Financial Reporting Manual. For School Divisions

Transcription

1 Financial Reporting Manual For School Divisions Ministry of Education: Education Funding Branch Last Updated: June 2018

2 PSAB - Summary of Standards, Guidelines and SORPs APPENDIX C The summary includes revisions up to and including release no. 45 (December 2016). This manual does not include sections PS 4200 to PS 4270 standards pertaining to government not-for-profit organizations. Appendix C-1.1: PSAB Revisions and New Standards revision releases for future implementation Appendix C-1.2: New standards to be implemented in Appendix C-2: Summary of PSAB Standards, Guidelines and SORPs List of Public Sector Accounting Standards Concepts & Principles (PS1000 PS1300): PS 1000 Financial Statement Concepts PS 1100 Financial Statement Objectives PS 1150 Generally Accepted Accounting Principles PS 1201 Financial Statement Presentation PS 1300 Government Reporting Entity Financial Reporting (PS2100 PS2700): PS 2100 Disclosure of Accounting Policies PS 2120 Accounting Changes PS 2125 First-time Adoption PS 2130 Measurement Uncertainty PS 2200 Related Party Disclosures PS 2400 Subsequent Events PS 2500 Basic Principles of Consolidation PS 2510 Additional Areas of Consolidation PS 2601 Foreign Currency Translation PS 2700 Segment Disclosures Financial Statement Items (PS3041 PS3510): PS 3041 Portfolio Investments PS 3050 Loans Receivable PS 3060 Government Partnerships PS 3070 Investments in Government Business Enterprises PS 3100 Restricted Assets and Revenues PS 3150 Tangible Capital Assets PS 3200 Liabilities PS 3210 Assets PS 3230 Long-term Debt PS 3250 Retirement Benefits PS 3255 Post-employment Benefits, Compensated Absences and Termination Benefits PS 3260 Liability for Contaminated Sites PS 3270 Solid Waste Landfill Closure and Post-closure Liability PS 3300 Contingent Liabilities PS 3310 Loan Guarantees PS 3320 Contingent Assets PS 3380 Contractual Rights PS 3390 Contractual Obligations PS 3410 Government Transfers PS 3420 Inter-entity Transactions PS 3430 Restructuring Transactions PS 3450 Financial Instruments PS 3510 Tax Revenue page 1

3 Public Sector Guidelines PSG-2 Leased Tangible Capital Assets PSG-4 Funds and Reserves PSG-5 Sale-Leaseback Transactions PSG-7 Tangible Capital Assets of Local Governments Public Sector Statements of Recommended Practice SORP-1 Financial Statement Discussion and Analysis SORP-2 Public Performance Reporting SORP-3 Assessment of Tangible Capital Assets SORP-4 Indicators of Financial Condition page 2

4 Appendix C-1.1: PSAB Revisions and New Standards PSAB revision releases for future implementation Revision Release None Revision Background Effective Date Implications for School Divisions page 3

5 Appendix C-1.2: New standards to be implemented in *Excludes revisions to PS 4200 series pertaining to government not-for-profit organizations Revision Release None Revision Background Effective Date Implications for School Divisions page 4

6 Appendix C-2: Summary of PSAB Standards, Guidelines and SORPs The summary includes revisions up to and including release no. 45 (December 2016). This summary does not include sections PS 4200 to PS 4270 standards pertaining to government not-for-profit organizations. Source: CPA Canada Standards and Guidance Collection - Public Sector Accounting Handbook Caution: The summary below outlines the standards in place at a specific point in time, as noted above. School divisions should be aware that PSAB is continually evolving and new standards or changes to standards may occur at any time. Public Sector Accounting Standards PS 1000 Financial Statement Concepts This section describes the concepts underlying the development and use of accounting principles in government financial statements. Such financial statements are designed to meet the common information needs of external users of financial information about a government. Context of government financial statements Users and user information needs Financial statement objectives Benefit versus cost constraint Qualitative characteristics Elements of financial statements Recognition Measurement PS 1100 Financial Statement Objectives This section identifies and describes objectives of government financial statements that are generally acceptable to the users and preparers of the statements. These objectives provide the basis for determining standards of financial statement reporting and accounting principles that are consistent with one another and appropriate for government. PSAB s goal is to improve government financial statements and enhance their comparability. Role of objectives in standard setting Government operations Objectives of government financial statements Appendix A Unique characteristics of government page 5

