Public Sector Accounting Board (PSAB) – Update … · Public Sector Accounting Board (PSAB) –...

transcript

Public Sector Accounting Board(PSAB) – Update

The PSA Handbook is the primary authoritative source of public sector GAAP.

The opinions stated in the presentation are those of the author and do not necessarily reflect the views of PSAB. Official positions of PSAB are established only after extensive public due process.

Michael A. Puskaric, DirectorNovember 21, 2018

Standard-Setting in Canada

AcSBAcSB Staff

PSABPSAB Staff

VP Standards

CPA Canada

OversightSupport & LiaisonResources

Oversight

Standard-setting

AASBAASB Staff

November 21, 2018

PSAB’s Mission

• Public Sector Accounting Board (PSAB)• Serves the public interest by establishing

standards and other guidance for financial reporting by all Canadian entities in the public sector

• Supporting informed decision making and accountability for Canadian public sector entities

November 21, 2018

PSAB Membership

• PSAB members are appointed by AcSOC on an annual basis

• Diverse membership ensures appropriate balance of competencies and experience

November 21, 2018

PSAB Membership• Charles-Antoine St-Jean (Chair), Former Partner EY• Andrew Newman (Vice-Chair), Partner, KPMG• Scott Monroe, Director, Standards and Certification, First Nations Financial

Management Board • Bill Cox, Partner, BDO Canada• Jean-Luc Ostiguy, Partner, Deloitte (Retired)• Guylaine Leclerc, Auditor General of Quebec• Joyce Bateman, Former Member of Parliament, Winnipeg South Centre• Clyde MacLellan, Assistant Auditor General of Canada• Kim MacPherson, Auditor General of New Brunswick• Bill Matthews, Senior Associate Deputy Minister National Defense• Ann Marie Miller, Comptroller General of Finance, Newfoundland & Labrador• Geoffrey Gatien, Associate Deputy Minister and Controller, Department of

Finance & Treasury, Government of Nova Scotia• Mike Ruta, CFO, City of Winnipeg

November 21, 2018

PSAB Committees

November 21, 2018

PSAB’s Due Process

• Key due process principles:– Stakeholder consultation– Accountability – Transparency

• AcSOC oversees our activities and ensures we follow our rigorous due process

November 21, 2018

PSAB’s Due Process

November 21, 2018

PSA Overview - Roadmap

• Gov’t and components

OGOs and Partnerships

GNFPs*

PSA Handbook

PSA Handbook +/-* NFPs in the public sector

November 21, 2018

2017-2020 Strategic plan

InternationalStrategy

NFP Strategy

Conceptual Framework

StakeholderAcceptance

Public Interest

November 21, 2018

Interrelated Strategies

November 21, 2018

Effective datesDate Topic

April 1, 2021 Governments and some organizations only:• F/S Presentation PS 1201• Foreign Currency Translation PS 2601• Financial Instruments PS 3450• Portfolio Investments PS 3041

April 1, 2021 Government and Government Organizations• Asset Retirement Obligations, Section PS 3280

April 1, 2022 Government and Government Organizations• Revenue, Section PS 3400

November 21, 2018

2018-19 Annual PlanDocuments Project

Final Standard (FS) • Asset Retirement Obligations• Revenue

ExposureDraft (ED)

• Financial Instruments (Narrow Scope)• Annual Improvements• Public private partnerships

Statement ofPrinciples (SOP)

• Conceptual framework & Reporting Model

Invitation to Comment (ITC)

• Employment benefits (Pensions)

ConsultationPaper (CP)

• Review of International Strategy – CP #1 & 2• Government Not-For-Profit

November 21, 2018

Review of International Strategy

2017-2020 Strategic Plan

Review our approach to International Public Sector Accounting Standards

• Conduct research on the differences between Canadian Public Sector Accounting Standards and International Public Sector Accounting Standards

• Learn about experiences of other jurisdictions that have elected to follow International Public Sector Accounting Standards

