2018-19 financial reporting manual€¦ · [april 2005] .24 financial statements should communicate...

2018-19

Financial Reporting Manual

For School Divisions

Ministry of Education: Education Funding Branch Last Updated: February 2019

School Division Financial Reporting Manual 2018-19

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APPENDIX D

Public Sector Accounting Board (PSAB) Checklist

Introduction The purpose of this Checklist is to assist school divisions in preparing financial statements in accordance with PSAB standards as set out in the CPA Canada Public Sector Accounting Handbook. The PSAB Checklist provides a summary of PSAB requirements, along with an area to include compliance by the school division. Note that the checklist does not include sections PS 4200 to PS 4270 standards pertaining to government not-for-profit organizations and this checklist should be supplemented by further appropriate documentation, where appropriate. The PSAB Checklist should not be used as a substitute for referring to the PSAB standards themselves. A copy of the completed checklist can be provided to the school division’s appointed auditor as support for the school division’s assessment of its financial statement reporting requirements. PSAB Guidelines (not included in checklist) PSAB also issues guidelines that set out PSAB's interpretations of existing standards or its opinions on other issues of concern with respect to matters of financial accounting policies and disclosures for which the process of issuing exposure drafts and eventual standards does not apply or cannot be undertaken on a timely basis. Guidelines are a primary source of GAAP. The Public Sector Accounting Handbook contains the following guidelines: PSG – 2 Leased Tangible Capital Assets (last revised in February 2007) PSG – 4 Funds and Reserves (June 2004) PSG – 5 Sale-Leaseback Transactions (last revised in February 2007) PSG – 7 Tangible Capital Assets of Local Governments (last revised in February 2007) These guidelines should be referred to as applicable. The guidelines have not been included in the PSAB Checklist.


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PSAB Checklist The checklist includes revisions up to and including release no.47 (November 2018)

School Division: ________________________________________ Fiscal Year: _________________

PS 1000 Concepts and Principles

Section Compliance PS 1000 FINANCIAL STATEMENT CONCEPTS

.07 A government financial report should present information that is useful in evaluating the government's financial condition at the end of the accounting period and its financial performance during the accounting period. Government financial statements are a fundamental component of a government financial report. [APRIL 2005]

.24 Financial statements should communicate information that is relevant to the needs of those for whom the statements are prepared, reliable, comparable, understandable and clearly presented in a manner that maximizes its usefulness. [APRIL 2005]

PS 1100 FINANCIAL STATEMENT OBJECTIVES

.16 Objective 1 Financial statements should provide an accounting of the full nature and extent of the financial affairs and resources which the government controls, including those related to the activities of its agencies and enterprises. [APRIL 2005]

.20 Objective 2 Financial statements should present information to describe the government's financial position at the end of the accounting period. Such information should be useful in evaluating:

(a) the government's ability to finance its activities and to meet its liabilities and contractual obligations; and,

(b) the government's ability to provide future services. [APRIL 2005]

.36 Objective 3 Financial statements should present information to describe the changes in a government's financial position in the accounting period. Such information should be useful in evaluating:

(a) the sources, allocation and consumption of the government's recognized economic resources in the accounting period;

(b) how the activities of the accounting period have affected the net debt of the government; and,

(c) how the government financed its activities in the accounting period and how it met its cash requirements. [APRIL 2005]


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Section Compliance

.61 Objective 4 Financial statements should demonstrate the accountability of a government for the resources, obligations and financial affairs for which it is responsible by providing information useful in:

(a) evaluating the financial results of the government's management of its resources, obligations and financial affairs in the accounting period; and,

(b) assessing whether resources were administered by the government in accordance with the limits established by the appropriate legislative authorities. [APRIL 2005]

PS 1150 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

.04 A public sector reporting entity should apply every primary source of GAAP that deals with the accounting and reporting in financial statements of transactions or events encountered by the public sector reporting entity. [APRIL 2005]

.05 When the primary sources of GAAP do not deal with the accounting and reporting in financial statements of transactions or events encountered by the public sector reporting entity, or additional guidance is needed to apply a primary source to specific circumstances, the selection of an appropriate accounting policy requires the exercise of professional judgment. In these circumstances, a public sector reporting entity should adopt accounting policies and disclosures that are consistent with:

(a) the primary sources of GAAP; and, (b) the application of the concepts described in Financial Statement Concepts,

section PS 1000. [APRIL 2005]

PS 1201 FINANCIAL STATEMENT PRESENTATION

.005 The financial statements of a government should be clearly identified and should include or be accompanied by an acknowledgment of the government's responsibility for their preparation. [APRIL 2005]

.007 Notes and schedules that are integral to the financial statements should be clearly identified. [APRIL 2005]

.010 Notes and supporting schedules in financial statements should not be used as a substitute for proper accounting treatment. [APRIL 2005]

.012 Financial statements should present any information required for the fair presentation of a government's financial position, results of operations, remeasurement gains and losses, change in net debt and cash flow. [APRIL 2012]

.016 Financial statements should be presented in such form and use such terminology and classification of items that significant information is readily understandable.

[APRIL 2005]

.018 Financial statements should present a comparison of current period amounts with those of the prior period(s). [APRIL 2005]

.020 The bases for determining the reported amounts of assets and liabilities should be applied consistently and, where the bases are not self-evident, they should be disclosed. [APRIL 2005]


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Section Compliance .022 Financial statements should be issued on a timely basis. [APRIL 2005]

.024 Where the financial statements are subject to an independent audit, the auditor's report should be appended to the statements. Unaudited financial statements should be clearly identified as such. [APRIL 2005]

.026 Financial statements should present the substance of transactions and events. [APRIL 2005]

.031 Financial statements should include a statement of financial position, a statement of operations, a statement of remeasurement gains and losses, a statement of change in net debt and a statement of cash flow. [APRIL 2012]

.040 The statement of financial position should report net debt and the accumulated surplus/deficit as the two indicators that together explain the financial position at the end of the accounting period.

(a) The statement of financial position should report liabilities and financial assets and report the difference between them as the measure of the government's net debt.

(b) Below the net debt indicator, the statement of financial position should report non-financial assets and account for and report the sum of the government's net debt and its non-financial assets as the accumulated surplus/deficit of the government at the end of the accounting period. [APRIL 2005]

.041 When reporting on changes in a government's financial position, the primary sources of GAAP require certain amounts to be reported in the statement of remeasurement gains and losses. When this is the case, a government should report the following additional information about the composition of its accumulated surplus / deficit at the financial statement date:

(a) the accumulated operating surplus or deficit; and (b) the accumulated remeasurement gains and losses. [APRIL 2012]

.045 The statement of financial position should report liabilities segregated by main classifications, such as:

(a) accounts payable and accrued liabilities; (b) liabilities for employee future benefits; (c) deferred revenue; (d) borrowings; and, (e) loans from other governments. [APRIL 2005]

.046 Financial statements should disclose adequate information about the nature and terms of a government's liabilities. [APRIL 2005]

.050 The statement of financial position should report financial assets segregated by main classifications, such as:

(a) cash and cash equivalents; (b) revenues receivable; (c) inventories for resale and other assets held for sale that meet the requirements

of paragraph PS 1201.055; (d) loans to other governments; (e) other loans; (f) portfolio investments; (g) investments in government business enterprises; and, (h) investments in government business partnerships. [APRIL 2005]


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Section Compliance .051 Financial statements should disclose adequate information about the nature and terms

of a government's financial assets together with any valuation allowances. [APRIL 2005]

.053 Valuation allowances should be used to reflect financial assets at their net recoverable or other appropriate value. [APRIL 2005]

.055 An asset held for sale should be recognized as a financial asset when all of the following criteria are met:

(a) prior to the date of the financial statements, the government body, management board or an individual with the appropriate level of authority commits the government to selling the asset;

(b) the asset is in a condition to be sold; (c) the asset is publicly seen to be for sale; (d) there is an active market for the asset; (e) there is a plan in place for selling the asset; and, (f) it is reasonably anticipated that the sale to a purchaser external to the

government reporting entity will be completed within one year of the financial statement date. [APRIL 2005]

.057 The statement of financial position should report non-financial assets segregated by main classifications, such as:

(a) tangible capital assets; (b) inventories held for consumption or use; and, (c) prepaid expenses. [APRIL 2005]

.059 The financial statements should disclose the nature of government non-financial assets as assets that are normally employed to provide future services. [APRIL 2005]

.062 Any asset that: (a) is not held for sale as described in paragraph PS 1200.051; and, (b) would otherwise meet the definition of a tangible capital asset except for its

ability to contribute to the net cash inflows of the government; should be recognized as a non-financial asset. [APRIL 2005]

.068 Financial statements should disclose that all intangibles, and items inherited by right of the Crown, such as Crown lands, forests, water, and mineral resources, are not recognized in government financial statements. [APRIL 2005]

.072 Contractual rights are rights to economic resources arising from contracts or agreements that will result in both an asset and revenue in the future (see CONTRACTUAL RIGHTS, Section PS 3380).

.078 The statement of operations should: (a) report revenues, other than remeasurement gains, of the accounting period

segregated by significant types of revenues from taxes, non-tax sources and transfers from other governments;

(b) report expenses, other than remeasurement losses, of the period by function or major program;

(c) account for the difference between revenues and expenses reported in the statement of operations in the period, as the measure of the operating surplus or deficit for the period; and

(d) report the accumulated operating surplus / deficit at the beginning and end of the period, unless these figures are reconciled with the surplus / deficit for the period on a separate statement. [APRIL 2012]


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Section Compliance .081 Revenues, including gains, should be recognized in the period in which the

transactions or events occurred that gave rise to the revenues. Gains are generally recognized when realized in the statement of operations. Items not practicably measurable until cash is received would be accounted for at that time. [APRIL 2012]

.083 Financial statements should disclose the gross amounts of revenues. [APRIL 2005]

.085 Financial statements should disclose the gross amounts of expenses. [APRIL 2005]

.086 Financial statements should disclose the expenses of the accounting period by object. [APRIL 2005]

.090 Losses arising from asset impairment and changes in valuation allowances should be recognized as expenses in the statement of operations in the accounting period. The change in the value of a financial asset that is attributable to a remeasurement gain or loss should be reported in the statement of remeasurement gains and losses.

