Public sector accounting board reaches for the stars

Canada’s PSAB remains committed to enhancing its role as a leader in accounting standards, even as the business of standard-setting becomes increasingly complex.

If we were to have talked about public sector accounting standards 15 years ago, only a handful of government entities in Canada would have felt the topic was relevant. These would have been the early adopters of accounting standards — mainly provincial, territorial and federal governments. Today, almost 30,000 local governments, as well as all not-for-profits and government organizations, are on board.

The Public Sector Accounting Board (PSAB) has certainly felt this dramatic shift in its stakeholder community over the past decade. As public entities moved from cash to accrual accounting (e.g., accounting for derivatives and government transfers were introduced), the business of standard-setting has become more complex.

Engaging with the public

Responsibilities have come with the tremendous growth in clientele. A standard-setter is obliged to reach out, consult, listen carefully, consider feedback and communicate effectively. PSAB makes every effort to do this, as required by due process.

A Public Sector Accounting Discussion Group has recently been created, attracting influential and broadly experienced volunteer members. It is open to the public and hears from stakeholders with unique or representative application considerations. The response has been very positive. Public attendance has been excellent, and many important stakeholder concerns have been given a venue for constructive and creative dialogue. We have covered relevant and timely topics such as accounting for retirement benefits, how to interpret the intricacies of government transfers and why it is important to define and articulate the public interest. 

In the public interest PSAB is mandated to act in the public interest. What does this mean and how do we know if we are meeting this key objective? Financial statements should be understandable and useful for assessing accountability and decision-making. Board members are professionals who understand their duty to the public. But understanding is not enough — PSAB needs to communicate its deliberations in plain language. A new statement, called a public interest statement, is being written for new standards. It’s still early but we are hoping it helps to better define our public interest considerations.

Why PSAB matters

One of the reasons why PSAB has a solid international reputation is because we were among the first to implement standards in such areas as consolidation, pension obligations, tangible capital assets and financial statement presentation. In terms of recognition, many might not be aware that the government of Canada has received unmodified audit opinions on its consolidated financial statements for almost 20 years. Very few national governments have achieved this level of discipline and excellence. The progressive efforts of PSAB would not be possible without the volunteers who sit on task forces and staff members who support the board and make our due process work. Without these capable and generous people we would not be in the enviable position we are today.

As PSAB chair, I have completed my first three-year term and have been reappointed for another two-year term. In the next few years, PSAB will continue its focus on public and stakeholder engagement. Public sector standards are being developed internationally by the International Public Sector Accounting Standards Board (IPSASB), where Canada plays a leadership role. As a new member of IPSASB, I will strive to ensure PSAB is more influential internationally.

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