• Issue a public consultation paper to get the opinion of stakeholders

• Develop options for our international strategy

November 21, 2018

Timelines

November 21, 2018

Consultation Paper 1 IssuedComment Period & Outreach ActivitiesReview of CommentsConsultation Paper 2 IssuedComment Period & Outreach ActivitiesReview of CommentsDecision on International StrategyStakeholder Viewpoint Analysis and Board Decision Summary Issued

June Sept Dec Mar June Sept Dec Mar June2018 2019 2020

Current Approach to IPSASB

• Maintain a Canadian standard-setting capability while contributing to and influencing the work of the IPSASBo contribute to the development of standards by:

– briefing the Canadian members of IPSASB– responding to IPSASB documents for

commento encouraging Canadian public sector entities to

respond to IPSASB’s documents for comment

November 21, 2018

International Strategy – Why Now?

• International Standards have maturedo Conceptual Framework, robust due process

and a comprehensive set of Accounting Standards

• International adoption momentum• Canada’s role in influencing

International Standards• Time & resources spent on developing

Canadian public sector standards

November 21, 2018

Consultation Paper # 1

• Neutral Approach o PSAB has not decided which option to pursue

• Introduce decision making model

• Not seeking opinions on which option PSAB should adopt o Discuss criteria that will be used to evaluate these

options

November 21, 2018

• Resources and timeframes for implementation are not in scope

• Responses received from CP #1 will be incorporated into CP #2

• PSAB to be in a position to make a decision by March 2020

November 21, 2018

• Asking stakeholders to comment on:

o Are there additional criteria the Board should include in its business cases when evaluating the options?

o Should any criteria take precedence over others?

o Are there other significant facts that should be taken into consideration?

November 21, 2018

Asking stakeholders to comment on:

oAre there additional options for PSAB to consider and for which it should develop a business case?

oAre there any other matters that should be brought to the Board’s attention for consideration?

November 21, 2018

Decision Making Criteria

November 21, 2018

International Strategy – Options

Business Case Approach

Status QuoAdapt IPSAS

principlesAdapt

IPSASsAdopt

IPSASs

November 21, 2018

Option # 1 – Status Quo

Status quo is defined as continuing the existing standard-setting process. This option maintains PSAB’s role in establishing PSA standards independently from other standard setters.

principlesAdapt

IPSASsAdopt

IPSASs

November 21, 2018

Option # 2 – Adapt IPSAS Principles

principlesAdapt

IPSASsAdopt

IPSASs

This option involves PSAB continuing to develop standards for Canada. However, future standards would be based on existing IPSASs. The Board would establish a process detailing when departures from IPSASs are warranted.

November 21, 2018

Option # 3 – Adapt IPSASs

This option involves applying IPSASs in Canada, except in circumstances where a departure is warranted. PSAB moves away from developing standards for Canada except when a Canadian issue is identified.

principlesAdapt

IPSASsAdopt

IPSASs

November 21, 2018

Option # 4 – Adopt IPSASs

principlesAdapt

IPSASsAdopt

IPSASs

This option involves PSAB adopting IPSASs as issued by the IPSASB.

November 21, 2018

PSAS / IPSAS Comparison

19 Standards (50%)

11 Standards (29%)

8 Standards (21%)

Consistency of PSAS with IPSAS

Consistent

Difference

Significant difference

November 21, 2018

Responses to Consultation Paper #1

Controller

Federal & Provincial Auditor

Local Auditor Local Gov’t

SUCH Org

Actgfirms Others Total

International 1 1

Canada 1

BC 1 2 1 4

AB 1 1

SK 1 1 2

MB 1 1

ON 1 1 2 4

QC 1 1 1 3

NB 1 1

NS 1 1

PEI 1 1

NFLD 1 1 2

Bermuda

Total 10 1 1 4 3 5 4 28

*Note: 1 joint response was received from 12 Auditor Generals November 21, 2018

Preliminary Stakeholder Feedback

November 21, 2018

• Defining existing criteria and addition of new criteria

• Ranking of criteria

• Risk analysis/cost-benefit of options

• Impact to government not-for-profits and smaller public sector entities

• Need to understand the experiences of other jurisdictions

November 21, 2018

• Communicate feedback on Consultation Paper #1

• IPSASB and PSAB comparison

• Share the experiences of other jurisdictions

• Define and finalize the criteria and options

• Currently determining whether PSAB will take a position on the future of international strategy

