Proposal to Modify the Canadian Public Sector GAAP Hierarchy

On May 5, 2020, PSAB voted to approve “Option 2 – Adapt IPSAS principles when developing future standards” as its future international strategy. This decision resulted from extensive consultation with Canadian stakeholders and careful consideration of the international strategy decision-making criteria.

Under Option 2, PSAB will continue to develop Public Sector Accounting Standards (PSAS), but future standards would be based on the principles in International Public Sector Accounting Standards (IPSAS). This means that if a project is undertaken and an IPSAS already exists, the principles of that IPSAS will be used as a base for developing the corresponding Canadian PSAS. The Board has established Criteria for Modifying and Reviewing IPSAS Principles that will be a framework and provide guidance when departures from IPSAS principles in the development of PSAS are permitted.

Our Exposure Draft, Proposal to Modify the Canadian Public Sector GAAP Hierarchy is out for comment until February 15, 2021. It proposes to modify the GAAP hierarchy set out in GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, Section PS 1150, to position IPSAS as the go-to accounting framework in situations where PSAB has not issued a specific standard. This would begin April 1, 2021.

A change in the GAAP hierarchy will affect where stakeholders seek accounting guidance when PSAS is silent. It is important for PSAB to understand and consider stakeholder views to any and all changes to the GAAP hierarchy.