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Assets, Contingent Assets and Contractual Rights

The Proposal
The Statement of Principles, Assets, Contingent Assets and Contractual Rights, proposes: additional guidance and disclosure requirements for assets; a definition of and disclosure requirements for contingent assets; and a definition of and disclosure requirements for contractual rights. Responses are requested by November 14, 2013. Why are standards on assets, contingent assets and contractual rights needed? The CICA Public Sector Accounting (PSA) Handbook provides limited guidance regarding the definition of assets. Providing additional guidance will assist preparers and auditors in determining whether an item meets the definition. Currently, the PSA Handbook does not provide a definition of contingent assets. Including a definition of contingent assets and disclosure requirements would enhance users understanding of what constitutes contingent assets, as well as when and what information would be disclosed. The PSA Handbook also does not provide a definition of contractual rights. Including a definition of contractual rights and disclosure requirements on expected future assets and related revenue is important as it offers information about resources that may become available to meet a public sector entitys obligations, or to finance future operations. Providing information on both contractual rights and contractual obligations allows for a balanced view of a public sector entitys future revenue and expenditures. What are the key principles proposed by PSAB? Information about the nature of assets that are not recognized should be disclosed in notes together with the reason(s) why. The existence of a contingent asset at the date of the financial statements should be disclosed in notes to the financial statements when the occurrence of the confirming future event is likely. Information about a public sector entity's contractual rights should be disclosed in notes or schedules to the financial statements and should include descriptions about their nature and extent and the timing.

Guidance on the definitions of and disclosure requirements for assets, contingent assets and contractual rights are provided.

The Public Sector Accounting Board (PSAB) was created to serve the public interest by establishing accounting standards and providing guidance for financial and other performance information reported by the public sector. Final standards are issued in the CICA Pubic Sector Accounting Handbook.

Plain Language, August 2013