Clarification of transitional provisions for the application of FINANCIAL INSTRUMENTS, Section PS 3450

Last August, the Public Sector Accounting Board (PSAB) amended the transitional provisions for the application of FINANCIAL INSTRUMENTS, Section PS 3450, as follows:

“This Section applies to fiscal years beginning on or after April 1, 2015. For those government organizations that applied the CPA Canada Handbook – Accounting prior to their adoption of the CPA Canada Public Sector Accounting Handbook, this Section applies to fiscal years beginning on or after April 1, 2012. Governments and government organizations would also adopt FOREIGN CURRENCY TRANSLATION, Section PS 2601, at the same time. Earlier adoption is permitted. The application of this Section for governments will be reviewed by December 31, 2013.” [emphasis added]

Some stakeholders have wondered about the interpretation of this clarification and the entities involved. According to information obtained, only organizations that used the CPA Canada Handbook – Accounting for fiscal years ended on or before December 31, 2012, must start applying Section PS 3450 now – for fiscal years beginning on or after April 1, 2012. In all other situations, such as where an entity was already using the CPA Canada Public Sector Accounting Handbook for its financial statements ended October 31, 2012, the adoption of PS 3450 will be required for fiscal years beginning on November 1, 2015, unless it is adopted earlier.
PSAB’s objective was that if an organization was already applying the requirements related to financial instruments of the CPA Canada Handbook – Accounting for a fiscal year ended on or before December 31, 2012, it must not stop using the provisions related to financial instruments and then start using them again during the following fiscal year. Section PS 3450 will thus apply to fiscal years beginning on or after April 1, 2012, in those cases only.

Technical Working Group on Public Sector Accounting