PSAB Reporting
Model
Objectives of the Presentation
1. Review the objectives of the old
financial statements.
2. Review the objectives of the new
financial statements with the
recording of tangible capital assets.
3. Help you understand the differences
between the old & new F/S.
PSAB Reporting Model
■
The Public Sector Accounting Board (PSAB)
of the Canadian Institute of Chartered
Accountants (CICA) issues standards with
respect to accounting and financial
reporting for the public sector.
■
Years ago there was little or no standards
for government financial reporting and
governments all did it a differently.
PSAB Reporting Model
■
PSAB established to set standards for
governments based on the financial
reporting information required for public
sector.
■
Standards are established after extensive
research and consensus from all levels of
government and other stakeholders by
way of exposure drafts being issued
together with meetings throughout the
country.
PSAB Reporting Model
■ Municipal Act 185(1) – Must prepare
F/S’s for municipal governments
recommended by CICA
■ 185(2)- F/S’s must include
■ Debt limit of the municipality
■ Amount of debt of the municipality
PSAB Reporting Model
■Please note that
Saskatchewan municipalities
have been reporting in
accordance with PSAB
standards since 2002
PSAB Reporting Model (Old)
■ Conceptual model of old financial
statements has been
Revenue
Less: Expenditures
Equals: Excess of Revenues over
Expenditures (Change in Net Fin.
Assets)
PSAB Reporting Model (Old)
■ Statement of Financial Position
■ Financial Assets
■ Cash, taxes receivable etc.
■ Less: Liabilities
■ Accounts payable, loans etc.
■ = Net Financial Assets (Net Debt)
■ Non-Financial Assets
■ Gravel, culverts etc.
■ =Net Assets (Equity)
PSAB Reporting Model
■ Net Financial Assets (When
Financial assets exceed financial
liabilities)
■ This amount is a measure of the
‘Net Financial Assets’ the
government has available to
provide future services to
ratepayers.
PSAB Reporting Model
■ Net Debt (When financial
liabilities exceed financial assets)
■ Amount is a measure of the
future revenues required to pay
for past transactions.
PSAB Reporting Model Old)
■ Statement of Financial Position
■ Financial Assets - Cash, taxes receivable etc.
■ Less: Liabilities - Accounts payable, loans etc.
■ = Net Financial Assets (Net Debt)
■ Non-Financial Assets - Gravel, culverts etc.
■ =Net Assets (Equity)
PSAB Reporting Model
■ Non-Financial Assets – gravel,
culverts, rat poison etc.
■ These are normally consumed In the
normal course of operations
■ Are not for sale in the normal course of
operations
PSAB Reporting Model
■ Statement of Financial Position
■ Financial Assets - Cash, taxes receivable etc.
■ Less: Liabilities - Accounts payable, loans etc.
■ = Net Financial Assets (Net Debt)
■ Non-Financial Assets - Gravel, culverts etc.
■ =Net Assets (Equity)
PSAB Reporting Model(Old)
■ Net Assets (Equity)
■ Net economic resources
available to the municipality to
provide future services.
PSAB Reporting Model
■ Statement of Financial Position
■ Financial Assets - Cash, taxes receivable etc.
■ Less: Liabilities - Accounts payable, loans etc.
■ = Net Financial Assets (Net Debt)
■ Non-Financial Assets - Gravel, culverts etc.
■ =Net Assets (Equity)
But what’s missing?
PSAB Reporting Model
■ Tangible Capital Assets
■Graders
■Tractors
■Buildings
■Roads
■Bridges
Layne’s – Tangible Cap. Assets
Layne’s – Tangible Cap. Assets
PSAB Reporting Model
■ Tangible Capital Assets
■Are used continually in the supply
of goods or services to ratepayers.
■Have useful lives over one year
■ Are not for sale in the ordinary
course of business.
PSAB Reporting Model
■ Note - A tangible Capital Asset Is
Not?
■ Water
■ Rat Poison
■ Gravel
PSAB Reporting Model (New)
■ Statement of Financial Position
(New Statement)
■ Financial Assets - Cash, taxes receivable etc.
■ Less: Liabilities - Accounts payable, loans etc.
■ = Net Financial Assets (Net Debt)
■ Non-Financial Assets
■ Gravel, culverts etc
■Tangible Capital Assets
■ =Net Assets (Equity)
PSAB Reporting Model
■ New Financial Statement – uses
accounting principles applied by
businesses and farms for (almost) ever.
■ Consider that a farmer would always
include in his/her ownership equity
assets such as equipment, buildings
etc.
PSAB Reporting Model (New)
■Conceptual model of (New)
Income Statements is now:
Revenue
Less: Expenses
Equals: Excess of Revenues over
Expenses
Expenditures vs. Expenses
Expenditures (Old)
Expenses (New)
■ Are outlays of assets to
buy goods & services
■ Are the consumption of
assets to provide goods
& services
■ Recorded as they are
incurred
■ Amortization of TCA
■ Recorded when the
outlay is made
■ Capital expenditures
It’s really the difference between cash
expended and the cost of services delivered.
PSAB Reporting Model
■ 4 statements req’d by PSAB
1. Statement of Financial Position
2. Statement of Operations
3. Statement of Change in Financial
Assets (Net Debt)
4. Statement of Cash Flow
Statement of Financial Position
Old
New
■ Financial Assets
■ Financial Assets
■ Less: Liabilities
■ Less: Liabilities
■ = Net Financial Assets
■ = Net Financial Assets
■ Non-Financial Assets
■ Non-Financial Assets
■ Stock, supplies etc.
