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PSAB

Terms of Reference

(Revised and approved by the Accounting Standards Oversight Council on February 27, 2024)

Introduction

  1. These Terms of Reference establish the Public Sector Accounting Board’s (PSAB) purpose and authority, setting out its vision, mission, objectives, roles, and responsibilities. The Terms of Reference lay the foundation for PSAB’s other governing documents:
    1. the Due Process Manual, which describes the review and consultation activities PSAB will fulfill in developing and adopting financial reporting standards and other guidance; and
    2. the Statement of Operating Procedures, which clarifies the operational processes PSAB applies to fulfill its responsibilities.

    See Appendix A in the Due Process Manual for a glossary of key terms. 

Vision

  1. PSAB’s vision is to be an internationally respected standard setter that helps Canadian public sector entities report relevant and high-quality information to the public.

Mission

  1. PSAB’s mission is to serve the public interest by developing accounting standards and other related reporting guidance for the Canadian public sector that support accountability, transparency, informed decision making, and stewardship. 

Objectives

  1. PSAB has the following objectives:
    1. To establish financial reporting standards and other guidance that improve the quality of information reported by Canadian public sector entities, with due consideration for the costs and the benefits to the preparers and users of financial reports of different categories of reporting entities, and changes in the economic environment.
    2. To facilitate the resource allocation process in the public sector through the provision of improved financial information.
    3. To participate with other standard setters in the development of high-quality internationally accepted public sector financial reporting standards.
    4. To support the implementation of financial reporting standards and the resolution of emerging application issues.
  2. In meeting its objectives, PSAB is committed to the following:
    1. Meeting the financial reporting needs of various categories of public sector entities.
    2. Providing high-quality standards that promote confidence in reported financial information.
    3. Respecting and encouraging input from all interested and affected parties. This will include ensuring the respectful inclusion and participation of Indigenous Peoples in public sector accounting standard-setting by developing consultative processes with Indigenous Peoples that are consistent with their self-determination objectives and free, prior, and informed consent.
    4. Bringing objectivity to the consideration of issues.
    5. Respecting the use of professional judgment.
    6. Responding to interested and affected parties’ needs in a timely manner.
    7. Seeking ongoing improvement to the standard-setting process.
    8. Acting as thought leaders on financial reporting issues.
    9. Supporting the improvement of reporting beyond financial statements such as that described in the Statements of Recommended Practice.

Responsibilities

  1. PSAB has the following responsibilities:
    1. To develop or adopt financial reporting standards and other guidance on its own authority, when satisfied as to need, usefulness, and practicality, following due process. Due process requires a review of financial reporting concepts and practice along with a process of consultation with affected parties and debate. This includes contributing to and working to influence the development of International Public Sector Accounting Standards developed by the International Public Sector Accounting Standards Board.
    2. To implement effective working processes for all projects and activities. PSAB may commission task forces, advisory groups, or other groups (“committees”), as appropriate, to aid in the development of financial reporting standards, guidance, or other material.
    3. To undertake research and encourage research by others in support of the development of financial reporting standards and other guidance.
    4. To be accountable to interested and affected parties by responding to them in a timely manner and facilitating their participation and input into the development of standards.
    5. To continue relationships with other Canadian and national standard setters by discussing issues of mutual interest, including issues regarding the development of public sector financial reporting standards and supporting the improvement of reporting quality beyond traditional financial statements.
    6. To account to the Accounting Standards Oversight Council or its successor (the Oversight Council) for the effective and efficient fulfillment of its mission and objectives. PSAB submits plans and performance reports annually to the Oversight Council to demonstrate how it is meeting its responsibilities. PSAB gives due consideration to the input from, and recommendations of, the Oversight Council in carrying out its work.
    7. To advise the Oversight Council as to the human and financial resources needed to accomplish PSAB's objectives.

Membership

  1. The membership of PSAB is, except for temporary vacancies, as follows:
    1. A compensated Chair, appointed on either a full-time or part-time basis.
    2. Between 11 and 13 volunteer members. A Vice-Chair may be appointed from among the volunteer members to assist in carrying out the role of the Chair.
  2. The following have a right to attend and participate in PSAB meetings and receive any meeting materials:
    1. The Vice-President, Standards of the Chartered Professional Accountants of Canada (CPA Canada).
    2. The Director, Public Sector Accounting Standards.