7 PS 1150 Generally Accepted Accounting Principles This section: (a) establishes standards for financial reporting in accordance with generally accepted accounting principles; (b) describes what constitutes generally accepted accounting principles, and their sources; and, (c) provides guidance on sources to consult when selecting accounting policies and determining appropriate disclosures, when a matter is not dealt with explicitly in the primary sources of generally accepted accounting principles. Sources of GAAP PS 1201 Financial Statement Presentation This section establishes general reporting principles and standards for the disclosure of information in government financial statements. The principles and standards are based on the concepts underlying government financial statements in Financial Statement Concepts, section PS 1000, and the objectives of government financial statements set out in Financial Statement Objectives, section PS General reporting principles Standards of presentation and disclosure Appendix A Illustrative financial statements federal, provincial and territorial governments Appendix B - Illustrative financial statements local governments PS 1300 Government Reporting Entity This section defines the scope of the government reporting entity in terms of the organizations whose financial affairs and resources would be included in government financial statements and establishes standards on how to account for and disclose those organizations in government financial statements. It also establishes standards on how to account for and disclose portfolio investments and trusts under administration. Defining the government reporting entity Determining whether control exists Accounting for government organizations Accounting for portfolio investments Trusts under administration Appendix A Applying the transitional provisions page 6

8 PS 2100 Disclosure of Accounting Policies This section establishes disclosure standards on the accounting policies adopted by an entity in the preparation and presentation of its financial statements. Accounting policies are the specific accounting principles used by a reporting entity and the methods for applying those principles. Content Presentation PS 2120 Accounting Changes This section establishes standards on how to account for and disclose: (a) a change in an accounting policy; (b) a change in an accounting estimate; and, (c) a correction of an error relating to prior period financial statements. Change in an accounting policy Change in an accounting estimate Correction of an error in prior period financial statements Prior period adjustments PS 2125 First-Time Adoption The purpose of this section is to ensure that a government organization's first financial statements, prepared in accordance with Public Sector Accounting Standards, contain highquality information that: (a) is transparent for users of the financial statements and comparable over all periods presented; (b) provides a suitable starting point for accounting in accordance with Public Sector Accounting Standards; and, (c) can be generated at a cost that does not exceed the benefits to users. Recognition, measurement and presentation page 7

9 PS 2130 Measurement Uncertainty This section establishes disclosure standards for measurement uncertainty arising from items recognized or disclosed in financial statements. The disclosure standards in this section supplement the standards in other sections. PS 2200 Related Party Disclosures This section defines a related party and establishes disclosures required for related party transactions. Identifying a related party Appendix A - Decision tree Scope of applicability PS 2400 Subsequent Events This section establishes standards on how to account for and disclose events occurring between the financial statement date and the date of their completion. Financial statements are prepared to reflect a government's financial position at a particular date and changes in financial position for a period ended on that date. However, events occurring after the financial statement date may indicate a need to adjust items or to make specific disclosures in those statements. Therefore, in preparing financial statements, the implications and financial effects of subsequent events would be considered. Accounting treatment PS 2500 Basic Principles of Consolidation This section establishes standards on the basic principles of consolidation involved in preparing government financial statements as required by Government Reporting Entity, paragraph PS Additional consolidation issues such as accounting for governmental units with non-controlling interests, acquisitions and sales of government investments in governmental units, and accounting for the change in status of a governmental unit to a government business enterprise, are dealt with in Additional Areas of Consolidation, section PS Basic principles Appendix A Government reporting entity framework page 8

