Intangible Assets project.
If for some reason—and I don’t expect this would happen—but if for some reason, the Intangible Asset project is delayed, it might be possible that the Board would look to changing the effective date for this standard to tie in as well. That would be up to them. And, it’s not going to happen anyway, so why worry about it?
But we will tie in with the intangible assets. And we will, as said earlier, have relief that you don’t have to work backwards for those assets purchased substantially below fair value or contributed materials. That can be on a go-forward basis, which will make life easier.
I think it’s also good to mention the thoughts we had around reconciliation with Indigenous Peoples.
This whole concept of reconciliation is very important to CPA Canada, and probably even more important to PSAB, because PSAB is the standard-setter for First Nations, and provinces, and local governments, and the federal government, but First Nations are an important part of who we work with and for.
So, in our original proposals, we had reference to paragraph 43 of Article 11 of the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). We thought it was a good tie-in to make reference to that.
We got some feedback saying, yes, that’s a good tie-in, but perhaps you should also make reference to other things, such as the Truth and Reconciliation Call to Action 67, which is around collections of Indigenous artifacts.
So, we considered that and decided against it for two reasons:
One is, as you see in the bottom there, TRC 67 is pretty narrow application. It only applies to the federal government and Canadian Museums Association. So it doesn’t apply to the majority of our stakeholders; so that was part of the reason.
The other part of the reason is just, I think, a reluctance to have too much reference outside of the Handbook. If we start referencing things that are outside the Handbook, it makes it much more difficult for PSAB to keep things up to date, because there could be changes that’s beyond the control of PSAB what changes in outside documents. So, that was part of the rationale there. So we decided not to make a change, but we thought it was important enough to discuss how we got to that conclusion in the Basis for Conclusions. So that is discussed there.
There are some consequential amendments that come out of this.
For the most part, pretty minor. It’s basically wherever 4230 and 4240 were mentioned in other standards. Obviously that will be removed because those standards won’t be effective anymore once the new 3150 is adopted, and, of course, 4230 and 4240 themselves will be withdrawn.
So, as soon as you adopt the new 3150, you can no longer use 4230 or 4240. So you can adopt early, or you’ll have to do it by April 1, 2030.
The Guidance, as of May 2025, is in all the Handbooks now—the updated Guidance—so should you want to early adopt, the Guidance is there. You can look for it online, or—I don’t even know if we produce paper copies anymore, but whatever the version is—it should be up to date now with all the new 3150 standard.
Amanda Senkowski: Great! Thank you, Bill. Now that we’ve completed the first standard-level project of the GNFP Strategy and Implementation Plan, we’ll turn our attention to the next project, Contributions and Financial Statement Presentation.
When determining the ordering of the projects, Contributions was identified as the second standard-level initiative. The project scope also includes developing additional guidance on endowments in response to the feedback received during the GNFP strategy development.
As we began identifying the issues to be addressed as part of the project and considered some of the feedback that we received during the Tangible Capital Assets project, PSAB noted the interdependencies between contributions and financial statement presentation.
As a result, it was determined that both projects should be done at the same time and combined into one project.
During the Tangible Capital Assets project, it became clear that reviewing the PS 4200 series to determine what amendments, if any, should be made to other sections of the PSA Handbook could potentially impact all public sector entities, as they may have new guidance to apply.
Having said that, the intent is not to make significant changes to key foundational-type standards, such as government transfers and the reporting model.
It’s important to note that the scope of the contributions and Financial Statement Presentation project is limited to incorporating the PS 4200 series into the PSA Handbook.
This means that customization specific to GNFPOs may be used, but only when they address a substantive and distinct accountability of GNFPOs. Amendments may also be used, but only when the guidance would benefit all public sector entities.
In addition, interested and affected parties have highlighted the need for enhanced guidance on endowments, which will also be addressed within this combined project and will apply to all public sector entities.
Ultimately, the objective of the GNFP strategy is to improve comparability of public sector financial statements, and any proposed amendments will be intended to achieve this without making substantive changes to core principles.
On this slide, you’ll see the sections from the PS 4200 series that will be reviewed as part of this project to determine what amendments, if any, are needed to be considered for other sections of the PSA Handbook.