■ = Net Assets
■ Municipal equity
■ Un-appropriated equity
■ Appropriated equity
■ Stock, supplies etc.
■ Tangible capital assets
■ = Accumulated surplus
Statement of (Income)
Old – ‘Financial Activities’
■ Revenues
■ Less: Expenditures
■ = Change in NetFinancial Assets
■ +/- Change in NonFinancial Assets
■ = Change in Net Assets
■ +/- Change in long term
debt
■ = Surplus
New – ‘Operations’
■ Revenues
■ Less: Expenses
■ = Surplus before capital
contributions
■ + Capital
grants/contributions
■ = Surplus
Operations Stmt. (New)
Change in Net Financial Assets
Old – No such Stmt. but
similar to Stmt. Of Fin.
Activities
■ Revenue
■ Expenditures
■ Increase (decrease) in
Net Financial Assets
New for 2009
■ Surplus from Stmt. of
Operations
■ Add: TCA Amortization
and other supply expense
amounts
■ Less: Capital and supply
expenditures in year
■ = Increase (decrease) in
Net Financial Assets
■ + Net. Fin Assets – BOY
■ = Net Fin. Assets - EOY
Change in Fin. Assets
Old/New Reconciliation of
Income
■ ‘Change in Net Assets’ on
2008 F/S’s
449,108
■ Revised surplus
restated on 09 F/S’s
818,027
Diff. between Old & New
365,919
Diff. between capital
expenses/surplus (Stmt. 3)
365,919
Net Fin. Assets/Net Debt
PSAB Reporting model places equal emphasis on
the annual surplus/deficit & the overall financial
health of the muni.
A government’s net
financial assets (debt)
is a key indicator of a
Govt’s overall
financial health
Statement of Cash Flow
Old
■ Change in Net-Financial
Assets (Stmt. of Fin. Act.)
■ Change in non-cash fin.
assets and liabilities – ie
New
■ Surplus/Deficit (Stmt. Of
Operations)
■ Change in non-cash Fin.
Assets and liabilities – ie
■ Taxes receivable
■ Accounts payable
■ Amortization
■ Taxes receivable
■ Accounts payable
■ +/- Investments
■ +/- Financing
■ = Increase (Decrease)
in Cash
■
■
■
■
+/-Capital expenditures
+/- Investments
+/- Financing
= Increase/Dec in cash
Schedule 1 – Tax Revenues Etc.
Old - Schedule of
Revenues
■ Taxes
■ Fees and Charges
■ Maintenance &
Development Charges
■ Utilities
New – Schedule of Taxes
and Other
Unconditional Revenue
■ Taxes
■ Unconditional grants
■ Grants in Lieu of Taxes
Sch. 2 – Other Revenues by Functional
Category
Old – Schedule of Grants
■ Unconditional grants
■ Conditional grants
■ Grants in Lieu of Taxes
New – Schedule of
Conditional Grants and
other Revenue
■ Organized by Functional
Category (Gen. Gov’t.,
protection etc.)
■ Operating Conditional
Grants
■ Fees and charges
■ Capital Conditional
Grants
New Sch. 2 – Other Revenues by
Functional Category
Schedule 3 – Expenses by Functional
Category
_________
Old – Schedule of
Expenditures
■ Organized by functional
areas (Gen. Gov’t.,
Protective Services Etc.)
■ Regular expenditures
■ Capital expenditures
■ Supply expenditures
New – Schedule of
Expenses
■ Organized by functional
areas (Gen. Gov’t.,
Protective Services Etc.
■ Regular expenses
■ Amortization of TCA’s
■ Supply expenses
Schedules 4 & 5 – Revenues &
Expenses grouped by Function
■ Revenues (by function) -
xxx,xxx
■ Expenses (by function) -
yyy,yyy
■ Surplus(Deficit) –Function -
zzz,zzz
■ Tax & other revenues -
aaa,aaa
■ Surplus (Deficit) -
bbb,bbb
Operations by Function
Schedules 6 & 7 – Tangible Capital
Assets by Object & Function
■ Schedule 6 – TCA’s organized by:
■
Land, Buildings, Equipment,
Infrastructure Etc.
■ Schedule 7 – TCA’s organized by:
■
Gen. Gov’t, Protective services,
Transportation
Capital Assets by Object
Capital Assets by Function
Schedule 8 - Accumulated Surplus
Old – Schedule of
Reserves
■ Reserves listed
■ Prepared in form of
continuity schedule with
increases & decreases to
opening balance
amounts to arrive at the
balance end of year
New – Sch. Of
Accumulated Surplus
■ Reserves listed
■ Net Investment in
Tangible Capital Assets
listed
■ Prepared in form of
continuity schedule with
increases & decreases to
opening balance
amounts to arrive at the
balance end of year
Management Responsibility.
Report
Old
■ No such report
New
■ PS Recommendation –
1200.005
■ The Fin. Stmts. of a Gov’t.
should be clearly
identified and should
include or be
accompanied by an
acknowledgement of the
government’s
responsibility for their
preparation.
Initial Recording
More work for Administrators and
Auditors in this year of change.
Work process for both Administrators
and Auditors should be normal in
future years.
Auditor’s Report – Clear
Opinion
■ Same as last year.
■ Last paragraph indicates Fin.
Stmts. present fairly in
accordance with generally
accepted accounting principles
(GAAP).
Auditor’s Report – Adverse
Opinion
■ Extra paragraph added
indicating that tangible capital
assets and amortization have not
been recorded as required by
GAAP.
■ Last paragraph says F/S’s are not
accordance with GAAP.
That’s All Folks
Questions