Public Sector Accounting Board
Decision Summary
December 15-16, 2011

Concepts Underlying Financial Performance

PSAB received a presentation regarding the Task Force’s Consultation Paper 1 detailing the 24 responses received, the Task Force’s consideration of the issues raised and the proposed disposition. The Task Force noted that an issues analysis, responding to the major issues raised, will accompany a second Consultation Paper.

PSAB provided feedback to the Task Force on next steps in the project. A revision to the timeline is proposed to accommodate additional issues raised in the responses. PSAB encouraged the Task Force to consider other methods of consulting with constituents as well as ways to shorten the proposed timeline, while recognizing that a conceptual framework project is a significant undertaking.

Handbook Improvements

PSAB approved a series of final “Handbook Improvement” changes clarifying various Sections of the Public Sector Accounting Handbook.

Financial Instruments — Effective Date for General Revenue Funds

PSAB considered a request to amend the transitional provisions in Section PS 2601, Foreign Currency Translation, and Section PS 3450, Financial Instruments. PSAB requires government organizations to comply by April 1, 2012 and governments by April 1, 2015. PSAB decided not to amend the transitional provisions. It did agree to respond directly to the request to clarify its intent when it provided governments with a longer effective date.

Pension Accounting

Current pension accounting is in the process of being reconsidered both internationally and domestically in the private sector. PSAB will continue to actively monitor these changes and consider their implications for the public sector in Canada given the changing economic environment.

Amendments Resulting from Section PS 3450

PSAB approved final amendments to the PSA Handbook based on the proposals in the Exposure Draft. In response to respondents’ feedback, some clarifications to the amendments were made in finalizing the changes.

Financial Instruments — Transitional Provisions
PSAB approved an Exposure Draft that sets out proposed transitional provisions for government organizations that have gains and losses on financial instruments in the “available-for-sale” category. Existing transitional provisions did not clearly address this issue. The Exposure Draft proposes an approach that will ensure that these gains and losses are reported in the statement of remeasurement gains and losses and that recognition in operations will occur when the gains and losses are realized.

Asset Retirement Obligations

PSAB approved an Asset Retirement Obligations project. The project is expected to commence in 2012. The project will address the reporting of legal obligations associated with the retirement of long-lived tangible capital assets currently in productive use. Recognition and measurement of the liability will be a major issue as will be accounting for the related expense.

Assets

PSAB held its first discussion of issues in the Assets project. It discussed the “power to tax” in relation to the existing definition of an asset to explore and consider the various components of the definition. 

The Assets project is intended to provide guidance that will help preparers and auditors in assessing whether an item meets the current definition and consider providing guidance on contingent assets and contractual rights.

Appropriations

PSAB approved a Statement of Principles on the use of appropriations. 

PSAB agreed that entities who receive their funding from transfers of assets would apply the principles in Section PS 3410, Government Transfers. As a further scope clarification, the Statement of Principles emphasizes that the standard only applies to those entities that are required to or have chosen to issue general purpose financial statements. 

The Board agreed that appropriations should be reported in general purpose financial statements and recognized when the authority is in place and an eligible expenditure had been incurred. PSAB was also in general agreement with proposals on presentation and disclosure.

The Board focused its time on considering the Task Force’s analysis of the alternatives for reporting appropriations. After considerable discussion, PSAB agreed that the credit related to the use of appropriations should be reported in the statement of operations. 

The Statement of Principles is expected to be issued in February 2012.

PSAB Work Plan 2012-13

PSAB approved its Work Plan for 2012-13, which will now be reviewed by the Accounting Standards Oversight Council. Extra time was added to each PSAB meeting in 2012 to accommodate the development of its 2013-2016 Strategic Plan. The Board agreed that a draft strategic plan would be published for comment once developed. The current strategic plan comes to an end on March 31, 2013.

Update of Terminology

PSAB reviewed responses received to the Exposure Draft that set out Phase I of the proposals to update the terminology in the PSA Handbook to more explicitly include government organizations in the wording of the individual Sections of the PSA Handbook. 

A recurring theme in PSAB discussions is a concern over whether there is a need to distinguish certain government organizations, such as departments and ministries, from other government organizations. PSAB asked staff to consider the implications of making this distinction. An analysis of the issues will be considered at the March 2012 meeting.

Stakeholder Survey

PSAB reviewed the responses to its recent survey and agreed that a summary of the disposition of those comments would be posted on the PSAB website.