Reporting Model Released
The new Reporting Model in Section PS 1202 Financial Statement Presentation, was issued in the CPA Canada Public Sector Accounting (PSA) Handbook on October 2, 2023.
Focused on ensuring the standard is relevant and continues to meet users’ needs, PSAB’s new Reporting Model:
- builds on the existing one in Section PS 1201;
- is consistent with PSAB’s Conceptual Framework;
- ensures an increased understanding of financial statements and the indicators within them; and
- provides improved accountability information for users.
The New Reporting Model – What’s different?
To increase the accountability value of financial statements in an understandable way, the following changes have been made to the financial statement package:
- The statement of financial position was restructured and now includes two categories of liabilities and a third component of net assets or net liabilities.
- The net financial assets or net financial liabilities indicator (formerly known as net debt) has been relocated to its own statement, the statement of net financial assets or net financial liabilities. Its calculation has been refined.
- The statement of change in net debt has been removed. However, an entity has the option to present the change in the indicator on the statement of net financial assets or net financial liabilities.
- The statement of changes in net assets or net liabilities was added:
- This statement shows a reconciliation of each component of net assets or net liabilities.
- All revenues and expenses arising in the period are captured in the statement of changes in net assets or net liabilities. The statement’s purpose is to be transparent with respect to those revenues and expenses recognized in surplus or deficit of the period and those recognized directly in net assets or net liabilities. The information presented on the statement of remeasurement gains and losses will now be presented on this statement.
- The statement of cash flow was amended to isolate financing activities to present whether all of an entity’s other activities combined results in the need for cash to be raised through financing activities.
- Amended budgets may be presented but only in limited circumstances.
The following was also added to Section PS 1202:
- a discussion on going concern that builds on the discussion in the Conceptual Framework; and
- the recognition exclusions related to (1) developed and non-purchased intangibles, (2) Crown lands and natural resources that have not been purchased and (3) art and historical treasures. These were relocated from the superseded Conceptual Framework for consideration in PSAB’s future technical agenda.
As a consequence of issuing Section PS 1202, various sections and guidelines of the PSA Handbook have been withdrawn or amended. All amended sections and guidelines include a new transitional paragraph that outlines:
- the paragraphs affected;
- the reason for the amendment(s) (i.e., as a result of issuing Section PS 1202);
- the effective date (i.e., applicable at the same time as Section PS 1202); and
- the transitional provisions (i.e., prior period amounts would need to be restated to conform to the requirements for comparative information in Section PS 1202).
Start Preparing Now
The Reporting Model in Section PS 1202 will be effective for fiscal years beginning on or after April 1, 2026. Earlier adoption is permitted only if the Conceptual Framework is also adopted at the same time. To ensure you are ready:
- Access Section PS 1202 (the new Reporting Model) in PSA Handbook.
- Review the guidance provided in the various appendices of Section PS 1202 in the form of application guidance, decision trees, illustrative examples, and illustrative financial statements.
- Review the consequential amendments listed in Highlight Summary no. 57 in the PSA Handbook.
- Access the Basis for Conclusions for Section PS 1202, which explains the rationale for PSAB’s decisions in developing the new reporting model standard.
- Stay tuned for:
A Key Achievement for Financial Reporting in the Canadian Public Sector
In March 2023, PSAB approved the new Reporting Model.
The approval and issuance of Section PS 1202, the new Financial Statement Presentation standard, which sets out PSAB’s new Reporting Model, is a key achievement for PSAB and financial reporting in the Canadian public sector.
PSAB embarked on this high priority project to amend, if necessary:
- The conceptual framework found in Section PS 1000, Financial Statement Concepts, and Section PS 1100, Financial Statement Objectives, with a focus on measuring the financial performance of public sector entities.
- The Reporting Model in Section PS 1201, Financial Statement Presentation.
To ensure that the new Reporting Model was specific to the Canadian public sector and would stand the test of time, PSAB consulted with Canadian interested parties extensively and released a series of documents for public input.