Resources

“In Brief” Plain and Simple Overview of the Consultation paper

Video “Reviewing our International Strategy”

www.frascanada.ca

November 21, 2018

Questions and/or Comments

November 21, 2018

Concepts UnderlyingFinancial Performance

The North Star

November 21, 2018

Task Force Members• Clyde MacLellan (Chair),

OAG Canada

• Tim Beauchamp, Retired, Director PSA Standards

• Pete DeVries, Retired, Dept. of Finance, Canada

• Paula Jesty, Partner, Deloitte

• Brad Klaiber, Director, University of Calgary

• Merwan Saher, Retired, AG Alberta

• Cindy Veinot, Former Comptroller General, Ontario

• Cheryl Wenezenki-Yolland, Retired in mid-2017 (former Associate DM Finance, British Columbia)

• Nickie Young, Professor Emeritus, St. Mary’s University, Nova Scotia

November 21, 2018

May 2018 – Release of Proposals for a Revised Conceptual Framework and Reporting Model

November 21, 2018

Why: Working in the Public Interest

November 21, 2018

How: The Journey to the Proposals

Consultation Paper 1

• August 2011

• October 2012

• March 2015

November 21, 2018

Purpose of Project (1)

Existing Conceptual Framework

• Section PS 1000, Financial Statement Concepts• Section PS 1100, Financial Statement Objectives

Proposed Conceptual Framework

• Chapter 1: Introduction to the ConceptualFramework

• Chapter 2: Characteristics of Public SectorEntities

• Chapter 3: Financial Reporting Objective• Chapter 4: Role of Financial Statements• Chapter 5: Financial Statement Foundations• Chapter 6: Financial Statement Objectives• Chapter 7: Qualitative Characteristics and

Related Considerations• Chapter 8: Elements of Financial Statements• Chapter 9: Recognition and Measurement• Chapter 10: Presentation Concepts

November 21, 2018

Purpose of Project (2)

Section PS 1201, Financial Statement

Presentation

Section PS 1202, Financial Statement

Presentation

November 21, 2018

Proposed Conceptual Framework –At a Glance• What’s new?

– Definition of conceptual framework

– Better articulation of financial statement foundations

– Understandability focus

– Derecognition– Presentation concepts

• What’s different?– Characteristics of

PSEs– Qualitative

characteristics– Considerations– Recognition

prohibitions relocated

November 21, 2018

Elements of Financial Statements

• Asset• Liability• Revenue• Expense

November 21, 2018

Exclusions from Recognition

inherited natural resources

inherited Crown lands

purchased and inherited art and

historical treasures

all intangibles

November 21, 2018

Your Feedback Matters

November 21, 2018

Reporting Model

November 21, 2018

The Way Forward…

…considers all Public Sector

Entities

November 21, 2018

Proposed Financial Statement Package

• statement of financial position• statement of surplus or deficit• statement of changes in net assets• statement of cash flow• statement of net debt• notes and schedules

November 21, 2018

Statement of Surplus or Deficit

Budget 20x3 20x2xx xx xxxx xx xxxx xx xx

Statement of Surplus or Deficitfor the period ended March 31

RevenueExpenseSurplus / (Deficit)

November 21, 2018

Statement of Financial Position

20x3 20x2xx xxxx xxxx xx

accumulated surplus/deficit xx xxaccumulated remeasurements xx xxaccumulated other xx xx

Net assets (net liabilities) comprised of:

Statement of Financial Positionas at March 31

Financial assetsNon-financial assetsTotal assets

Liabilities

November 21, 2018

Multiple Components of Net Assets

Net Assets

Accumulated surplus or deficit

Accumulated remeasurements Accumulated other

November 21, 2018

Why direct recognition in net assets?

