Public Sector Accounting Standards

Financial Instruments – Narrow Scope Amendments

Summary

In response to feedback received from the Canadian Council of Comptrollers, the Public Sector Accounting Board (PSAB) will develop additional narrow scope amendments to address specific concerns raised.

The objective of this project is to review the following topics:

Presentation of the fair value of derivatives;
Presentation of certain foreign exchange gains/losses and changes in the fair value of associated derivatives; and
Accounting for rate-setting transactions.

In connection with this project, PSAB also previously approved the following amendments:

Financial Instruments - Narrow Scope Amendments; and
Financial Instruments - Federal Government Narrow Scope Amendments.

Staff Contact(s)

Lauren Pennycook, CPA, CA Principal, Accounting Standards Board

+1 416 204 2950

[email protected]

Project Status

Information gathering

Completed between 2016–2018 and 2020
Approving project

Narrow scope amendments project approved by PSAB in March 2018

Additional narrow scope amendments approved by PSAB in April 2020
Consulting stakeholders

Financial Instruments Advisory Group established September 2018

The Financial Instruments – Narrow Scope Amendments Exposure Draft issued in January 2019

The Financial Instruments – Federal Government Narrow Scope Amendments Exposure Draft issued in January 2020

The Financial Instruments – Presentation Narrow Scope Amendments Exposure Draft issued in July 2020

The Financial Instruments – Foreign Exchange Narrow Scope Amendments Exposure Draft issued in July 2020
Deliberating feedback

PSAB reviewed stakeholder feedback on the Financial Instruments – Narrow Scope Amendments Exposure Draft in December 2019

PSAB reviewed stakeholder feedback on the Financial Instruments – Federal Government Narrow Scope Amendments Exposure Draft in July 2020

PSAB reviewed stakeholder feedback on the Financial Instruments – Presentation Narrow Scope Amendments and Financial Instruments – Foreign Exchange Narrow Scope Amendments in December 2020
Final pronouncement

The final amendments for the Financial Instruments – Narrow Scope Amendments were issued in the PSA Handbook in March 2020

The final amendments for the Financial Instruments – Federal Government Narrow Scope Amendments were issued in the PSA Handbook in October 2020

The final amendments for the Financial Instruments – Presentation Narrow Scope Amendments and Financial Instruments – Foreign Exchange Narrow Scope Amendments were issued in the PSA Handbook in April 2021

Meeting & event summaries

July 8, 2021

PSAB Decision Summary – June 29, 2021 and July 8, 2021

PSAB received the Financial Instruments Advisory Group’s overview, comprehensive analysis, and recommendation on rate-setting transactions, as part of the Financial Instruments – Narrow-scope Amendments project.

PSAB accepted the Financial Instruments Advisory Group’s recommendation not to proceed with an exposure draft on the accounting for rate-setting transactions. The Board made this decision on the basis that the amendments required to permit such transactions within public sector accounting standards could not be accommodated through the narrow-scope-amendment mandate. The extensive changes required to accommodate rate-setting transactions were inconsistent with the Board’s due process for narrow-scope amendments and could introduce principles inconsistent with previously approved decisions in the development of the financial instruments suite of standards.

This completes the Financial Instruments – Narrow-scope Amendments project prior to its effective date for fiscal years beginning on or after April 1, 2022. PSAB will continue to monitor and review the accounting for the financial instruments suite of standards, including rate-setting and other financial risk management activities. In accordance with its due process, approximately two years after the implementation of these new standards, the Board will assess whether a post-implementation review of the financial instruments suite of standards should be performed.

December 9, 2020

PSAB Decision Summary – December 9, 2020

PSAB approved the following narrow-scope amendments:

Financial Instruments, Presentation Narrow-scope Amendments; and
Financial Instruments, Foreign Exchange Narrow-scope Amendments.

These amendments will be effective for fiscal years beginning on or after April 1, 2022.

These amendments will be reflected in the PSA Handbook in spring 2021.

July 3, 2020

PSAB Decision Summary – July 3, 2020

At its recent meeting, the Board discussed the Financial Instruments – Narrow Scope Amendments project and its Basis for Conclusions on its International Strategy decision. Read the Decision Summary for full details.

April 27, 2020

PSAB Decision Summary – April 27, 2020

PSAB received an overview of the accounting proposals prepared by the Canadian Council of Comptrollers and reviewed recommendations from the Board’s Financial Instruments Subcommittee. The Board agreed to pursue the development of additional narrow-scope amendments to address the following topics:

presentation of the fair value of derivatives;
presentation of certain foreign exchange gains/losses and changes in the fair value of associated derivatives; and
accounting for rate-setting transactions.

December 18, 2019

PSAB Decision Summary – December 12-13, 2019

PSAB approved the following:

Financial Instruments: Narrow-scope Amendments, final Handbook amendments. The amendments include changes to the accounting treatment of bond repurchase transactions, transitional provisions, and other minor improvements, and will be reflected in the CPA Handbook in the spring of 2020.
Exposure Draft, “Financial Instruments: Federal Government Narrow-scope Amendments.” The Exposure Draft will be published early in 2020, with a 60-day comment period.

September 27, 2019

PSAB Decision Summary – September 26-27, 2019

PSAB discussed the approach to revisit a final narrow-scope amendment for Section PS 3450, Financial Instruments, with respect to the federal government issue. The Board will evaluate the revised amendment and potentially approve an exposure draft for comment at the December 2019 meeting.

Disclaimer

This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal voting process.