  3. PSAB's members are appointed by the Oversight Council. Members of PSAB are selected and their terms of office set by the Oversight Council to ensure that PSAB has an appropriate balance of competencies and experiences to meet its objectives.

  4. The Chair plays a crucial role in the standard-setting process. The Chair takes the lead role in ensuring the performance of PSAB’s responsibilities detailed in paragraph 4. This includes the following:
    1. Presiding over meetings of PSAB and communicating with members between meetings, as necessary, concerning PSAB's activities.
    2. Attending meetings of the Oversight Council and its committees.
    3. Serving as one of Canada’s representatives at meetings relating to International Public Sector Accounting Standards.
    4. Acting as Canada's leading spokesperson and contact on public sector financial reporting standards matters for both the media and the public.
    5. Representing PSAB in meetings of other parties involved or interested in PSAB’s activities.
    6. Making presentations nationally and internationally on public sector financial reporting matters.
    The Chair may delegate these responsibilities to the Vice-Chair, if one has been appointed, or to the Director, Public Sector Accounting Standards, except that the responsibilities in sub-paragraph (d) may be delegated only with the agreement of the Chair of the Oversight Council.

  5. The role of the Vice-Chair, if one has been appointed, is to act on behalf of the Chair in a temporary capacity, at the request of the Chair or in his or her absence, in:
    1. presiding over meetings of PSAB;
    2. attending meetings of the Oversight Council or any of its committees, with the agreement of the Chair of the Oversight Council.
    The Vice-Chair also undertakes such other responsibilities as the Chair may delegate to them from time to time in accordance with paragraph 8. An appointee to the position of Vice-Chair is not thereby designated as a successor to the current Chair.

  6. Any member of PSAB who either:
    1. fails to attend more than two meetings of PSAB in succession; or
    2. fails to attend, in any 12-month period, at least 50 per cent of all meetings of PSAB
    in the absence of extenuating circumstances, will cease to be a member of PSAB as of the end of the meeting at which they were in default. The Chair makes a recommendation to the Nominating Committee of the Oversight Council concerning any extenuating circumstances and the Nominating Committee decides whether the defaulting member may continue as a member. A member is deemed to be absent from a meeting of PSAB unless they are in attendance for substantially all of it.

Reporting to the Oversight Council

  1. PSAB reports annually to the Oversight Council and the public on its activities, including its risk management process.

  2. Each year, PSAB presents its proposed agenda and project priorities to the Oversight Council for comments and considers the views and comments of the Oversight Council in determining its priorities and agenda. If, for any reason, PSAB does not wish to incorporate specific views and comments of the Oversight Council into its priorities and agenda, PSAB advises the Oversight Council as to its reasons and provides the Oversight Council with an opportunity to respond. PSAB discusses with the Oversight Council any changes to the annual plan and advises the Oversight Council of significant decisions made in carrying out the plan.

  3. PSAB is accountable to the Oversight Council to demonstrate that it has used the resources allocated to it effectively and efficiently and that it has assessed how well it is meeting its mission.

  4. PSAB submits such reports as may be required by the Oversight Council from time to time in addition to those otherwise specified in these Terms of Reference. 

Operations

  1. PSAB develops a statement setting out the principal operating procedures it follows in fulfilling its responsibilities.

  2. PSAB will create such committees, including committees of its own members, as it deems necessary in carrying out its responsibilities.

Consultation and Communication

  1. PSAB's Standard-setting Due Process Manual sets out its due process for the development and adoption of financial reporting standards and other guidance, including communication and consultation with all interested and affected parties.

  2. PSAB disseminates information about standard-setting activities, together with invitations to the public to provide input on those activities.

  3. PSAB supports the development of examples and other guidance to assist interested and affected parties in understanding and applying financial reporting standards consistently.

Periodic Review

  1. PSAB reviews its Terms of Reference, Statement of Operating Procedures, and Standard-setting Due Process Manual at least once every three years to ensure they continue to be fit for purpose. The Oversight Council’s authority and responsibilities are set out in its Terms of Reference.