The Exposure Draft proposed narrow-scope amendments to elevate the level of generally accepted accounting principles (GAAP) designated for four CPA Canada Public Sector Accounting (PSA) Handbook appendices. PSAB concluded the proposed amendments could result in a change in practice for some public sector entities in their application of the four standards affected. For other entities, there would be no change in practice as they may already give the same weight to the appendices they give to the main body of the related standards.
A further narrow-scope amendment was proposed to remove an outdated cross-reference in a Public Sector Accounting Guideline. This amendment could prompt entities to amend their accounting policy for operating leases.
Issuing the reclassification and renumbering changes in the PSA Handbook set out in Exposure Draft Appendix A was deferred pending public input on the proposed changes to the GAAP level designation of four appendices presented in this narrow-scope amendment Exposure Draft. The changes outlined in Appendix A will be issued at the same time as the final PSA Handbook amendments arising from this Exposure Draft.
Immediate effects of the proposals
Entities adopting Section PS 3400, for fiscal years beginning on or after April 1, 2023, should consider Appendix A – already identified as integral to the standard – as comprising level (i) GAAP and apply the standard accordingly.
Note that any glossary accompanying a standard is considered integral to that standard. It is not an appendix. Its location is to improve the flow of the standard; definitions would otherwise be included in the main body of the standard. The definitions included in a glossary are necessary to apply the related standard, as are those in the main body of a standard. PSAB does not anticipate any change in practice from clearly identifying glossaries in the PSA Handbook as integral to the related standard or from clarifying their designation as level (i) GAAP.
Future effects of the proposals
Should the change in the GAAP level designation of an appendix create a change in practice for a public sector entity, that change in practice would be effective for fiscal years beginning on or after April 1, 2026. Entities would have to evaluate their accounting policies in relation to the use of the four appendices for which the GAAP level has been elevated to determine if the greater weight under GAAP given to the appendices would change how they apply the four standards.
Entities may have to reconsider their accounting policy for operating leases, replacing any policy that is in accordance with former Section 3065 of Part V of the Handbook with an entity-developed accounting policy using the definition and guidance in Section PS 1150 and the related guidance in Section PS 2120, Accounting Changes.