Third Exposure Draft on Government Transfers to be Released

The Public Sector Accounting Board met on March 22 and 23.  One of the issues before the Board was the accounting treatment of government transfers.  A decision summary of the Board’s meeting is available on the PSAB website.  The following is the full text of the summary dealing with government transfers.


PSAB approved a third re-exposure draft (Re-ED 3) on Government Transfers.  It is expected to be issued for comment in late April or early May 2010.  Re-ED 3 is intended to seek input in particular on the question of how recipient governments should account for transfers.  

The only significant issue raised with the proposals in the second re-exposure draft (Re-ED 2) was the proposed approach to accounting for capital transfers received.  Determining when revenue should be recognized in operations in relation to transfers received has been an issue since the project started in 2002.  PSAB’s new proposals allow more scope for applying professional judgment in determining if a transfer results in revenue immediately or if it creates a liability such that the transfer is recognized in revenue in future periods.  The new proposals for recipients would base the accounting for all transfers received on the principles for operating transfers set out in Re-ED 2 in 2009.  

The Board believes that the new proposals will allow governments to reflect the substance of the full range of complex transfer arrangements they have with other levels of government in their financial statements.


It is our understanding that the third exposure draft on government transfers will be available in late April or early May, along with an analysis of issues raised in the previous drafts and how PSAB proposes to deal with them.  The comment deadline will be September 1, 2010.