[APRIL 2012]

.092 The statement of remeasurement gains and losses should report: (a) the accumulated remeasurement gains and losses at the beginning of the

period; (b) remeasurement gains and losses during the period, distinguishing between:

(i) amounts arising during the period; and (ii) amounts reclassified during the period to the statement of operations;

(c) any other comprehensive income that arises when a government includes the results of government business enterprises and government business partnerships in its summary financial statements; and

(d) the accumulated remeasurement gains and losses at the end of the period. [APRIL 2012]

.099 The statement of change in net debt should report the extent to which the expenditures of the accounting period are met by the revenues recognized in operations for the period and the extent to which net debt changed due to net remeasurement gains and losses in the accounting period. [APRIL 2012]

.100 The statement of change in net debt should report the acquisition of tangible capital assets in the accounting period as well as other significant items that explain the difference between the operating surplus or deficit for the accounting period and the change in net debt in the period. [APRIL 2012]

.102 The statement of change in net debt should report net debt at both the beginning and end of the accounting period. [APRIL 2005]

.107 The statement of cash flow should report how a government generated and used cash and cash equivalents in the accounting period and the change in cash and cash equivalents in the period. The statement of cash flow should report the cash and cash equivalents at both the beginning and end of the accounting period. [APRIL 2005]

.108 The statement of cash flow should report cash flows during the period classified by operating, capital, investing and financing activities. [APRIL 2005]


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Section Compliance .115 When a government is employing the indirect method and there is a significant

difference between the interest revenue or expense recognized in the statement of operations and the interest receipt or payment recognized in the cash flow statement, the financial statements should disclose the amount of the difference and the reason(s) for it. [APRIL 2005]

.119 The statement of cash flow should report separately major classes of gross cash receipts and gross cash payments arising from capital, investing and financing activities, except to the extent that cash flows described in paragraphs PS 1200.112-.113 are presented on a net basis. [APRIL 2005]

.120 Cash flows arising from each of the following operating, capital, investing or financing activities may be presented on a net basis:

(a) cash receipts collected and payments made on behalf of entities external to the government reporting entity, including taxpayers and beneficiaries, when the cash flows reflect the activities of the external party rather than those of the government; and

(b) cash receipts and payments for items for which the turnover is rapid, the amounts are large and the maturities are short. [APRIL 2005]

.121 Cash flows arising from interest paid on debt issued on behalf of government business enterprises and interest received from those government business enterprises should be presented on a net basis when the debt meets the criteria in Long-Term Debt, paragraph PS 3230.12. [APRIL 2005]

.124 Capital, investing and financing transactions that do not require the use of cash or cash equivalents should be excluded from the statement of cash flow. Such transactions should be disclosed in the financial statements in a way that provides all the relevant information about these capital, investing and financing activities. [APRIL 2005]

.126 The financial statements should disclose the components of cash and cash equivalents and should present a reconciliation of the amounts in the statement of cash flow with the equivalent items presented in the statement of financial position. A government should disclose the policy it adopts in determining the composition of cash and cash equivalents. [APRIL 2005]

.130 The statement of operations should present a comparison of the results for the accounting period with those originally planned. Planned results should be presented for the same scope of activities and on a basis consistent with that used for actual results. [APRIL 2005]

.131 The statement of change in net debt should present a comparison of the items that comprise the change in net debt for the accounting period, as well as the change in net debt for the period, with the figures originally planned. Planned amounts should be presented for the same scope of activities and on a basis consistent with that used for actual amounts. [APRIL 2005]

.135 Financial statements should disclose information to show where a government has exceeded its revenue, borrowing, investing, expense or expenditure authority limits. [APRIL 2005]


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Section Compliance PS 1300 GOVERNMENT REPORTING ENTITY

.07 The government reporting entity should comprise government components and those organizations that are controlled by the government. [APRIL 2005] [Editorial Change DECEMBER 2014]

.27 Government financial statements should consolidate the financial statements of governmental units comprising the government reporting entity. [DEC. 2014].

.35 Government business enterprises should be accounted for by the modified equity method. [JUNE 1996]

.39 Government financial statements should disclose, in notes or schedules: a listing of the major organizations comprising the reporting entity, separately identifying those that are consolidated and those that are accounted for by the modified equity method.

[SEPT. 1997]

.40 Trusts administered by a government or government organization should be excluded from the government reporting entity. [JUNE 1996]

.44 Government financial statements should disclose, in a note or schedule, a description of trusts under administration by a government or government organization, and a summary of trust balances. [JUNE 1996]


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PS 2000 Financial Reporting

Section Compliance PS 2100 DISCLOSURE OF ACCOUNTING POLICIES

.03 A clear and concise description of all significant accounting policies of a reporting entity should be included as an integral part of its financial statements. [SEPT. 1983]

.09 As a minimum, disclosure of information on accounting policies should identify and describe:

(a) the reporting entity and, where applicable, the method of consolidation; (b) the basis of accounting used in the financial statements; and, (c) the specific accounting policies selected and applied to significant assets,

liabilities, revenues and expenses. [SEPT. 1983]

.11 All significant accounting policies of a reporting entity should be disclosed in one place. [SEPT. 1983]

PS 2120 ACCOUNTING CHANGES

.14 When there is a choice from among two or more appropriate principles or methods used in their application and a change is made, the new accounting policy should be applied retroactively, unless the necessary financial data are not reasonably determinable.

[SEPT. 1997]

.17 When a change in an accounting policy is applied retroactively, the financial statements of all prior periods presented for comparative purposes should be restated to give effect to the new accounting policy, except in those circumstances when the effect of the new accounting policy is not reasonably determinable for individual prior periods. In such circumstances, an adjustment should be made to the opening balance of the accumulated surplus/deficit of the current period, or such earlier period as is appropriate, to reflect the cumulative effect of the change on prior periods. [SEPT. 1997]

.18 For each change in an accounting policy in the current period, the following information should be disclosed:

(a) a description of the change; (b) the effect of the change on the financial statements of the current period; and, (c) the reason for the change. [SEPT. 1997]

.19 When a change in an accounting policy has been applied retroactively and prior periods have been restated, the fact that the financial statements of prior periods that are presented have been restated and the effect of the change on those prior periods should be disclosed. [SEPT. 1997]

.20 When a change in an accounting policy has been applied retroactively but prior periods have not been restated, the fact that the financial statements of prior periods that are presented have not been restated should be disclosed. The cumulative adjustment to the opening balance of the accumulated surplus /deficit of the current period should also be disclosed. [SEPT. 1997]

.21 When a change in an accounting policy has not been applied retroactively, this fact should be disclosed. [SEPT. 1997]


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Section Compliance .22 The disclosure of particulars, including dollar amounts, applies to each change in an

accounting policy; it is not appropriate to net items when considering materiality. [SEPT. 1997]

.23 A change in an accounting policy that does not have a material effect in the current period but is likely to have a material effect in future periods should be disclosed.

[SEPT. 1997]

.28 The effect of a change in an accounting estimate should be accounted for in: (a) the period of change, if the change affects the financial results of that period

only; or (b) the period of change and applicable future periods, if the change affects the

financial results of both current and future periods. [SEPT. 1997]

.30 The amount of the correction of an error that impairs the fairness of financial statements of prior periods should be reported retroactively. Comparative information should be restated, unless it is impracticable to do so. [SEPT. 1997]

.34 When there has been a correction in the current period of an error in prior period financial statements, the following information should be disclosed:

(a) a description of the error; (b) the effect of the correction of the error on the financial statements of the current

and prior periods; and, (c) the fact that the financial statements of prior periods that are presented have

been restated. [SEPT. 1997]

.35 Financial statements of prior periods should be adjusted only for a change in an accounting policy or for a correction of an error in prior period financial statements, in accordance with this section. [SEPT. 1997]

PS 2125 FIRST-TIME ADOPTION

.05 A government organization should use the same accounting policies in its opening statement of financial position and throughout all periods presented in its first financial statements prepared in accordance with Public Sector Accounting Standards. Those accounting policies should comply with the accounting policies effective at the end of the year the government organization adopts Public Sector Accounting Standards, except as otherwise specified in this section. [JAN. 2011]

.07 The accounting policies that a government organization uses in its opening statement of financial position prepared in accordance with Public Sector Accounting Standards may differ from those that it used for the same date using its previous accounting policies. Any resulting adjustments arise from events and transactions before the date of transition to Public Sector Accounting Standards. A government organization should recognize such adjustments directly in accumulated surplus / deficit at the date of transition to Public Sector Accounting Standards. [JAN. 2011]


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Section Compliance .08 A government organization may elect to use one or more of the following exemptions:

(a) retirement and post-employment benefits; (b) business combinations; (c) investments in government business enterprises; (d) government business partnerships; and, (e) tangible capital asset impairment.

A government organization should not apply these exemptions by analogy to any other items. [JAN. 2011]

.15 This section prohibits retroactive application to accounting estimates. [APRIL 2012]

.20 In the year of adoption of Public Sector Accounting Standards, a government organization should disclose:

(a) the amount of each charge to accumulated surplus / deficit at the date of transition to Public Sector Accounting Standards resulting from the adoption of these standards and the reason therefore; and,

(b) a reconciliation of the net income reported in the government organization's most recent previously issued financial statements to its annual surplus / deficit under Public Sector Accounting Standards for the same period. [JAN. 2011]

.21 The disclosures required by paragraph PS 2125.20 should give sufficient detail to enable users to understand the material adjustments to the statement of financial position and statement of operations. If a government organization presented a cash flow statement under its previous accounting policies, it should explain the material adjustments to the statement of cash flow. [JAN. 2011]

.22 When a government organization elects to use one or more of the exemptions in paragraphs PS 2125.09-.14, it should disclose the exemptions used. [JAN. 2011]

PS 2130 MEASUREMENT UNCERTAINTY

.06 The nature of measurement uncertainty that is material should be disclosed. [APRIL 2005]

.07 The extent of measurement uncertainty that is material should be disclosed when it is reasonably possible that the amount could change by a material amount in the near term.

[APRIL 2005]

.08 When disclosure has been made in accordance with paragraph PS 2130.06 or PS 2130.07, the amount of the item subject to measurement uncertainty should be disclosed, except when disclosure of the amount would have a significant adverse effect on the entity. When the amount is not disclosed, the notes should indicate the reason(s) for non-disclosure. [APRIL 2005]


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Section Compliance

PS 2200 RELATED PARTY DISCLOSURES .06 A related party can be an entity or an individual.

.07 From the perspective of the entity that is reporting, parties related to it typically include those:

(a) entities that control it, share control of it or it controls; (b) entities that are subject to common control; (c) entities that it shares control of with other commonly controlled

entities; (d) entities that are subject to shared control by other commonly

controlled entities; (e) entities that it shares control of with other entities; (f) entities that are subject to shared control by other commonly

controlled entities and other entities; (g) individuals who are members of key management personnel or close

family members of those individuals; and (h) entities controlled by, or under shared control of, a member of key

management personnel or a close family member of that individual.

.17 An entity should disclose: (a) adequate information about the nature of the relationship with related

parties involved in related party transactions; (b) the types of related party transactions that have been recognized; (c) the amounts of the transactions recognized classified by financial

statement category; (d) the basis of measurement used; (e) the amount of outstanding balances and the terms and conditions

attached to them; (f) contractual obligations with related parties, separate from other

contractual obligations; (g) contingent liabilities involving related parties, separate from other

contingent liabilities; and (h) the types of related party transactions that have occurred for which no

amount has been recognized.