10 PS 2510 Additional Areas of Consolidation This section establishes standards on the following consolidation issues that are rare or require particular consideration: (a) accounting for governmental units with non-controlling interests; (b) acquisitions of governmental units; (c) sales of government investments in governmental units; and, (d) accounting for the change in status of a governmental unit to a government business enterprise. Non-controlling interest Acquisitions Sale of all or part of a government's investment in a governmental unit When a governmental unit becomes a government business enterprise PS 2601 Foreign Currency Translation This section establishes standards on how to account for and report transactions that are denominated in a foreign currency in government financial statements. Accounting Presentation PS 2700 Segment Disclosures This section establishes standards on how to define and disclose segments in a government's consolidated financial statements. Defining segments Identifying segments Attributing items to segments Segment accounting policies Changes in segments page 9

11 PS 3041 Portfolio Investments This section establishes standards on how to account for and report portfolio investments in government financial statements. This section does not deal with accounting for derivatives. Accounting Presentation and disclosure PS 3050 Loans Receivable This section establishes standards on how to account for and report loans receivable in government financial statements. The standards apply to loans to borrowers outside of the government reporting entity. Definition Loans to be repaid through future appropriations Forgivable loans Loans with significant concessionary terms Recognition Valuation Write-offs Recognition of interest revenue Loan restructuring Appendix A Decision tree Loans PS 3060 Government Partnerships This section defines a government partnership and establishes standards on how to account for and report a government's interest in government partnerships in government financial statements, regardless of the structures and forms under which the government partnership activities take place. This section does not deal with accounting by the government partnership itself. Elements that define a government partnership Forms and structures of government partnerships Accounting for the government's interest Accounting for investments of assets Presentation and disclosure Appendix A Types of government contractual arrangements page 10

12 PS 3070 Investments in Government Business Enterprises This section establishes standards on how to account for and report investments in government business enterprises in government financial statements by the modified equity method of accounting. Government Reporting Entity, section PS 1300, specifies the circumstances in which the modified equity method applies. This section outlines how to apply the modified equity method to investments in government business enterprises. In addition, this section addresses how to account for the change in status of a government business enterprise to a governmental unit. Additional Areas of Consolidation, section PS 2510, deals with the change in status of a governmental unit to a government business enterprise. Method of accounting Sale of all or part of an investment in a government business enterprise Statements at different dates When an organization no longer meets the definition of a government business enterprise Presentation and disclosure PS 3100 Restricted Assets and Revenues This section establishes standards on how to account for and report restricted assets and revenues in government financial statements. The standards do not apply to trusts under administration, which are excluded from the government reporting entity (see Government Reporting Entity, paragraph PS ) and government transfers, which are addressed in Government Transfers, section PS External restrictions Internally restricted entities Designated assets PS 3150 Tangible Capital Assets This section establishes standards on how to account for and report tangible capital assets in government financial statements. Accounting Presentation and disclosure for local governments page 11

13 PS 3200 Liabilities This section: (a) provides guidance for applying the definition of liabilities set out in Financial Statement Concepts, section PS 1000, and establishes general recognition and disclosure standards for liabilities; but (b) does not include standards for recognition and disclosure of specific types of liabilities, which are dealt with in individual CPA Canada Public Sector Accounting Handbook sections. Recognition Liabilities Appendix Decision tree Obligations PS 3210 Assets This section: (a) provides guidance for applying the definition of assets set out in Financial Statement Concepts, Section PS 1000, and establishes general disclosure standards for assets; but (b) does not include standards for recognition and disclosure of specific types of assets, which are dealt with in other handbook sections. Assets Appendix A - Decision tree Economic resources PS 3230 Long-term Debt This section establishes standards on how to account for and report long-term debt in government financial statements, including debt issued on behalf of a government business enterprise. It does not address the presentation and disclosure of other long-term obligations of a government. General guidance regarding the presentation and disclosure of a government's liabilities is provided in Financial Statement Presentation, paragraphs PS Retirement benefits are specifically dealt with in Retirement Benefits, section PS Other employee future benefits are specifically dealt with in Post- Employment Benefits, Compensated Absences and Termination Benefits, section PS Financial statement presentation page 12

