Someone has issues with PSAB? GFOA November 5, 2005 Someone has issues with PSAB?

A Useful Starting Point “Problems are the price of progress. Don’t bring me anything but trouble. Good news weakens me.” Charles F. Kettering

Two new “Troubles” (for now) Funds and Reserves Accounting for Tangible Capital Assets A new Reporting Model Implementation Issues

Funds and Reserves Final Handbook Section ( PSG-4) approved March 2004 Reason for project confusion expressed by jurisdictions regarding presentation to clarify existing standards as to whether these funds can be displayed on the statement of financial position

Funds and Reserves Applies to federal, provincial and territorial governments Does not apply to funds and reserves that are externally restricted. External restrictions are addressed in RESTRICTED ASSETS AND REVENUES, Section PS 3100.

Funds and Reserves Funds and reserves Variety of forms Reflect a government's intentions to undertake certain future activities or to demonstrate compliance with legislation. If supported by assets - meets the definition of designated assets set out in RESTRICTED ASSETS AND REVENUES, paragraph PS 3100.04(c) - reporting only allowed in the notes and not on the statement of financial position.

Funds and Reserves Separate reporting of funds and reserves not supported by assets = inconsistent with FINANCIAL STATEMENT PRESENTATION — FEDERAL, PROVINCIAL & TERRITORIAL GOVERNMENTS, Section PS 1200, and RESTRICTED ASSETS AND REVENUES, Section PS 3100 Therefore for ANY funds or reserves – only note disclosure permitted

Local Government Reporting Model Background 1997 SOP and research studies Task force recruited Two meetings Assess the applicability of senior model

Local Government Reporting Model Approach Assess the applicability of - PS 1000 Concepts - PS 1100 Objectives - PS 1200 General Standards - PS 3150 Tangible Capital Assets

Local Government Reporting Model Issues Asset/liability view Budget comparison Funds balances = disclosure? Accumulated surplus/deficit = net assets Annual surplus/deficit = revenues – expenses Get 3150 out

Local Government Reporting Model Financial assets – liabilities = FRR Below FRR + non-financial assets (NFA) Net assets = FRR + NFA Other F/S explain changes in indicators

Statement of Financial Position 2002 2001 Financial Assets 10,912 10,348 Liabilities 18,262 19,171 Net Debt (7,350) (8,823) Non-Financial Assets 7,360 7,457 Net Assets 10 (1,366)

Annual Results 2002 Budget Actual 2001 Revenues 14,277 16,322 16,854 Expenses (Depreciation, Inventories, Prepaids) 14,249 14,946 14,303 Annual Surplus 28 1,376 2,551 Opening Net Assets (1,366) (3,917) Closing Net Assets (1,338) 10

Change in Net Debt 2002 Budget 2002 Actual 2001 Actual Annual Surplus 28 1,376 2,551 TCA Acquired (294) (250) Depreciation 226 230 Net Prepaid Asset (10) (20) Net Inventory 110 (222) Change in Net Debt (40) 1,473 2,376 Opening Balance (8,823) (11,209) Closing Balance (8,863) (7,350)

Local Government Reporting Model When SOP fall of 2004 AED/PED spring 2005 Final fall of 2005