Items of a similar nature should be disclosed in aggregate. [APRIL 2017]

PS 2400 SUBSEQUENT EVENTS

.09 Financial statements should be adjusted when events occurring between the date of the financial statements and the date of their completion provide sufficient, additional evidence relating to conditions that existed at the date of the financial statements.

[MARCH 1997]

.13 Financial statements should not be adjusted for, but disclosure should be made of, those events occurring between the date of the financial statements and the date of their completion that do not relate to conditions that existed at the date of the financial statements but:

(a) cause significant changes to assets or liabilities in the subsequent period; or

(b) will, or may, have a significant effect on the future operations of the government. [MARCH 1997]


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Section Compliance

.15 Disclosure of a subsequent event that does not require adjustment of the financial statements should include:

(a) a description of the nature of the event; and, (b) an estimate of the financial effect, when practicable, or a statement

that such an estimate cannot be made. [MARCH 1997]

PS 2500 BASIC PRINCIPLES OF CONSOLIDATION

.06 Government financial statements should consolidate governmental units2 line-by-line on a uniform basis of accounting after eliminating inter-governmental unit transactions and balances. [MAY 1999]

2 Governments normally create governmental units, often through a restructuring of existing government resources, rather than acquire them. Accounting for acquired governmental units is dealt with in Additional Areas of Consolidation, paragraphs PS 2510.11-.32.

.15 Inter-governmental unit gains and losses arising on the sale or transfer of assets and liabilities remaining within the government reporting entity should be eliminated. [APRIL 2012]

.20 When, for purposes of consolidation, it is not possible to use governmental unit financial statements for a period that substantially coincides with that of the government's financial statements, this fact, and the period covered by the governmental unit financial statements used, should be disclosed. [MAY 1999]

.21 When the fiscal periods of a government reporting entity and a governmental unit are not the same, events relating to or transactions of the governmental unit that have occurred during the intervening period and significantly affect the financial position or results of operations of the government reporting entity should be recorded in the government's financial statements. [MAY 1999]

PS 2510 ADDITIONAL AREAS OF CONSOLIDATION

.05 When a non-controlling interest exists in a governmental unit, the government reporting entity should include that governmental unit in its financial statements on a proportionate consolidation basis. The financial statements should disclose the existence and extent of a non-controlling interest in a governmental unit. [MAY 1999]

.09 When accumulated losses applicable to the non-controlling interest in a governmental unit exceed the non-controlling interest’s share in the capital of the governmental unit, the excess and any further losses otherwise applicable to the non-controlling interest should be allocated only to the government’s interest. Subsequent earnings should be allocated entirely to the government’s interest until previously absorbed losses relating to the non-controlling interest are recovered. [MAY 1999]

.10 Government financial statements should disclose any accumulated losses accounted for in accordance with PS 2510.09. [MAY 1999]


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Section Compliance

.12 Government financial statements should consolidate acquired governmental units line-by-line on a uniform basis of accounting, after eliminating inter-governmental unit transactions and balances in accordance with Basic Principles of Consolidation, paragraphs PS 2500.08-.18, and taking into account paragraph PS 2510.31. [MAY 1999]

.15 The purchase cost of a governmental unit to a government should be determined by the fair value of the consideration given. In those cases, where the fair value of the consideration is not clearly evident, the government’s share of the fair value of the net assets acquired should be used as the purchase cost to the government. [MAY 1999]

.17 The purchase cost and the amounts assigned to assets acquired and liabilities assumed should be determined as of the date of the acquisition. [MAY 1999]

.18 For the period in which a purchase of a governmental unit occurs, government financial statements should reflect the government's proportionate share of the results of the acquired governmental unit from the date of acquisition. [MAY 1999].

.22 The government’s interest in identifiable assets acquired and liabilities assumed should be based on their fair values at the date of acquisition. When there is a difference between the purchase cost and the government’s share of the fair value of the net assets of the acquired governmental unit:

(a) any excess of the purchase cost over the government’s interest in identifiable assets acquired and liabilities assumed, based on their fair values, should be accounted for as a purchase premium in accordance with paragraph PS 2510.23

(b) such that the government’s interest in the identifiable assets acquired and liabilities assumed, based on their fair values, exceeds the purchase cost, the amounts assigned to identifiable non-monetary assets should be reduced to the extent that the excess is eliminated. [MAY 1999]

.23 When the purchase of a governmental unit gives rise to a purchase premium, it should be recognized as an expense in the period of acquisition. [MAY 1999]

.25 Expenses directly incurred in effecting an acquisition of a governmental unit accounted for as a purchase should be included as part of the cost of the purchase. [MAY 1999]

.27 Balances at the date of acquisition between existing governmental units and a newly acquired governmental unit should be eliminated on consolidation. [MAY 1999]

.30 When the carrying value of the assets of an existing governmental unit includes gains and losses arising from transactions with the newly acquired governmental unit which took place prior to the date of acquisition, such gains and losses should not be eliminated unless the transactions were made in contemplation of acquisition. [MAY 1999]

http://www.knotia.ca/Knowledge/View/Document.aspx?bookID=0&tbGoToKeyword=ps%202500.08&productId=126

http://www.knotia.ca/Knowledge/View/Document.aspx?bookID=0&tbGoToKeyword=ps%202510%20-%20Acquisitions&productId=126


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Section Compliance

.32 When a government acquires a governmental unit, the following should be disclosed: (a) the name and a brief description of the governmental unit acquired

and, when shares are acquired, the percentage of voting shares held; (b) the date of acquisition and the period for which the results of the

acquired governmental unit are included in the consolidated statements of operations;

(c) net assets acquired: (i) total assets at the amount assigned thereto; (ii) total liabilities at the amount assigned thereto; and,

(d) the amount and type of consideration given, at fair value and the resulting amount of any purchase premium that has been charged to expenses in the period. [MAY 1999]

.34 When all or part of a government’s investment in a governmental unit is sold, the gain or loss on sale should be based on the carrying value of the governmental unit’s net assets in the consolidated statement of financial position at the date of sale. [MAY 1999] .36 The gain or loss on the sale of all or part of an investment in a governmental unit should be included in the determination of consolidated results in the period of sale.

[MAY 1999]

.45 When a governmental unit changes in status to a government business enterprise, the change cannot:

(a) create revenue; or (b) result in reporting tangible capital assets that would improve the net

financial position of the government reporting entity. [MAY 1999 *] [Editorial Change APRIL 2006]

.51 When the government’s net investment balance increases or decreases because of a change in the status of a governmental unit to a government business enterprise, the amount of the increase or decrease should be accounted for as an adjustment to the opening balance of accumulated surplus/deficit. A description of the change, with details of change to the recorded amounts of individual financial statement items, should be disclosed. [OCT. 2006]

PS 2601 FOREIGN CURRENCY TRANSLATION

.11 At the transaction date, each asset, liability and amount reported in the statement of operations arising from a foreign currency transaction of the government should be translated into Canadian dollars by applying the exchange rate in effect at that date. [APRIL 1, 2019] (See explanation of effective date in paragraph PS 2601.023).

.14 At each financial statement date: (a) monetary assets and monetary liabilities denominated in a foreign

currency; and (b) non-monetary items denominated in a foreign currency that are

included in the fair value category in accordance with Financial Instruments, section PS 3450;

should be adjusted to reflect the exchange rate in effect at that date. [APRIL 1, 2019] (See explanation of effective date in paragraph PS 2601.023).


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Section Compliance

.18 An exchange gain or loss that arises prior to settlement is recognized in the statement of remeasurement gains and losses. [APRIL 1, 2019] (See explanation of effective date in paragraph PS 2601.023).

.19 In the period of settlement: (a) the cumulative amount of remeasurement gains and losses is reversed

in the statement of remeasurement gains and losses; and (b) an exchange gain or loss measured in relation to the exchange rate at

the date of the item's initial recognition is recognized in the statement of operations. [APRIL 1, 2019] (See explanation of effective date in paragraph PS 2601.023).

.22 A government should disclose the exchange gains and losses recognized in the statement of operations and the statement of remeasurement gains and losses. [APRIL 1, 2019] (See explanation of effective date in paragraph PS 2601.023).

.23 This section applies to fiscal years beginning on or after April 1, 2019. For those government organizations that applied the CPA Canada Handbook – Accounting prior to their adoption of the CPA Canada Public Sector Accounting Handbook, this Section applies to fiscal years beginning on or after April 1, 2012. Governments and government organizations would also adopt Financial Instruments, section PS 3450, at the same time. Earlier adoption is permitted.

PS 2700 SEGMENT DISCLOSURES

.22 Segment information should be prepared in accordance with the accounting policies adopted for preparing and presenting the consolidated financial statements of the government. [APRIL 2007]

.24 If there is a change in segments, prior period segment data presented for comparative purposes should be restated to reflect the newly reported segment(s) unless the necessary financial data are not reasonably determinable. [APRIL 2007]

.26 Government financial statements should separately disclose the following information, in notes or schedules, about each of a government's segments identified in accordance with paragraph PS 2700.07:

(a) the basis for identifying segments, the nature of the segments and the activities they encompass, and the method of significant allocations to segments;

(b) segment expense by major object or category; (c) segment revenue by source and type; (d) the aggregate of the net income of government business enterprises

and government business partnerships accounted for under the modified equity method for each segment, if applicable; and

(e) a reconciliation between the information disclosed for segments and the consolidated information in the financial statements.

[APRIL 2007]

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Section Compliance

.27 In addition to these disclosures, governments are encouraged to provide other segment information where useful to users of the financial statements. Examples of other disclosures that may be desirable include separate disclosure of the total carrying amount of assets by segment, separate disclosure of the total carrying amount of liabilities by segment, separate disclosure of tangible capital assets by segment, separate disclosure of additions to tangible capital assets by segment and any other significant elements of the financial statements by segment.

.30 In measuring and reporting segment revenue from transactions with other segments, inter-segment transfers should be measured on the basis that the government used to price those transfers. The basis of pricing inter-segment transfers and any change therein should be disclosed in the financial statements. [APRIL 2007]

.32 Changes in accounting policies related specifically to segment reporting that have a material effect on segment information should be disclosed. Prior period segment information presented for comparative purposes should be restated unless the necessary financial data are not reasonably determinable. Such disclosure should include:

(a) a description of the nature of the change (b) the reasons for the change; (c) the fact that comparative information has been restated or that the

necessary financial data are not reasonably determinable; and, (d) the financial effect of the change, if reasonably determinable.