14 PS 3250 Retirement Benefits This section establishes standards on how to account for and report obligations for employee retirement benefits in government financial statements. Other employee future benefits are specifically dealt with in Post-Employment Benefits, Compensated Absences and Termination Benefits, section PS Defined benefit plans Defined contribution plans Multi-employer and multiple-employer benefit plans Timing of actuarial valuations Glossary Appendix A Limit on accrued benefit asset Appendix B Illustrative examples PS 3255 Post-employment Benefits, Compensated Absences and Termination Benefits This section establishes standards on how to account for and report obligations for postemployment benefits, compensated absences and termination benefits in government financial statements. Post-employment benefits and compensated absences Termination benefits Appendix A Characteristics of benefit plans Appendix B Illustrative example page 13

15 PS 3260 Liability for Contaminated Sites This section establishes standards on how to account for and report a liability associated with the remediation of contaminated sites. Specifically, it: (a) defines which activities would be included in a liability for remediation; (b) establishes when to recognize and how to measure a liability for remediation; and, (c) provides the related financial statement presentation and disclosure requirements. Recognition Measurement Glossary Appendix A Decision tree Liability for contaminated sites Appendix B Illustrative examples Decision Tree (Liability for contaminated sites recognition): The following decision tree illustrates the accounting treatment specified in this section. page 14

16 PS 3270 Solid Waste Landfill Closure and Post-closure Liability This section establishes standards on how to account for and report the liability for closure and post-closure care of a solid waste landfill site in government financial statements. Specifically, it: (a) defines which activities should be included in closure and post-closure care; (b) establishes when to recognize and how to measure the closure and post-closure care liability; and, (c) provides the related financial statement presentation and disclosure requirements. Landfill operations Recognition and measurement PS 3300 Contingent Liabilities This section: (a) defines and establishes standards on how to account for and report contingent liabilities in government financial statements; but (b) does not include standards for specific types of contingent liabilities, which are dealt with in individual CPA Canada Public Sector Accounting Handbook sections. Definition Characteristics of contingent liabilities Existence uncertainty Recognition Measurement PS 3310 Loan Guarantees This section establishes standards on how to account for and report government loan guarantees in government financial statements. The standards apply to loan guarantees to persons and to organizations outside of the government reporting entity. They are not intended to apply to contractual obligations, or to other contingencies such as indemnities, self-insurance or government insurance programs. Providing for losses Estimating the provision for losses Removal of the provision for losses from the financial statements Guaranteed loans to be repaid from future government assistance page 15

17 PS 3320 Contingent Assets This section: (a) defines and establishes disclosure standards on contingent assets; but (b) does not include disclosure standards for specific types of contingent assets. Definition Characteristics of contingent assets PS 3380 Contractual Rights This section: (a) defines and establishes disclosure standards on contractual rights; but (b) does not include disclosure standards for specific types of contractual rights; and (c) does not include those contractual rights to exchange one asset for another where revenue does not arise. Definition Characteristics of contractual rights PS 3390 Contractual Obligations This section: (a) defines and establishes disclosure standards on contractual obligations in government financial statements; but (b) does not include disclosure standards for specific types of contractual obligations. Definition page 16