• Understandability for users– Only assets and liabilities in financial

position

• Most relevant for users:– No deferrals or other accounting

creations– One bottom line representing

surplus/deficitNovember 21, 2018

New Component of Net Assets

• Only used in rare circumstances• Only PSAB can designate transactions• Being illustrated to show responsiveness• PSAB can create further components

o To differentiate items with shared characteristics– Objective: Make F/S more understandable

• “accumulated other”

November 21, 2018

New Statement of Net Debt

• Separate reporting of net debt on its own statement

• Ability to refine the net debt calculation to restore its original meaning

• Ability to highlight and explain volatility in net debt related to financial instruments recognized at fair value on this statement

• Potential to not require it for some entities

November 21, 2018

Net Debt Calculation

Financial Assets-

Liabilities =

Net Debt or Net Financial Assets

Endowments??

Unearned Revenue related to performance obligations??

November 21, 2018

20x3 20x2xx xx

less financial assets that are externally restricted and/or not available to settle liabilities xx xx

Liabilities xx xx less liabilities that will not be settled through the use of

xx xxxx xx

Statement of Net Debtas at March 31

Financial assets

financial assets

Net Debt

Statement of Net Debt

Endowments

Unearned Revenue (granting a right over a

period of time)November 21, 2018

Budget Proposals

Ideally, the budget will use the same:• basis of accounting, • accounting principles, • scope of activities, and • classifications as the actuals in the financial statements.

November 21, 2018

Use of Amended Budget

• FOR GOVERNMENT – when there is an election and new budget is approved

• FOR GOVERNMENT ORGANIZATION –when governing body is elected or appointed and new budget is approved

November 21, 2018

We Want Your Feedback

Comment deadline: November 28, 2018

• Foster understanding of proposals– Webinars – October 15 and

17 (English), November 5 and 7 (French)

– articles– videos

• Develop exposure draft

November 21, 2018

Government Not-For Profit Organizations (GNFPO)

Background

• Assess the specific needs of GNFP stakeholders

• Understand if some of our standards should apply differently to GNFPOs

• Implement a GNFP strategy that meets the public interest

• Enhance engagement with the users of GNFPO organization’s general-purpose financial statements

November 21, 2018

Background

• Staff consulted with over 100 GNFP stakeholders

• The objective of the consultations was to:

○ understand the fiscal and regulatory environment in which GNFPOs operate in;

○ identify their financial reporting needs; and

○ understand their financial reporting perspectives.

November 21, 2018

Summary of findings

• Diversity in financial reporting framework

• Presentation:o Net debto Fund accounting

• Impact on balanced budget requirement

• Endowments: o Accountingo Presentation

November 21, 2018

Next Steps

• Present a consultation paper for approval at the December 2018 meeting

• The consultation paper will articulate:o Canadian and International NFP financial reporting

landscape;o results of the 2017/2018 GNFP consultations; ando seek stakeholder input to develop strategy.

November 21, 2018

Next Steps

• Webinar October 29, 2018o Discuss results of the consultationso Consultation paper

• “In Brief” document in November 2018

November 21, 2018

Public Sector AccountingDiscussion Group• Meeting November 19, 2018 • Live Stream www.frascanda.ca• Agenda:o Green infrastructureo Accounting for Indigenous Government

Business Enterpriseso Reporting Model o Contractual Rights

November 21, 2018

Shaping the Future

• Projects will define the future of Public Sector Accounting

• Stakeholder Involvement and Participation: o Documents for Commento Public Sector Discussion Groupo Task Force/Advisory Group

• Outreach Opportunities

November 21, 2018

For more information, visit www.frascanada.ca

Contact:Michael A. Puskaric

Director, Public Sector Accounting BoardPhone: +1 (416) 204-3451

Email: mpuskaric@psabcanada.ca