Setting the foundation for public sector entities: PSAB conceptual framework

The chair of the Public Sector Accounting Conceptual Framework Task Force invites you to comment by August 31 on its draft conceptual framework.

The work to date has been on understanding what the framework should look like and providing explanations as to why it should look that way. The most difficult discussions have focused on the notion of what is to be measured in terms of financial performance. Public sector entities are different as they do not exist to generate and measure profit. So what should be their measurement objective?

The task force has set out its vision on this and other related issues in Consultation Paper 3, Conceptual Framework Fundamentals and the Reporting Model.

Your comments are requested by August 31, 2015. Your views are important and necessary before a blueprint is created. That blueprint will be issued as a Statement of Principles in 2016.

One compelling comment can make a difference. I look forward to your input and advice.


If the footings aren’t set right, then the entire house will be skewed. It is likely the house won’t look like it was meant to when the plans were developed. While the Public Sector Accounting Board (PSAB) is not building houses, the basic principle of getting the foundation right applies equally to accounting and financial reporting. That is the underlying purpose of a financial statement conceptual framework: getting the footings right.

A conceptual framework is a reflection of the purpose as to why financial statements are published. For example, if the purpose is to report on cash balances, then the entire framework needs to be built to meet that underlying objective.

Public sector entities have been granted certain powers, rights and responsibilities in order to fulfil their provision of public goods and services mandates. The general public and others provide the resources necessary, elected officials set out policies, and governments and their organizations fulfil and operationalize those policies.

To that end, the purpose of publishing financial statements in the public sector is to demonstrate accountability for the resources received and the uses to which those resources were deployed.

If some information is missing, even though it is communicated in an understandable fashion, it fails the test of demonstrating accountability. Alternatively, if all of the information is presented but it is not understandable, then it also fails to meet the accountability test. The challenge is to present complete information in a way that promotes understandability which enhances the accountability value of the financial statements.

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