[APRIL 2007]


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PS 3000 Financial Statement Items

Section Compliance PS 3041 PORTFOLIO INVESTMENTS

.07 When there has been a loss in value of a portfolio investment that is other than a temporary decline, the investment should be written down to recognize the loss. The write-down should be included in the statement of operations. In the case of an item in the fair value category, a reversal of any net remeasurements should be reported in the statement of remeasurement gains and losses. [APRIL 2012]

.08 A write-down of a portfolio investment to reflect a loss in value should not be reversed if there is a subsequent increase in value. [MARCH 1999]

.15 For the purposes of calculating a gain or loss on the sale of a portfolio investment, the cost of the investment sold should be calculated on the basis of the average carrying value of the portfolio investment as measured in relation to cost or amortized cost. The gain or loss on the sale of a portfolio investment should be included in the statement of operations in the period of sale. [APRIL 2012]

.17 When the terms associated with a government's portfolio investment are so concessionary that the substance of the transaction is that all or a significant part of the investment is in the nature of a grant, the grant portion of the transaction should be recognized as an expense when the investment is made. [MARCH 1999]

.21 When a government uses present value techniques to recognize part of a portfolio investment as a grant, the recorded value of the investment at the date of investment should be its cost less the amount calculated as the investment discount. The amount of the investment discount should be amortized to revenue applying the effective interest method over the term to redemption or maturity of the investment. [APRIL 2012]

.27 Portfolio investments should be reported separately on the statement of financial position. [MARCH 1999]

.28 The basis of valuation of portfolio investments should be disclosed. [MARCH 1999]

.29 Income from portfolio investments should be reported separately on the statement of operations. [MARCH 1999]

.30 When portfolio investments include marketable securities, the quoted market value of such securities as well as their carrying value should be disclosed. [MARCH 1999]

PS 3050 LOANS RECEIVABLE

.10 The amount of a loan that is expected to be recovered from future appropriations should be accounted for in the statement of operations as an expense in the period when a direct relationship can be established between the repayment of the loan and a government's funding to the borrower. [MARCH 2012]

.17 When an amount is advanced with forgivable conditions, it should be accounted for as a grant unless it meets the definition of a loan receivable and there is sufficient evidence of a reasonable expectation of its recovery. [APRIL 1993]


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Section Compliance .20 When the terms of a loan are so concessionary that the substance of the transaction is

that all or a significant part of the loan is more in the nature of a grant, the grant portion of the transaction should be recognized in the statement of operations as an expense when the loan is made. [March 2012]

.24 The recorded value of the loan at the date of issue should be its face value discounted by the amount of the grant portion. The amount of the loan discount should be amortized to revenue in a rational and systematic manner over the term of the loan.

[APRIL 1993]

.26 A loan receivable should be recognized on a government's statement of financial position when:

(a) the government assumes the risks associated with, and acquires the right to receive, repayment of principal and any related payments of interest; and

(b) the amount of the loan can be reliably measured. This normally coincides with the disbursement of funds, exchange of other assets, or assumption of liabilities. [APRIL 1993]

.28 A loan receivable should be removed from a government's statement of financial position when it has been repaid, the risks and rewards associated with the loan have been transferred, the right to repayment has expired or been waived, or it is written off.

[APRIL 1993]

.30 Loans receivable should be initially reported on a government's statement of financial position at cost. Valuation allowances should be used to reflect loans receivable at the lower of cost and net recoverable value. [APRIL 1993]

.35 Loans receivable should be reported net of their related valuation allowances on a government's statement of financial position. Changes in valuation allowances should be recognized in expenses in the statement of operations. [SEPT. 1997]

.38 When the amount of a loss is known with sufficient precision, and there is no realistic prospect of recovery, the loan receivable should be reduced by the amount of that loss.

[APRIL 1993]

.43 Interest revenue should be recognized on a loan receivable when earned. Interest revenue should cease to be accrued on a loan when the collectability of either principal or interest is not reasonably assured. [APRIL 1993]

.51 The costs of concessions in a loan restructuring, if any, relating to principal or interest previously accrued, should be recognized in the statement of operations as expenses at the time of restructuring. [APRIL 2012]

.52 Interest should not be capitalized on the restructuring of a loan receivable unless its recovery over the term of the loan is reasonably assured. [APRIL 1993]

.54 In describing the accounting policies selected by a government and applied to its loans receivable, governments should disclose:

(a) the basis of initial valuation on the statement of financial position; (b) the policy with respect to valuation allowances, write-offs and recoveries;

and, (c) the policy for the recognition of interest revenue. [APRIL 1993]


…page 20

Section Compliance .56 Government financial statements should disclose the nature and terms of significant

classes of loans receivable, including: (a) the recorded cost, the related valuation allowance and the net recoverable

value; (b) general terms and conditions of the loans receivable, such as:

(i) repayment terms; (ii) interest terms; (iii) a description of forgiveness and other conditions attached to

the loans; and (iv) security held for the class of loans; and,

(c) the amount of loans receivable outstanding in foreign currencies, the currencies in which such amounts are receivable, the Canadian dollar equivalents, and the basis of translation. [APRIL 1993]

PS 3060 GOVERNMENT PARTNERSHIPS

.29 Government financial statements should recognize the government’s interest in government partnerships, except for government business partnerships, using the proportionate consolidation method. [OCT. 1999]

.32 Government business partnerships should be accounted for by the modified equity method applied using the government’s share of the government business partnership. [OCT. 1999]

.41 When a government invests assets in a government partnership and receives in exchange an interest in the government partnership, any loss9 that occurs should be recognized at the time of the initial investment in the statement of operations. [OCT. 1999] 9A loss occurs when the fair value of the asset invested is less than its net carrying amount in the government's financial statements.

.43 When a government invests assets in a government partnership and receives in exchange an interest in the government partnership, any gain10 that occurs should be reported in the financial statements of the government as a deferred gain at the time of the initial investment only to the extent of the interest of the other non-related partners.

[OCT. 1999] 10A gain occurs when the fair value of the asset invested is greater than its net carrying amount in the government's financial statements.

.45 When a government partnership other than a government business partnership is dissolved, any deferred gain related to the assets invested by the government should be recognized as revenue. [OCT. 1999]

.47 For government business partnerships, any deferred gain related to the assets invested by the government should be amortized to net operating results in a rational and systematic manner over the life of the invested assets. If the invested assets are non-depreciable, the deferred gain should be amortized to net operating results on a basis appropriate to the expected revenue or service to be obtained from their use by the government business partnership. When the invested assets are disposed of by the government business partnership to an independent third party, any unamortized portion of the deferred gain should be recognized as revenue. [OCT. 1999]


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Section Compliance .49 When tangible capital assets are invested in a government partnership other than a

government business partnership, the government should report those assets as follows: (a) the other non-related partners’ share of assets invested by the government

would be treated as disposals by the government; and, (b) the government's share of assets invested by the other non-related partners

would be treated as purchases by the government in accordance with the relevant standards in Financial Statement Presentation, section PS 1201, and Tangible Capital Assets, section PS 3150. [JUNE 2011]

.55 Government financial statements should disclose, in notes or schedules: (a) a description of the nature and purpose of government partnerships; (b) a listing of government partnerships, including the government's share,

separately identifying those that are accounted for using the proportionate consolidation method and those that are accounted for by the modified equity method; and

(c) condensed supplementary financial information relative to government partnerships. Such financial information should be provided separately for those government partnerships accounted for using proportionate consolidation and those accounted for using modified equity, on: (i) the financial position and results of operations, including:

− total assets and liabilities segregated by main classification; − net assets or liabilities, separately displaying accumulated

other comprehensive income; − total revenues and expenses; and − net operating results for the period, separately displaying

other comprehensive income; (ii) the nature and amount of any adjustments to the net assets or the net

operating results, as shown in the financial statements of the government partnerships, to arrive at the amount included in the government's statement of financial position or statement of operations; and,

(iii) transactions and balances with organizations included in the government reporting entity. [OCT. 2006]

.56 The government should disclose its share of any contingencies and contractual obligations of government partnerships and those contingencies that exist when the government is contingently liable for the liabilities of other parties to those government partnerships. [SEPT. 2004]

.57 Deferred gains arising from the government’s investment of assets in the government partnership should be reported with liabilities in the government’s statement of financial position. [OCT. 1999]

PS 3070 INVESTMENTS IN GOVERNMENT BUSINESS ENTERPRISES

.04 Government business enterprises should be accounted for by the modified equity method.

.14 When the carrying value of the assets of the government reporting entity or the acquired government business enterprise include gains and losses arising from inter-organizational transactions which took place prior to the date of acquisition, such gains and losses should not be eliminated unless the transactions were made in contemplation of acquisition. [APRIL 2000]


…page 22

Section Compliance .15 Expenses directly incurred in effecting an acquisition of a government business

enterprise should be included as part of the cost of the purchase. [APRIL 2000]

.17 A purchase premium arising on the acquisition of a government business enterprise should be deferred and amortized to the government's income from an investment in a government business enterprise. The amortization period should be the lesser of the life of the purchase premium and twenty years. The method of amortization should be:

(a) the straight line method; or (b) another systematic method when it can be demonstrated to be more appropriate

in the circumstances than the straight line method. [APRIL 2000]

.19 Fair value increments related to depreciable assets should be amortized to the government's income from an investment in a government business enterprise over the estimated useful lives of the related assets. [APRIL 2000]

.22 When there has been a permanent impairment in value of the unamortized balance of a purchase price discrepancy, it should be written down. The write-down should be charged against the government's income from an investment in a government business enterprise. [APRIL 2000]

.23 A write-down of government's investment in a government business enterprise to reflect a loss in value should not be reversed. [APRIL 2000]

.34 The transfer or sale of a tangible capital asset from a governmental unit to a government business enterprise should not improve the net results of the period or otherwise improve the net financial position of the government reporting entity. [APRIL 2000]

.40 When all or part of a government's investment in a government business enterprise is sold, for the purposes of calculating a gain or loss on the sale of an investment, the cost of the portion of the total investment sold should be calculated on the basis of the carrying value of the investment at the date of sale. [APRIL 2000]

.41 The gain or loss on the sale of all or part of a government's investment in a government business enterprise should be included in the determination of consolidated operating results in the period of sale. [APRIL 2000]

.46 When, for purposes of preparing government consolidated financial statements, it is not possible to use financial statements of a government business enterprise for a period which substantially coincides with that of the government's consolidated financial statements, this fact, and the period covered by the financial statements of the government business enterprise that are used, should be disclosed. [APRIL 2000]

.47 When the fiscal periods of the government reporting entity and a government business enterprise are not the same, events relating to, or transactions of, the government business enterprise that have occurred during the intervening period and significantly affect the consolidated financial position or results of operations of the government reporting entity should be recorded in government consolidated financial statements.

