As a result of stakeholder feedback received, PSAB was asked to revisit the validity of the prohibition against recognizing purchased intangibles in public sector financial statements
Key stakeholder feedback includes:
- At its April 26, 2019 Public Sector Accounting Discussion Group (PSA DG) meeting, PSA DG members suggested that PSAB consider a narrow scope amendment.
- Input received in response to the 2018 conceptual framework and reporting model documents for comment supported PSAB relocating the recognition prohibitions from the conceptual framework to the standards level. Some urged PSAB to remove them entirely.
- Input received at the 2018 AFOA conference told PSAB how significant this issue is for Indigenous governments and how the prohibition was distorting their financial position.
- PSAB stakeholders have asked why purchased intangibles acquired through an exchange transaction cannot be recognized in public sector financial statements as they are measurable at the price in the transaction.
The Board is proposing to take action now on this issue, in a limited fashion, that would open the door to the recognition of purchased (not developed, constructed or inherited) intangibles.
The Board would not, however, provide details of how to recognize them at this time. This approach is similar to that for purchased natural resources and purchased Crown lands. They are not excluded from recognition in financial statements, but the Public Sector Accounting (PSA) Handbook does not include any specifics on how such items would be recognized.