PSAB Model Financial Statements and Comparison of PSAB with the CICA Handbook
An organization's financial statements are a key part of how it reports on and provides accountability for the management of the resources entrusted to it. This applies to private and public enterprises alike. High quality financial statements, developed in accordance with independently set accounting standards that meet the needs of those that rely on them, are a must in this context.
Accounting standards in Canada are changing. For example, International Financial Reporting Standards are being introduced in parts of the private and public sector. Virtually every organization that produces public financial statements will be using a different accounting standard over the next few years.
The Government of the Province of British Columbia has directed many government organizations to adopt the accounting standards issued by the Public Sector Accounting Board of Canada (PSAB), which the government itself follows for its consolidated financial statements. Government business enterprises, those that generate their own revenues sufficient to operate independently without government support, will adopt International Financial Reporting Standards.
The government has directed that the move to PSAB will occur in two main phases:
- government organizations that are in the health or education sectors will adopt PSAB standards in their fiscal year that commences on or after January 1, 2012.
- all other government organizations will adopt PSAB standards in their fiscal year that commences on or after January 1, 2011.
Government has also directed government organizations to follow PSAB standards without the incorporation of the optional not-for-profit provisions now within PSAB.
When PSAB standards are adopted for the first time, an organization is required to adopt them retroactively, and to present an opening balance sheet as at the date of transition. An organization that is not in the health or education sector, and which has a March 31 year-end, will be adopting PSAB in its year-end March 31, 2012, and so will need to present an opening balance sheet as at April 1, 2010.
These changes are unprecedented in the province, and may require significant effort on the part of some government organizations to prepare for and implement these changes.
To assist government organizations transitioning to the PSAB framework, we have created two documents:
- Model financial statements, which are an illustrative example of the type of financial statement presentation and disclosures required under PSAB standards; and
- A summary comparison between PSAB standards and the CICA handbook standards that many government organizations currently use, with explanations of differences.
Staff in my office, in consultation with standard setters and several large private sector audit firms, prepared these documents. Just as PSAB standards are changing, so too will these documents, which will be updated as new standards are issued. These documents are current as of February 23, 2011.
If you have any questions or comments with respect to these documents, please contact Jason Reid, Executive Director.
John Doyle, MBA, CA
Auditor General
Summary Comparison of Canadian Public Sector Accounting Standards With the CICA Handbook Part V
Project Team
Bill Gilhooly: Assistant Auditor General
Lisa Moore and Jason Reid: Executive Directors
Geoff Stagg: Manager
Albert Law, YJ Lin, Violet Louie: Auditors
Kevin Louie: Senior Audit Associate
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