[APRIL 2000]

.53 In the period that a government organization no longer meets the definition of a government business enterprise, the effect of conforming its accounting policies to those of the government reporting entity for the purposes of consolidation should be included in the determination of consolidated operating results. [APRIL 2000]


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Section Compliance .56 When the circumstances affecting a government organization change such that it no

longer meets the definition of a government business enterprise, the resulting change in accounting treatment, the underlying reasons for the change, and the financial effect of the change should be disclosed. [APRIL 2000]

.57 A government's investment in government business enterprises should be reported separately on the consolidated statement of financial position. [APRIL 2000]

.58 Income from investments in government business enterprises should be reported separately on the consolidated statement of operations. [APRIL 2000]

.58A Other comprehensive income from investments in government business enterprises should be reported separately on the consolidated statement of remeasurement gains and losses. [APRIL 2012]

.60 Government consolidated financial statements should disclose, in notes or schedules, condensed supplementary financial information relative to government business enterprises. Such financial information should be provided on:

(a) the financial position and results of operations including: (i) total assets and liabilities segregated by main classification; (ii) net assets or liabilities; separately displaying accumulated other

comprehensive income; (iii) total revenues and expenses; (iv) net income or loss for the period; and (v) other comprehensive income for the period;

(b) the nature and amount of any adjustments of the net assets or the net income, as shown in the government business enterprises' financial statements, to arrive at the amount included in the government's consolidated statement of financial position and the consolidated statement of operations;

(c) transactions and balances with other organizations included in the government reporting entity;

(d) contractual obligations and contingencies; (e) the nature and terms of any government guarantees relating to outstanding debt

issued by the government business enterprise; and (f) the government's percentage ownership of any government business enterprise

that the government does not wholly own. [OCT 2006]


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Section Compliance .69 When a government acquires a government business enterprise, the following should be

disclosed: (a) the name and a brief description of the government business enterprise acquired

and, when shares are acquired, the percentage of voting shares held; (b) the date of acquisition and the period for which the results of the acquired

government business enterprise are included in the consolidated statement of operations and the consolidated statement of remeasurement gains and losses;

(c) net assets acquired: (i) total assets at the government business enterprise's original carrying

amount and at the amount assigned thereto, and, (ii) total liabilities at the government business enterprise's original carrying

amount and at the amount assigned thereto; (d) the amount and type of consideration given, at fair value and the resulting

amount of any purchase premium, together with the period of amortization; and,

(e) a description of the nature of the purchase premium, how the useful life of the purchase premium was determined and the method of amortization.

[APRIL 2012]

.70 When there has been a permanent impairment in value of the unamortized portion of a purchase price discrepancy, the amount of the purchase price discrepancy that has been charged to the government's income from an investment in a government business enterprise should be disclosed. The facts and circumstances leading to the impairment should also be disclosed. [APRIL 2000]

PS 3100 RESTRICTED ASSETS AND REVENUES

.11 Externally restricted inflows should be recognized as revenue in a government’s financial statements in the period in which the resources are used for the purpose or purposes specified. An externally restricted inflow received before this criterion has been met should be reported as a liability until the resources are used for the purpose or purposes specified. [JUNE 1997]

.18 Government financial statements should disclose in notes or schedules: (a) a general description of the nature and source of any external restrictions; (b) the amounts of externally restricted inflows by major source; (c) the amount of, and changes in, the deferred revenue balance attributable to each

major category of external restrictions; and, (d) any externally restricted assets that are segregated, including an explanation of

the relationship of those assets to the related liability. [JUNE 1997]

.24 Government financial statements should disclose, in notes or schedules, condensed supplementary financial information relative to internally restricted entities. The financial information should be provided for internally restricted entities or groups of similar entities and for all internally restricted entities as a whole. The information provided should report the financial position and results of operations, including:

(a) total assets and liabilities segregated by main classification; (b) net assets or liabilities; (c) total revenues and expenses; and (d) net operating results for the period.

In addition, a general description of the nature of the internal restriction should be provided. [JUNE 1997]


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Section Compliance

.30 When a government chooses to provide information about designated assets, it should do so in notes, not on the statement of financial position. Such disclosure should include a description of the assets and their intended use. [JUNE 1997]

PS 3150 TANGIBLE CAPITAL ASSETS

.05 (b) Cost is the gross amount of consideration given up to acquire, construct, develop or better a tangible capital asset, and includes all costs directly attributable to acquisition, construction, development or betterment of the tangible capital asset, including installing the asset at the location and in the condition necessary for its intended use. The cost of a contributed tangible capital asset, including a tangible capital asset in lieu of a developer charge, is considered to be equal to its fair value at the date of contribution. Capital grants would not be netted against the cost of the related tangible capital asset. The cost of a leased tangible capital asset is determined in accordance with Public Sector Guideline PSG-2, Leased Tangible Capital Assets.

.07 Tangible capital assets should be accounted for and reported as assets on the statement of financial position. [APRIL 2005]

.09 Tangible capital assets should be recorded at cost. [SEPT. 1997]

.22 The cost, less any residual value, of a tangible capital asset with a limited life should be amortized over its useful life in a rational and systematic manner appropriate to its nature and use by the government. [SEPT. 1997]

.23 The amortization of the costs of tangible capital assets should be accounted for as expenses in the statement of operations. [SEPT. 1997]

.29 The amortization method and estimate of the useful life of the remaining unamortized portion of a tangible capital asset should be reviewed on a regular basis and revised when the appropriateness of a change can be clearly demonstrated. [SEPT. 1997]

.31 When conditions indicate that a tangible capital asset no longer contributes to a government’s ability to provide goods and services, or that the value of future economic benefits associated with the tangible capital assets is less than its net book value, the cost of the tangible capital asset should be reduced to reflect the decline in the asset’s value.

[SEPT. 1997]

.32 The net write-downs of tangible capital assets should be accounted for as expenses in the statement of operations. [JAN. 2003]

.33 A write-down should not be reversed. [SEPT. 1997]

.38 The difference between the net proceeds on disposal of a tangible capital asset and the net book value of the asset should be accounted for as a revenue or expense in the statement of operations. [JAN. 2003]

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Section Compliance .40 The financial statements should disclose, for each major category of tangible capital

assets and in total: (a) cost at the beginning and end of the period; (b) additions in the period; (c) disposals in the period; (d) the amount of any write-downs in the period; (e) the amount of amortization of the costs of tangible capital assets for the period; (f) accumulated amortization at the beginning and end of the period; and, (g) net carrying amount at the beginning and end of the period. [April 2005]

.42 Financial statements should disclose the following information about tangible capital assets:

(a) the amortization method used, including the amortization period or rate for each major category of tangible capital asset;

(b) the net book value of tangible capital assets not being amortized because they are under construction or development or have been removed from service;

(c) the nature and amount of contributed tangible capital assets received in the period and recognized in the financial statements;

(d) the nature and use of tangible capital assets recognized at nominal value; (e) the nature of the works of art and historical treasures held by the government;

and (f) the amount of interest capitalized in the period. [SEPT. 1997]

PS 3200 LIABILITIES .03 Liabilities should be recognized in the financial statements when:

(a) there is an appropriate basis of measurement; and (b) a reasonable estimate can be made of the amount involved.[SEPT. 2004]

.30 Information about the nature of liabilities that cannot be recognized should be disclosed

in notes together with the reason(s) why a reasonable estimate cannot be made of the amount involved. [SEPT. 2004]

PS 3210 ASSETS

.32 Information about the major categories of assets that are not recognized should be disclosed in the notes. When an asset is not recognized because a reasonable estimate of the amount involved cannot be made, the reason(s) for this should be disclosed.

[APRIL 2017]

PS 3230 LONG-TERM DEBT

.02 The statement of financial position should report a government’s long-term debt at the end of the accounting period. [MARCH 1997]

.03 When a government has externally restricted sinking funds set aside to retire its long-term debt, the following information should be provided:

(a) the gross amount of the long-term debt to be retired by the sinking funds; and (b) the amount of sinking fund assets available to retire the debt. [MARCH 1997]


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Section Compliance .06 When debt is issued by a government and some or all of the proceeds are subsequently

loaned to a government business enterprise, except in the circumstances in paragraph PS 3230.10, the government should:

(a) recognize the entire amount borrowed from sources external to the reporting entity as a liability and the related receivable from the government business enterprise as a financial asset in the consolidated statement of financial position; and

(b) recognize the interest on the entire amount of debt borrowed as an expense and the related interest earned from the government business enterprise as revenue, in the consolidated statement of operations. [APRIL 2000]

.10 When there is sufficient evidence that debt has been issued by a government specifically on behalf of a government business enterprise:

(a) the debt issued on behalf of the government business enterprise and the related receivable from the government business enterprise should be presented on a net basis in the consolidated statement of financial position; and

(b) the interest expense on the debt issued on behalf of the government business enterprise and the related interest revenue from the government business enterprise should be presented on a net basis in the consolidated statement of operations. [APRIL 2000]

.12 Sufficient evidence that debt has been specifically issued by a government on behalf of a government business enterprise comprises:

(a) details in the terms of the debt prospectus, borrowing by-laws, or other terms of the original debt issuance documentation, which require a specified amount of the proceeds of the debt issue to be passed directly from the government to the government business enterprise;

(b) the intention of the government and the government business enterprise that the government will realize the receivable from the government business enterprise and settle the external debt simultaneously, which is contractually supported by the details of the loan amount, interest rate, and timing and nature of repayment outlined in the terms of the agreement between the government and the government business enterprise; and

(c) the financial ability of the government business enterprise to fulfill the requirements in (b) as demonstrated by a realistic and specific business plan projecting the future results of operations of the government business enterprise. [APRIL 2000]

.13 When, in a period subsequent to the debt issue, the conditions in paragraph PS 3230.12(b) and/or (c) are no longer met; the government should report the remaining financial arrangement with the government business enterprise in accordance with paragraph PS 3230.06. [APRIL 2000]


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Section Compliance .15 Financial statements should disclose information to highlight the composition of a

government's long-term debt as follows: (a) the gross amount outstanding; (b) the amounts issued specifically on behalf of government business enterprises

and reported in accordance with paragraph PS 3230.10; (c) the net amount reported on the consolidated statement of financial position; (d) the gross interest paid or payable for the period relating to the debt described in

(a); (e) the interest revenue for the period received or receivable from government

business enterprises on debt issued specifically by the government on behalf of government business enterprises and reported in accordance with paragraph PS 3230.10; and

(f) the net amount of interest expense reported on the consolidated statement of operations. [APRIL 2000]

.17 Financial statements should disclose adequate information about the nature and terms of a government's long-term debt, as described in paragraph PS 3230.15(a), including:

(a) interest rates; (b) the existence of sinking fund and redemption provisions; (c) an appropriate description of repayment dates and amounts and the nature of

the repayment; and (d) any amounts payable on demand. [APRIL 2000]

.18 Financial statements should disclose the aggregate amount of payments estimated to be required in each of the next five years and thereafter to meet sinking fund or retirement provisions for the debt disclosed in accordance with paragraph PS 3230.15(a), as well as the amounts to be recovered in each of those years and thereafter from government business enterprises in relation to the debt disclosed in accordance with paragraph PS 3230.15(b). [APRIL 2000]

.22 When a government holds its own securities at the end of the accounting period, including securities derecognized in accordance with Financial Instruments, paragraphs PS 3450.042-.051, the following should be disclosed:

(a) the gross amount of the long-term debt classes to which the securities relate; and

(b) the amount of the government's own securities purchased but not cancelled. [APRIL 2012]

.24 If any of the liabilities are secured, they should be stated separately and the fact that they are secured should be indicated. Where assets of a government are pledged as security against liabilities, the nature, and where practicable, the carrying value of such assets should be disclosed. [MARCH 1997]

.25 The details of any defaults of the government in principal, interest, sinking fund or redemption provisions with respect to any outstanding obligation should be disclosed.