At the end of the GNFP Strategy Implementation Plan group of projects, sections PS 4200, 4210, 4220, and 4270 will be withdrawn, similar to the Tangible Capital Assets Project.
The review of the PS 4200 series requires consideration as to whether there’s similar guidance that already exists in the Public Sector Handbook.
When there’s no similar guidance in the PSA Handbook, there’s discernment as to whether the guidance should be retained as a customization because it addresses a matter specific to government not-for-profit organizations, or, if an amendment might be appropriate, because there are other public sector entities that would benefit from the guidance.
There’s also a determination as to whether the guidance is consistent with PSAB’s Conceptual Framework.
And given that the PS 4200 series has not been updated in a while, consideration is also given to what other standard-setters are doing regarding those particular topics and to look as to whether or not it’ll be relevant. Some of the other standard-setters that we’re looking to are the International Public Sector Accounting Standards Board, as well as our Accounting Standards Board.
Now I’ll turn the time back to you, Bill, to discuss some of the preliminary issues.
Bill Cox: Thank you, Amanda. I’m just looking at my clock here. I don’t remember if we said at the outset (we probably did) that we’re going to try and have fifteen minutes for Q&A at the end. And according to my clock, it looks like we’re right on track here, so I think we should have plenty of time for questions. So, think those up in the next fifteen minutes, and we will get to some of those.
So, Amanda walked you through how we got to having this as our second project. And our committee, the Government Not-for-Profit Advisory Committee, has met recently. We had a good long two-day in-person meeting to, sort of, thresh out what we saw as the preliminary issues—some around contributions as on this slide, and some on financial statement presentation, which is the next slide we’ll look at. And I think we’ve already found that this is going to be a really interesting and fun but challenging area to work through.
So, the preliminary issues, as you see in the slide here: The one at the top, accounting for capital contributions, we know is going to be an important one.
Many of our stakeholders, particularly those using the 4200 series, have sort of automatic matching for their capital contributions, where the capital revenue is recognized over the life of the assets. They like the way it works, and if anything we do is going to make any changes to that, we know we’re going to hear about it. So that is going to be a tough one to work through.
That sort of automatic matching versus what’s in the Handbook now, where you can still get to recognizing the revenue over the life of the asset. It’s just a little bit different, because there has to be stipulations that create a liability, and the liability has to be reduced over the life of the asset. So, you could still get to the same accounting, but it’s not automatic the way it is in the 4200 series. So working through that, I think, is going to be something that many organizations will be keeping a close eye on, and it’ll be important for us to understand and get feedback. We’re going to talk near the end of this presentation about feedback, but it’s really important for us to understand what’s important to organizations, what they’re doing now, why they do it, what outside influences impact them. We need to know all that if we’re going to come up with the best recommendation for the Board. So, that’s going to be a tough area.
The second one: The two methods of revenue recognition. In the 4200 series, there’s a choice between restricted fund and deferral basis for revenue recognition. I think we thought that might be… originally, we thought that might be an area where we’d spend a lot of time, but now that we’ve done some research, I think it’s not going to be that difficult an area. And the reason I say that is, from our research, we tried to find government not-for-profit organizations that use the restrictive fund method of accounting, and we were not able to find any. We thought, a couple of days ago, we thought we had one, and then when we did a little further research, we realized, no—they just present on a fund basis, but they’re still using the deferral method. So I’m not sure there’s any government not-for-profit organizations that use the restrictive fund method. If there are, and any of you are watching, or you know of somebody, please let us know, because we’re thinking that this may not be an issue at all, and if we’re wrong, we should know about that.
Third on the list, there is endowments, and this is an area that is kind of screaming out for standard help here, because it’s not really addressed at all in the regular PSAS Handbook. You would go through restricted assets and revenues, probably, or other standards as well to try and figure out how to deal with endowments. Of course, many organizations that have endowments use the full PSAS Handbook, and they’ve been able to find their way around it. But I don’t know that even those organizations that have found a way to work it are 100% satisfied with that. And there is guidance in the 4200 series around endowments, so there’ll be a question about whether we can bring some good guidance out of the 4200 series.
Whatever guidance that we think we might want to bring out has to be consistent with the Conceptual Framework, but is there anything in there that’s consistent that would be very helpful to every organization that has an endowment? I think there might be.