18 PS 3410 Government Transfers This section establishes standards on how to account for and report government transfers to individuals, organizations and other governments from both a transferring government and a recipient government perspective. Recognition Presentation and disclosure Glossary Appendix A - Decision tree Recognition Appendix B - Distinguishing types of transfers PS 3420 Inter-entity Transactions This section establishes standards on how to account for and report transactions between public sector entities that comprise a government's reporting entity from both a provider and recipient perspective. Recognition Measurement Appendix A - Decision tree Accounting PS 3430 Restructuring Transactions This section establishes standards on how to account for and report restructuring transactions by both transferors and recipients of assets and/or liabilities, together with related program or operating responsibilities. Characteristics of restructuring transactions Recognition Measurement Classification Presentation and disclosure page 17

19 PS 3450 Financial Instruments This section establishes standards on how to account for and report all types of financial instruments including derivatives. Financial instruments include primary instruments (such as receivables, payables and equity instruments) and derivative financial instruments (such as financial options, futures and forwards, interest rate swaps and currency swaps). Derivative financial instruments meet the definition of a financial instrument and, accordingly, are within the scope of this section. Recognition Measurement Derecognition of a financial liability Presentation Financial statement disclosures Risk disclosures Glossary Appendix A - Applying the requirements PS 3510 Tax Revenue This section establishes standards on how to account for and report tax revenue in government financial statements. Recognition Measurement Transfers made through a tax system and tax concessions Presentation and disclosure Appendix A Decision tree Transfers made through a tax system and tax concessions page 18

20 Public Sector Guidelines PSAB Guidelines 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. As described in section PS1150 Generally Accepted Accounting Principles, Guidelines are a primary source of GAAP. PSG-2 Leased Tangible Capital Assets The purpose of this guideline is to: (a) define leased tangible capital assets; (b) describe how to account for a leased tangible capital asset and the related lease liability; (c) describe the information that should be disclosed about transactions involving leased tangible capital assets; and, (d) provide guidance on initial application of the guideline. It applies to government financial statements. PSG-4 Funds and Reserves The purpose of this guideline is to provide guidance on reporting information related to a government's financial funds and reserves that are part of the government reporting entity. It applies to government financial statements. This guideline does not apply to funds and reserves that are externally restricted. External restrictions are addressed in Restricted Assets and Revenues, section PS This guideline applies to local governments that have adopted Financial Statement Presentation, PS PSG-5 Sale-Leaseback Transactions The purpose of this guideline is to define a sale-leaseback transaction and describe how to account for such transactions when the leaseback involves either a leased tangible capital asset (LTCA) or an operating lease. PSG-7 Tangible Capital Assets of Local Governments The purpose of this guideline is to provide transitional guidance to a local government on reporting information related to tangible capital assets in notes or schedules to its financial statements. page 19

21 Public Sector Statements of Recommended Practice (SORPs) Statements of Recommended Practice (SORPs) are issued by PSAB to enhance decision making and accountability by improving the understandability of reports issued in the public sector. However, as described in section PS SORPs do not form part of the CPA Canada Public Sector Accounting Handbook or generally accepted accounting principles, nor are they designed to become GAAP in the future. For practical purposes, SORPs may be filed within the Handbook. SORP-1 Financial Statement Discussion and Analysis Provides guidance for reporting financial statement discussion and analysis (FSD&A). SORP-2 Public Performance Reporting Provides guidance for reporting performance information in a public performance report of a government or a government organization. For simplicity, the terms "entity" and "entities" are used throughout this SORP to refer to all governments and government organizations, unless otherwise specifically indicated. This SORP offers general guidance. It is not prescriptive with respect to the structure of the report and is not intended as a template for a public performance report. SORP-3 Assessment of Tangible Capital Assets Provides guidance to governments or government organizations that choose to prepare and present a report on the physical condition of their tangible capital assets, including leased tangible capital assets. The guidance provides a basis for exercising professional judgment as to the nature and extent of the information to be reported. SORP-4 Indicators of Financial Condition Provides guidance to governments that choose to report supplementary information on financial condition. The ability of governments to report indicators of financial condition may vary. Some governments may choose to report certain indicators initially, but over time, and as experience is gained, additional indicators may be reported. page 20