[MARCH 1997]


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Section Compliance PS 3250 RETIREMENT BENEFITS

.016 The statement of financial position should report the retirement benefit liability and the statement of operations should report the expenses for retirement benefits on the basis of the value of the benefits attributed to employee service to the financial statement date.

[SEPT. 2001]

.025 An accrued benefit method should be used to attribute the cost of retirement benefits to the periods of employee service. [SEPT. 2001]

.029 The projected benefit method pro-rated on services should be used to attribute the cost of retirement benefits to the periods of employee service. [SEPT. 2001]

.037 For a defined benefit plan, plan assets should be valued at market-related values. [SEPT. 2001]

.042 Actuarial assumptions should be based on the government's best estimates of expected long-term experience and short-term forecasts. [SEPT. 2001]

.045 Actuarial assumptions should be internally consistent. [SEPT. 2001]

.050 An accrued benefit asset should be presented on a government's statement of financial position net of any valuation allowance. When a defined benefit plan gives rise to an accrued benefit asset, a government should recognize a valuation allowance for any excess of the adjusted benefit asset over the expected future benefit. A change in valuation allowance should be recognized in the statement of operations for the period in which the change occurs. [SEPT. 2001]

.062 Except in the circumstances in paragraph PS 3250.068, PS 3250.071 and PS 3250.078, actuarial gains and losses should be amortized to the liability or asset and the related expense in a systematic and rational manner over the expected average remaining service life of the related employee group. [SEPT. 2001]

.066 The cost of plan amendments related to prior period employee services should be accounted for in the period of the plan amendment. [SEPT. 2001]

.068 In the period of a plan amendment related to prior period employee services that results in an increase in the accrued benefit obligation, if net unamortized actuarial gains exist, these should be recognized immediately, to a maximum of the prior period service cost, and offset against the prior period service cost in the statement of operations, with separate disclosure in the notes. [SEPT. 2001]

.071 In the period of a plan amendment related to prior period employee services that results in a decrease in the accrued benefit obligation, if net unamortized actuarial losses exist, these should be recognized immediately, to a maximum of the decrease in the accrued benefit obligation. The net amount would be recognized in the statement of operations, with separate disclosure in the notes. [SEPT. 2001]

.078 Gains and losses determined upon a plan settlement or curtailment should be accounted for in the period of the settlement or curtailment. [SEPT. 2001]

http://www.knotia.ca/Knowledge/View/Document.aspx?bookID=0&tbGoToKeyword=ps%203250%20-%20Defined%20Benefit%20Pension%20Plans&productId=126

http://www.knotia.ca/Knowledge/View/Document.aspx?bookID=0&tbGoToKeyword=ps%203250%20-%20Defined%20Benefit%20Pension%20Plans&productId=126

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Section Compliance

.081 When a government participates in a joint defined benefit plan, the government's risk is limited to its portion of the plan. The government should account for its portion of the plan in accordance with the standards for defined benefit plans. [SEPT. 2001]

.084 Financial statements should disclose: (a) a general description of retirement benefit plans, benefit formulae and funding

policy, including a description of significant changes to retirement benefit plans during the period;

(b) the accrued benefit obligation at the end of the period, as determined by the actuarial valuation;

(c) the market value of plan assets at the beginning and the end of the period and, if different, the market-related value of plan assets at the beginning and the end of the period;

(d) the amount of retirement benefit liability or accrued benefit asset at the end of the period, indicating separately the amount of any valuation allowance determined in accordance with paragraph PS 3250.050.

(e) unamortized actuarial gains and losses and the periods of amortization; (f) current period benefit cost; (g) cost of plan amendments incurred during the period; (h) net actuarial gains or losses recognized in the determination of the cost of plan

amendments in accordance with paragraphs PS 3250.068 and PS 3250.071; (i) other gains and losses on accrued benefit obligations arising during the period; (j) other gains and losses on plan assets arising during the period; (k) gains and losses arising from plan settlements and curtailments incurred during

the period; (l) amortization of actuarial gains and losses reflected in the current year expense; (m) the amount recognized as a result of a temporary deviation from the plan,

determined in accordance with paragraph PS 3250.073; (n) the change in a valuation allowance determined in accordance with paragraph

PS 3250.050; (o) the amount of contributions by employees during the period; (p) the components of the retirement benefits interest expense for the period; (q) the amount of contributions by the government during the period; (r) the amount of benefits paid during the period; (s) the expected return and actual return on plan assets during the period; (t) assumptions about long-term inflation rates, expected rate of return on plan

assets, assumed health care cost trends, rate of compensation increase (for pay-related plans) and discount rate; and

(u) the date of the most recent actuarial valuation performed for accounting purposes. [SEPT. 2001]

.087 A government should provide these disclosures separately for plans that provide pension benefits and plans that provide retirement benefits other than pensions. [SEPT. 2001]

.088 A government that has aggregated disclosures for its defined benefit pension plans, or for its other defined benefit retirement plans, should provide the disclosures separately for the aggregate of plans with accrued benefit obligations in excess of plan assets.

[SEPT. 2001]


…page 31

Section Compliance .093 For joint defined benefit plans, in addition to the disclosures required in paragraphs

PS 3250.084 government financial statements should disclose: (a) the significant accounting policies for joint plans; (b) a description of the unique nature and terms of any joint plans; (c) the government's share of the risks and benefits under the plans; and (d) the total financial status of any joint plans. [SEPT. 2001]

.097 For defined contribution plans: (a) the liability for retirement benefits should be the difference between the amount

a government was required to contribute and the amount that was contributed by the financial statement date including accumulated interest on any outstanding amounts payable to the fund at the financial statement date;

(b) the retirement benefit liability should be accounted for in the statement of financial position;

(c) the expense for retirement benefits should be the amount of required contributions provided for employees' services rendered in the period. Interest accrued during the period on any outstanding amounts payable to the fund should be accounted for as a retirement benefit interest expense; and

(d) the retirement benefit expense and the retirement benefit interest expense should be accounted for in the statement of operations. [SEPT. 2001]

.099 For a defined contribution plan, the cost of current and expected future years' contributions related to a past service plan amendment should be accounted for in the period of the plan amendment. [SEPT. 2001]

.100 For defined contribution plans, financial statements should disclose: (a) a general description of benefit plans, contribution formulae and funding

policy; (b) the expense recognized for the period; and (c) a description of significant changes to benefit plans during the period.

[SEPT. 2001]

.108 When a government sponsors a defined benefit multiemployer retirement plan, the government should follow the standards for defined benefit plans in accounting for its obligation for the plan. [SEPT. 2001]

.110 When benefits are provided to employees through a multiemployer retirement benefit plan, each entity participating in the plan, other than the sponsoring government, should follow the standards for defined contribution plans. [SEPT. 2001]

.111 The government should disclose any available information about any surplus or deficit in a multiemployer plan, the basis used to determine the surplus or deficit and the implications, if any, for the government. [SEPT. 2001]

.114 When benefits are provided to employees through a defined benefit multiple-employer retirement plan, each entity in the plan should follow the standards for defined benefit plans. [SEPT. 2001]

.117 This section should be accounted for as a change in accounting policy applied retroactively. [SEPT. 2001]


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Section Compliance

PS 3255 POST-EMPLOYMENT BENEFITS, COMPENSATED ABSENCES AND TERMINATION BENEFITS

.16 A government should recognize a liability and an expense for post-employment benefits

and compensated absences that vest or accumulate in the period in which employees render services to the government in return for the benefits. Retirement Benefits, section PS 3250, should be followed in accounting for such benefits. [JAN. 2004]

.22 A government should recognize a liability and an expense for post-employment benefits and compensated absences that do not vest or accumulate when the event that obligates the government occurs. [JAN. 2004]

.24 For a separately measured plan providing post-employment benefits or compensated absences that do not vest or accumulate, a government should recognize any actuarial gain or loss:

(a) immediately, in the period in which it arises; or (b) over a period linked to the type of benefit. [JAN. 2004]

.28 A government should recognize termination benefits as a liability and expense when it is demonstrably committed to either:

(a) terminate the employment of an employee or group of employees; or (b) provide termination benefits as a result of an offer to encourage voluntary

termination. [JAN. 2004]

.40 This section should be accounted for as a change in accounting policy applied retroactively. [JAN. 2004]

PS 3260 LIABILITY FOR CONTAMINATED SITES

.08 A liability for remediation of contaminated sites should be recognized when, as at the financial reporting date:

(a) an environmental standard exists; (b) contamination exceeds the environmental standard; (c) the government:

(i) is directly responsible; or (ii) accepts responsibility;

(d) it is expected that future economic benefits will be given up; and, (e) a reasonable estimate of the amount can be made.

An obligation for remediation of contaminated sites cannot be recognized as a liability unless all criteria above are satisfied. [APRIL 2014]

.40 The estimate of a liability should include costs directly attributable to remediation activities. Costs would include post-remediation operation; maintenance and monitoring that are an integral part of the remediation strategy for a contaminated site. The estimate would include costs of assets acquired as part of remediation activities to the extent those assets have no alternative use. [APRIL 2014]

.46 A liability for remediation should be estimated based on information available at the financial statement date. [APRIL 2014]

.55 The measurement technique adopted by a government should result in the best estimate of the amount required to remediate contaminated sites. [APRIL 2014]

http://www.knotia.ca/Knowledge/View/Document.aspx?bookID=0&tbGoToKeyword=PS%203250&productId=126


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Section Compliance

.59 The carrying amount of a liability for remediation should be reviewed at each financial reporting date. Any revisions to the amount previously recognized should be accounted for in the period in which revisions are made. [APRIL 2014]

.62 A liability for remediation of contaminated sites should be reduced by expected net recoveries if the recognition criteria outlined in Financial Statement Concepts, paragraphs PS 1000.54-.56, are satisfied. [APRIL 2014]

.65 A financial statement should disclose information about: (a) the nature and source of the liability; (b) the basis for the estimate of the liability; (c) when a net present value technique is used, the estimated total undiscounted

expenditures and discount rate; (d) the reasons for not recognizing a liability; and (e) the estimated recoveries. [APRIL 2014]

PS 3280 ASSET RETIREMENT OBLIGATIONS (Fiscal years beginning on or after April 1, 2021) .09 A liability should be recognized when, as at the financial reporting date: (a) there is a legal obligation to incur retirement costs in relation to a tangible capital asset;

(b) the past transaction or event giving rise to the liability has occurred; (c) it is expected that future economic benefits will be given up; and (d) a reasonable estimate of the amount can be made. A liability for an asset retirement obligation cannot be recognized unless all of the criteria above are satisfied.