Our timing of dealing with this is really fortunate, because we’re getting to this very soon after the issue of the new Conceptual Framework and the new reporting model. And the new reporting model, of course, has the ability to have different categories of accumulated surplus that may—I don’t want to presuppose anything—but that may be very useful from an endowment revenue point of view.
So, I think we’re fortunate now we have some more tools. Had we looked at this a couple years ago, we wouldn’t have had the same tools. So now I think we have some good tools, we have some good concepts in the 4200 series, and we’ll be able to, I hope, bring some good standards to regular PSAS.
Last issue, contributed materials and services, may sound like a repeat of what we just talked about a few slides ago, but we were talking about contributive materials and services for tangible capital assets a few slides ago.
There’s also the accounting issues around contributing materials and services for other things that aren’t tangible capital assets. Again, it’s an area where there’s more guidance in the 4200 series, and probably some concepts or standards that we could pull out of there.
So this is one of the reasons why, when we think of things coming out of the 4200 series and being available to all, this is one of the reasons why I think it’s important that all organizations that use PSAS should, sort of, keep an eye on what we’re doing.
Even though we have government not-for-profit organizations in our title, because of the way things are coming out of the 4200 series and potentially being available to all, we could have an impact to all organizations. So don’t just write this off. If you’re not a government not-for-profit, don’t just write this off. Still pay attention to what we’re doing, because it could have impact.
Some of our 3150 changes that we made, such as counting for assets paid at substantially below fair value, that will apply to everybody now. So, keep an eye on what we’re doing.
So, in addition to the contribution side, there’s also the financial statement presentation side. And these are the areas that we’ve identified as preliminary issues here.
The first one is the option to apply fund accounting. I think this may not be too difficult an area. At first, we heard a lot of comment from government not-for-profit organizations that use fund accounting. They swear by their funds: The capital fund’s important, the ancillary services fund is important, the endowment fund is important, the utility fund is important. It’s all very important and very integral to the way they account for things, but my sense is, from having dug a little deeper with many of those folks, that it doesn’t necessarily … they can have their funds accounted for internally, but they don’t necessarily need to present their financial statements on that basis, particularly with the option to have a note that would break things down in the way they wanted to. So we’ll obviously, we’ll work through it, but I don’t know that that’s going to be a very difficult area for us, but we’ll find out.
The second one—net financial assets or net financial liabilities indicator. This is another issue where it’s a good time. We’re getting to this at the right time, because we’re getting to it after the new reporting framework has been issued, which changes the way this information is calculated and presented, so I don’t think this is as significant as it was. In prior years, government not-for-profit organizations sort of said, this net financial asset liability indicator is not very important to us. We’re not a government. We don’t issue debt. It’s not that important to us. Why is it on the face of the statements? Well, the new reporting model changes that anyway, so I think, this will be an easier one to work through now because of those, that new format.
The third one, though, I believe, is going to be a very important issue, and one that we’ll want to get lots of feedback on, and that’s the budget to actual comparison. It is required under regular PSAS; it’s not required under 4200 series.
And from our discussions with government not-for-profit organizations, there’s a fair bit of reluctance to show the budget in some cases largely because, largely in those situations where there’s balanced budget legislation, and often that balanced budget legislation is telling you what counts as a revenue, what counts as an expenditure, which may be different than what revenues and expenditures are for accounting purposes. So, they sort of have to do the budget on one basis, and if they have to put that on their financial statements, which are prepared on another basis, that could create some reconciliation difficulties for them. So, this is an area where we really want to get a lot of good feedback and understand where people are coming from, what the impact of balanced budget legislation is, so we can come up with some good recommendations there.
Last on the list is the current versus non-current asset and liability classification. That’s there in the 4200 series. It’s not something that we do in regular PSAS, so the question will be: Is that something that should be done by all? Probably not. Should it be a customization for nonprofits? Maybe. That’s the kind of thing we’ll be looking through to take a look at and come up with a reasonable recommendation.
Next steps. The fall this year is our outreach phase. As I said, I think probably a few times, very, very important that we get as much feedback as we can. We are going to have a survey coming out, I believe, in December, or close to, asking some very specific questions. But we’re also going to try and have members of our committee, Board members, PSAP’s app, we’re going to try and have everybody reach out and talk to as many contacts as they have in the government, not-for-profit organization realm, as well as other governments and government entities as well, trying to get as much information as we can. Really important, I think, that we get some good research on this, because it’s such a unique area, and we really need to have our background.
