GFOA November 5, 2004 Accounting Standards for Municipalities
History of PSAAC, PSAAB, PSAB l l l 1980 senior government Comptrollers and Auditors General approached CICA PSAAC was formed 1989 PSAAC broadened its scope to include local governments 1990 PSAAC became PSAAB = task forces 1997 moved auditing to Assurance Standards Board = PSAB reports to Ac. SOC now
The Purpose of F/S l F/S should communicate reliable information, relevant to the needs of users, in a manner that maximizes their usefulness, that is clearly presented, understandable, timely and consistent.
What’s all the Fuss About? “The purpose of history is to explain the present – to say why the world around us is the way it is. History tells us what is important in our world and how it came to be. It tells us why things we value are things we should value. And it tells us what is to be ignored or discarded. That is true power – profound power. ” Michael Crichton, Timeline, Random House Publishing Group, 1999, page 480.
Why is PSAB Doing This? l Information is not complete l Similar transactions reported differently l Financial statement presentation fragmented
Why is PSAB Doing This? l Understand what you owe l Understand what you own l Understand your cost of services l Improved information l Performance reporting
But why a PSA Handbook? l Governments are different!!!! Ability to tax Capital assets not acquired for profit Net income not the measure of performance Budget is a key public policy document
What has PSAB Achieved? A common set of financial statements l A common set of financial indicators l An awareness of certain issues l But is it making a difference? l It is a mind-set change l
Where is PSAB now? l l l Full accrual without deferral of inventories and capital assets Definitions of financial assets and liabilities Consolidation of “controlled” entities Accounting policies related to specific items BUT no indicators of financial position, no definitions of accumulated or annual surplus
Compliance – three issues l l Remember PSAB 101? Capital expenditures and revenues not in Statement of Financial Activities Revenues – Expenditure = Change in Net Financial Assets or Liabilities Inventories of supplies and prepaid expenses (surprised? )
Where is PSAB going? l l l #1 focus relating to accounting standards in PSAB’s new strategic plan is local government!!!!! Capital asset accounting (stock & use) A new reporting model for local governments Segment reporting Performance reporting and a multidimensional “accountability” report
Where is PSAB Going? l l l #1 focus relating to acceptance in the new strategic plan is to get remaining local governments adopting the PSA Handbook Quebec remains a challenge but the east coast is moving We have about 2000 of the 3000 local governments covered in legislation (Ontario west)
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