.24 Upon initial recognition of a liability for an asset retirement obligation, a public sector entity should recognize an asset retirement cost by increasing the carrying amount of the related tangible capital asset (or a component thereof) by the same amount as the liability.

.25 The public sector entity should allocate the asset retirement cost to expense in a rational and systematic manner over the useful life of the tangible capital asset (or a component thereof).

.33 The estimate of a liability should include costs directly attributable to asset retirement activities. Costs would include post-retirement operation, maintenance and monitoring that are an integral part of the retirement of the tangible capital asset. The estimate would include costs of tangible capital assets acquired as part of asset retirement activities to the extent those assets have no alternative use.

.39 A liability for an asset retirement obligation should be estimated based on information available at the financial statement date.

.43 Measurement of a liability for an asset retirement obligation should result in the best estimate of the amount required to retire a tangible capital asset (or a component thereof) at the financial statement date.

.49 The carrying amount of a liability for an asset retirement obligation should be reconsidered at each financial reporting date.


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Section Compliance

.53 In periods subsequent to initial measurement, a public sector entity should recognize period-to-period changes in a liability resulting from: (a) revisions to either the timing, the amount of the original estimate of undiscounted cash

flows or the discount rate, as part of the cost of the related tangible capital asset; and (b) the passage of time as an accretion expense.

.54 The revised carrying amount of the related tangible capital asset (or a component thereof) should be amortized in a rational and systematic manner on a go-forward basis.

.55 Once the related tangible capital asset (or a component thereof) is no longer in productive use, all subsequent changes in the estimate of the liability for asset retirement obligations should be recognized as an expense in the period they are incurred.

.60 A recovery related to asset retirement obligation should be recognized when: (a) the recovery can be appropriately measured; (b) a reasonable estimate of the amount can be made; and (c) it is expected that future economic benefits will be obtained.

A recovery should not be netted against the liability.

.61 A contingent recovery should be disclosed in accordance with CONTINGENT ASSETS, Section PS 3320.

.63 A public sector entity should disclose the following information: (a) a general description of the liability for an asset retirement obligation and the

associated tangible capital asset (or a component thereof); (b) the amortization method used for the asset retirement costs; (c) the basis for the estimate of the liability, including the estimated total undiscounted

expenditures, the time period over which the undiscounted expenditures are to be incurred, the estimated timing of settlement of these expenditures and the discount rate used;

(d) a reconciliation of the beginning and ending aggregate carrying amount of the liability showing separately the changes attributable to:

(i) the liability incurred in the current period; (ii) the liability settled in the current period; (iii) the change resulting from the passage of time (i.e., accretion expense); and (iv) revisions in estimated cash flows;

(e) how any requirements for financial assurance and funding associated with asset retirement obligations, if legally required, are being met;

(f) when a reasonable estimate of the amount of an asset retirement obligation cannot be made, the fact and the reasons therefor; and

(g) the estimated recoveries.


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Section

Compliance

PS 3300 CONTINGENT LIABILITIES .15 A contingent liability should be recognized in the financial statements when:

(a) it is likely that a future event will confirm that a liability has been incurred at the date of the financial statements; and

(b) the amount can be reasonably estimated. [SEPT. 2004]

.21 A contingent liability should be derecognized when it is settled or otherwise extinguished, or when it is determined that the existence of a liability at the financial statement date is unlikely. [SEPT. 2004]

.27 The existence of a contingent liability at the date of the financial statements should be disclosed in notes to the financial statements when:

(c) the occurrence of the confirming future event is likely but the amount of the liability cannot be reasonably estimated;

(d) the occurrence of the confirming future event is likely and an accrual has been made, but there exists an exposure to liability in excess of the amount accrued; or

(e) the occurrence of the confirming future event is not determinable. [SEPT. 2004]

.28 The following information should be disclosed in notes or schedules relative to a contingent liability, unless its occurrence is unlikely:

(a) the nature; (b) the extent, except in those cases where the extent cannot be measured or

disclosure of the extent would have an adverse effect on the outcome; (c) the reason(s) for any non-disclosure of the extent; and (d) when an estimate of the amount has been made, the basis for that estimate.

[SEPT. 2004]

PS 3310 LOAN GUARANTEES

.05 Government loan guarantees should be accounted for and reported as contingent liabilities in the government’s financial statements. [JUNE 1995]

.08 A provision for losses on loan guarantees should be established when it is determined that a loss is likely, and should be accounted for as a liability and in the statement of operations as an expense. [JUNE 1995]

.10 The provision for losses on loan guarantees should take into account the principal amount outstanding, accrued and unpaid interest if it is guaranteed, and amounts recoverable from the borrower and from the sale of assets pledged as security.

[JUNE 1995]

.14 The provision for losses on loan guarantees should be determined using the best estimates available in light of past events, current conditions, and taking into account all circumstances known at the date of preparation of the financial statements. [JUNE 1995]

.18 The provision for losses on loan guarantees should be reviewed on an ongoing basis. Any changes in the provision for losses on loan guarantees should be charged or credited to expenses results in the statement of operations [JUNE 2011].


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Section

Compliance

.20 The provision for loss on a loan guarantee should be removed from the government’s statement of financial position when the guaranteed loan has been discharged or the term of the loan guarantee has expired. [JUNE 1995]

.24 The amount of a guaranteed loan that is expected to be repaid from future government assistance should be accounted for as a liability and an expense in the statement of operations in the period when a direct relationship can be established between the repayment of the loan and the government's funding to the borrower.

[JUNE 2011]

.29 Government financial statements should disclose information to describe the accounting policies selected and applied to loan guarantees, including:

(a) the basis for initial recognition and measurement of the provision for losses on loan guarantees; and

(b) the policy with respect to changes in the amount of the provision. [JUNE 1995]

.31 Government financial statements should disclose in notes or schedules the nature and terms of significant classes of loan guarantees. Information that should be disclosed includes:

(a) the authorized limit; (b) the principal amount outstanding; (c) the amount of provision for losses; and, (d) general terms and conditions. [JUNE 1995]

PS 3320 CONTINGENT ASSETS

.19 The existence of a contingent asset at the date of the financial statements should be disclosed in notes to the financial statements when the occurrence of the confirming future event is likely. [APRIL 2017]

.20 The following information should be disclosed in notes or schedules relative to a contingent asset:

(a) the nature; (b) the extent, except in those cases where the extent cannot be measured or

disclosure of the extent would have an adverse effect on the outcome; (c) the reason(s) for any non-disclosure of the extent; and (d) when an estimate of the amount has been made, the basis for that estimate.

[APRIL 2017]

PS 3380 CONTRACTUAL RIGHTS .11 Information about a public sector entity's contractual rights should be disclosed in notes

or schedules to the financial statements and should include descriptions about their nature and extent and the timing. [APRIL 2017]


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Section Compliance

PS 3390 CONTRACTUAL OBLIGATIONS

.09 Information about a government's contractual obligations should be disclosed in notes or schedules to the financial statements and should include descriptions of their nature and extent and the timing of the related expenditures. [Former paragraph PS 3390.09 retained in Archived Pronouncements.] [APRIL 2017]

PS 3400 REVENUE (Fiscal years beginning on or after April 1, 2021) 29 A public sector entity should evaluate the goods or services it has promised to provide. It should

identify which goods or services (or which bundles of goods or services) are distinct and should be accounted for separately.

.35 Revenue from transactions with performance obligations should be recognized when (or as) the public sector entity satisfies a performance obligation by providing the promised goods or services to a payor.

.52 Revenue from transactions with no performance obligations should be recognized when a public sector entity: (a) has the authority to claim or retain an inflow of economic resources; and (b) identifies a past transaction or event that gives rise to an asset.

.58 A public sector entity should recognize as revenue the portion of the transaction price allocated to the performance obligation that has been satisfied.

.74 For transactions with significant concessionary terms, measurement of the transaction price should reflect the best estimate based on the terms of the transaction at each reporting date.

.81 A public sector entity should recognize revenue from transactions with no performance obligations at its realizable value.

.88 A public sector entity should disclose: (a) disaggregated revenues reported on the statement of operations by source and type, with

separate disclosure of revenues that are not related to recurring activities; (b) typical performance obligations and the methods and policies that apply when recognizing

revenues; and (c) the nature and amount of continuing performance obligations grouped by category of

similar transactions.

.89 When a public sector entity has the information necessary to record a transaction but does not expect to collect payment, disclosure of these amounts is required.

.90 In circumstances where the terms of the arrangement include significant concessionary terms so that all or a part of the transaction is concessionary in nature, disclosure of the original amount of the transaction price should be provided.

PS 3410 GOVERNMENT TRANSFERS .12 A government transfer should be recognized by a transferring government as an expense in

the period the transfer is authorized and all eligibility criteria have been met by the recipient. [APRIL 2012]

Section Compliance


…page 38

.16 A transfer without eligibility criteria or stipulations should be recognized as revenue by a recipient government when the transfer is authorized. [APRIL 2012]

.17 A transfer with eligibility criteria, but without stipulations, should be recognized as revenue by a recipient government when the transfer is authorized and all eligibility criteria have been met. [APRIL 2012]

.19 A transfer with or without eligibility criteria, but with stipulations, should be recognized by a recipient government as revenue in the period the transfer is authorized and all eligibility criteria have been met, except when and to the extent that the transfer gives rise to an obligation that meets the definition of a liability for the recipient government in accordance with Liabilities, section PS 3200. [APRIL 2012]

.25 A liability recognized in accordance with paragraph PS 3410.19 should be reduced and an equivalent amount of revenue recognized as the liability is settled. Revenue recognition should occur in a manner consistent with the circumstances and evidence used to support the initial recognition of the transfer as a liability. [APRIL 2012]

.28 For a transferring government, a government transfer is authorized for the purposes of this section when either the authorization described in (a) or (b) is in place.

(a) There is evidence that both of the following have occurred by the financial statement date: (i) the enabling authority to provide a transfer is in place, which is conveyed

through approved legislation, regulations or by-laws of the transferring government, and

(ii) an exercise of authority under that approved legislation, regulations or by-laws has occurred. In essence, a decision has been made by the transferring government under the approved legislation, regulations or by-laws that clearly demonstrates that it has lost its discretion to avoid proceeding with the transfer.