And 2027 is the date that we’re going to come out with an Exposure Draft with our thoughts on all those issues we just talked about.
How to stay informed. On the next slide here, the actual slides themselves, these are our links. There’s a link to our project page. It’s a good thing to take a look at every couple of weeks to see what’s new, what new documents are there.
As I said, just a minute ago, if you’re not a government not-for-profit organization, still keep tabs on what we’re doing. I think it’s going to be important to all.
The second link there, the GNFP strategy decision, gives you some of the background as to how we ended up with the process that we’re going through now. Useful if you’re not already aware of it.
The third link there, the Standard, the FRAS Canada newsletter. I’m going to guess that most people attending this webinar are already subscribed to the Standard. But if you’re not, you should be. It's great! It’s an email that comes every two weeks. It tells you what’s new in all the standards, not just PSAS but also IFRS and ASPE and sustainability standards, and auditing, and all those good things, and it’s a really good way… I think any professional accountant should get that email, glance through it, and click to go deeper on anything that’s important to them. So, I’m guessing most of you are signed up for the Standard. If you’re not, you absolutely must! Go and sign up for that.
And lastly, our social media links on the bottom there. The X account is @FRASCanada, and we’re also on LinkedIn at the Public Sector Accounting Board (PSAB).
So, please keep in touch.
Amanda Senkowski: Okay, thank you, Bill. So before we get to the Q&A, as mentioned at the beginning, you’ll see up on the screen here, there's a link for our post-webinar quiz. Deven, our Zoom expert, will also put a link to the quiz in the Q&A in case it’s easier for you to access there. By attending this webinar and successfully completing this quiz, this may be applicable for CPD requirements.
So with that, we’ll move forward into the question-and-answer period.
Let me just get that open here.
So for this first question: Why do only public sector entities that are not applying the PS 4200 series get transitional relief for purchases of tangible capital assets at substantially below fair value?
Bill Cox: Oh, that’s a good question. It seems like we’re penalizing those entities that use the 4200 series. But really we are not, because if you were applying the 4200 series, you would have already been doing that, applying those sections, so you wouldn’t have to do any work. You’ve already done the work in past years, so it would almost … it would actually be more work to have a don’t-do-it-backwards type requirement. So, no additional work for those who are already using the 4200 series. It seems like a penalty, but it’s not.
Amanda Senkowski: Okay, and then we have another one here. Do all public sector entities need to assess their works of art, historical treasures and collections to determine if the new proposed disclosure requirements impact them?
Bill Cox: Yes, good question. I think the answer is yes. With the disclosure requirements, if you actually have a collection that you’re in charge of, controlling and managing and presenting, there’s further disclosure requirements. But even for other entities where that’s not their basic purpose, there is some general disclosure required. I don’t believe it’s very onerous. We did try and tone that back a little bit to make sure it wasn’t too onerous. But, the short answer is yes, look at what you’ve got. And if it’s material, there’s going to be some brief disclosures required.
Amanda Senkowski: Okay, thanks, Bill. And it looks like we’ve got one more question here. With the contributions and financial statement presentation project ongoing, is it likely that it’s going to affect the current accounting treatment for capital contributions if you’re an entity applying the PS 4200 series?
Bill Cox: Is it likely? That’s a million-dollar question. It’s certainly possible because the two standards … the two methods right now are so different.
One is automatic matching, and the other is looking at whether the funding contains stipulations that would create a liability.
So you could end up with the same result. I am certainly aware of organizations that use the full PSAS Handbook that end up with recognition of assets over their life. So it’s possible to end up in the same result, but it’s certainly not automatic. So, something to keep close eyes on if that’s important to you.
Amanda Senkowski: Okay, great! Thanks, Bill. It looks like we have no further questions coming in. So, you’ll see there on the screen my contact information as well as my associate director, Sandra Waterson. We’re currently the two team members on this project. So if you have any further insights you’d like to share with us, or questions, or any specific examples that you’d like to share with us from today’s presentation, we’d love to hear from you.
And with that, I will just thank you all for your time today. We’re so happy to have you join us, and yes, please go back to our project page and follow along with the work. Thank you so much.