(b) There is evidence that both of the following have occurred: (i) actions and communications of the transferring government by the

financial statement date clearly demonstrate that it has lost its discretion to avoid proceeding with a transfer and thus the government is demonstrably committed to approving the enabling legislation, regulations or by-laws for the transfer and proceeding with the transfer; and

(ii) final approval in the stub period of the enabling legislation, regulations or by-laws confirms that the transferring government was demonstrably committed to approving and proceeding with the transfer at the financial statement date.

In some cases, the authority to pay may be part of the authorization process for the purposes of this section and its absence at the financial statement date may indicate that the exercise of authority required by (a) or (b) is not complete. In such cases, the government may retain its discretion to avoid proceeding with a transfer until the authority to pay is in place. [APRIL 2012]

.33 For a recipient government, a government transfer is authorized for the purposes of this section when the transfer is authorized by the transferring government as described in paragraph PS 3410.28(a). [APRIL 2012]

.35 Financial statements should disclose major kinds of transfers recognized in the accounting period. [APRIL 2012]

Section Compliance


…page 39

.36 Financial statements should disclose information about the nature and terms of liabilities, if any, arising from government transfers received. [APRIL 2012]

PS 3420 INTER-ENTITY TRANSACTIONS .08 Inter-entity transactions involving the transfer of assets or liabilities should be recognized by

both the provider and the recipient. [APRIL 2017]

.10 When there is a policy of cost allocation and recovery for the provision of goods and services:

(a) the provider should report all revenues and expenses on a gross basis; and (b) the recipient should report expenses on a gross basis. [APRIL 2017]

.12 When there is no policy for allocating costs, the recipient may choose to recognize these costs when they would otherwise have been purchased and a reasonable estimate of the amount involved can be made. [APRIL 2017]

.13 When the recipient chooses to recognize unallocated costs it reports these items as revenues and expenses. [APRIL 2017]

.14 Inter-entity transactions should be recorded at the carrying amount as determined at the transaction date unless:

(a) transactions are undertaken on similar terms and conditions to those adopted if the entities were dealing at arm's length;

(b) assets or liabilities are transferred for nominal or no consideration; (c) transactions are allocated costs and recoveries; or (d) transactions are unallocated costs. [APRIL 2017]

.15 Inter-entity transactions should be recorded at the exchange amount when they are undertaken on similar terms and conditions to those adopted if the entities were dealing at arm's length. [APRIL 2017]

.17 When inter-entity transactions involve the transfer of assets or liabilities for nominal or no consideration, they should be measured at the carrying amount by the provider and at the carrying amount or fair value by the recipient. [APRIL 2017]

.19 When there is a difference between the exchange amount and the carrying amount of a transferred or exchanged asset or liability, a gain or loss should be reported in the statement of operations. [APRIL 2017]

.20 Allocated costs and recoveries should be measured at the exchange amount. [APRIL 2017]

.21 When recognized by the recipient, unallocated costs should be measured at the carrying amount or fair value unless policy, budget practices or accountability structures dictate otherwise. [APRIL 2017]

.23 An entity should disclose information about inter-entity transactions, whether or not given accounting recognitions, in accordance with RELATED PARTY DISCLOSURES, Section PS 2200. [APRIL 2017]


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Section Compliance

PS 3430 RESTRUCTURING TRANSACTIONS

.20 Individual assets and liabilities received in a restructuring transaction should be recognized by the recipient if they meet the definitions of assets and liabilities and applicable recognition criteria at the restructuring date. [APRIL 2018]

.21 Individual assets and liabilities transferred in a restructuring transaction should be derecognized by the transferor if they no longer meet the definitions of assets and liabilities and applicable recognition criteria at the restructuring date. [APRIL 2018]

.23 The increase in net assets or net liabilities resulting from recognition and de-recognition of individual assets and liabilities received from all transferors and transferred to all recipients in a restructuring transaction should be recognized as revenue or as an expense.

[APRIL 2018]

.37 A transferor should derecognize individual assets and liabilities transferred in a restructuring transaction at their carrying amount at the restructuring date. [APRIL 2018]

.38 A recipient should recognize individual assets and liabilities received in a restructuring transaction at their carrying amount with the following adjustments, where applicable, at the restructuring date:

(a) to comply with PSA standards; (b) to align with accounting policies, methods and assumptions to be adopted by

the recipient; and (c) to reflect the circumstances of the recipient. [APRIL 2018]

.48 The net effect of a restructuring transaction should be presented as a separate revenue or expense item in the statement of operations. [APRIL 2018]

.50 A transferor and a recipient should not restate its financial position or results of operations prior to the restructuring date to retroactively report the effects of a restructuring transaction in its financial statements as if the restructuring transaction took place prior to the restructuring date. [APRIL 2018]

.54 A transferor and a recipient should disclose sufficient information to enable users to assess the nature and financial effects of a restructuring transaction on their financial position and operations. [APRIL 2018]

.62 This Section applies to restructuring transactions occurring in fiscal years beginning on or after April 1, 2018, early adoption is permitted.

PS 3450 FINANCIAL INSTRUMENTS .011 A government should recognize a financial asset or a financial liability on its statement

of financial position when, and only when, a government becomes a party to the contractual provisions of the instrument. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]

.014 A government should identify contracts containing one or more embedded derivatives and apply paragraphs PS 3450.A18-.A26 in determining if they are to be recognized. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]


…page 41

Section Compliance .015 All items within the scope of this section are assigned to one of two measurement

categories: (a) fair value; or (b) cost or amortized cost.

.020 A government should include the following items in the fair value category: (a) derivatives; and; (b) portfolio investments in equity instruments that are quoted in an active market.

[APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]

.023 A government that defines and implements a risk management or investment strategy to manage and evaluate the performance of a group of financial assets, financial liabilities or both on a fair value basis, may include those items that are within the scope of this section in the fair value category. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]

.025 Derivatives that are linked to and must be settled by delivery of unquoted equity instruments should be measured at cost. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]

.026 A government may designate a contract to be a financial instrument carried at fair value if it contains one or more embedded derivatives unless:

(a) the embedded derivative(s) do not significantly modify the cash flows that otherwise would be required by the contract; or

(b) separation of the embedded derivative(s) is prohibited when applying paragraphs PS 3450.A18-.A26.

[APRIL 1,2019 - See explanation of effective date in paragraph PS 3450.097]

.027 A government should apply paragraphs PS 3450.A27-.A40 in measuring financial instruments in the fair value category. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]

.033 A government should measure interest using the effective interest method. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]

.036 Impairment losses (such as write-downs of portfolio investments, write-offs of loan receivables, etc.) should be reported in the statement of operations. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]

.039 When a quoted price in an active market is no longer available for an equity instrument that is a portfolio investment, a government should measure the portfolio investment at cost. The most recent quoted price becomes its new cost. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]

.041 When a quoted price in an active market becomes available for an equity instrument that is a portfolio investment for which such a price previously was not available, the asset should be remeasured at fair value and the difference between its carrying value and fair value is reported as a remeasurement gain or loss. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]


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Section

Compliance

.042 A government should remove a financial liability (or part of a financial liability) from its statement of financial position when, and only when, it is extinguished (i.e., when the obligation specified in the contract is discharged or cancelled, or expires). [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]

.048 An exchange between an existing borrower and lender of debt instruments with substantially different terms should be accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability or part of it (whether or not attributable to the financial difficulty of the debtor) should be accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]

.050 The difference between the carrying amount of a financial liability (or part of a financial liability) extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, should be recognized as a revenue or expense in the statement of operations. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]

.051 If a government repurchases a part of a financial liability, it should allocate the previous carrying amount of the financial liability between the part that continues to be recognized and the part that is derecognized based on the relative fair values of those parts on the date of the repurchase. The difference between the carrying amount allocated to the part derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, for the part derecognized should be recognized as a revenue or expense in the statement of operations. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]

.053 A change in the fair value of a financial instrument in the fair value category should be recognized in the statement of remeasurement gains and losses as a remeasurement gain or loss until the financial instrument is derecognized. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]

.053A A change in fair value of a financial asset in the fair value category that is externally restricted should be accounted for in accordance with Restricted Assets and Revenues, paragraphs PS 3100.11-.12. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]

.057 When a financial instrument is derecognized, a gain or loss is recognized in the statement of operations. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]

.057A A gain or loss associated with a financial instrument that is externally restricted is accounted for in accordance with Restricted Assets and Revenues, paragraphs PS 3100.11-.12. [APRIL 1, 2019 - See explanation of effective date in paragraph PS 3450.097]


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Section Compliance

.059 A financial asset and a financial liability should be offset and the net amount reported in the statement of financial position when, and only when, a government:

(a) currently has a legally enforceable right to set off the recognized amounts; and (b) intends either to settle on a net basis, or to realize the asset and settle the

liability simultaneously. [APRIL 1, 2019- See explanation of effective date in paragraph PS 3450.097]

.069 A government should disclose information that enables users of its financial statements to evaluate the significance of financial instruments for its financial position and changes in its financial position.


.085 A government should disclose information that enables users of its financial statements to evaluate the nature and extent of risks arising from financial instruments to which it is exposed at the financial statement date.


PS 3510 TAX REVENUE .08 Taxes should be recognized as assets and revenue when:

(a) they meet the definition of an asset set out in Financial Statement Concepts, section PS 1000;

(b) they are authorized as described in paragraph PS 3510.17; and, (c) the taxable event occurs. [APRIL 2012]

.17 A tax is considered authorized by a legislature or council for revenue recognition purposes when the effective date of the tax has passed and the earlier of the following has occurred:

(a) the related legislation, regulations or by-laws have been approved by the legislature or council, or

(b) the ability to assess and collect tax has been provided through legislative convention. [APRIL 2012]

.24 An asset acquired through a tax transaction should be measured initially at its realizable value at the date of acquisition. [APRIL 2012]

.32 At each financial statement date, the government should evaluate the likelihood of having to repay taxes collected under tax measures that have been deemed authorized using the concept of legislative convention set out in paragraph PS 3510.17(b) and recognize a liability when required by Liabilities, section PS 3200. Related refunds should be accounted for as a change in an estimate in accordance with Accounting Changes, section PS 2120.

[APRIL 2012]

.33 Transfers made through a tax system should be recognized in expenses and not as a reduction of tax revenue. [APRIL 2012]

.34 Tax revenue should not be grossed up for the amount of tax concessions. [APRIL 2012]

.45 The financial statements should disclose: (a) the accounting policies adopted for the recognition of tax revenue; (b) the accounting policies adopted for the recognition and valuation of tax

receivables if they are different from those for other receivables; and (c) the total tax revenue recognized in the accounting period and in each of the

major categories of tax. [APRIL 2012]

2018-19 financial reporting manual€¦ · [april 2005] .24 financial statements should communicate...

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