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November 3, 2006
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PSAB WORK PROVIDES GLIMPSE INTO FUTURE The Public Sector Accounting Board of Canadais a critically important organization for anyone involved in public sector financial reporting in Canada. The PSAB establishes the financial accounting and reporting standards used by our federal, provincial, territorial and local governments. Its members are drawn from governments, public accounting, business and academe. All members serve as individuals, and not as representatives of their organizations. The PSAB's work program is a window into the current concerns and future directions of the public sector community. To provide CCAF members with an update on the PSAB's work, CCAF Executive Director Michael Eastman talked to two key people at the Board:
Michael Eastman: Terry, let's start with the big picture: At the highest level, what is the PSAB's aim? Terry Paton: The PSAB is an independent organization that serves the public interest through the standards we set and the guidance we provide for financial reporting in the Canadian public sector. We develop our standards and guidance through an extensive due process which includes consultation and communication with our stakeholders. Our hope is that public sector organizations will adopt what we develop in order to contribute to public understanding of and build confidence in public sector reporting. Michael Eastman: What are your priority projects at present? Terry Paton: At any given time we have a handful of projects underway to develop or enhance our standards and guidance. Of our five current projects, the one of most interest to CCAF members is our Performance Reporting project, on which we have worked closely with CCAF. This project has resulted in a new Statement of Recommended Practice that provides a general framework for public performance reporting. Our Board approved the statement this past June. Our other current projects deal with financial instruments; government transfers; the non-financial assets of local governments; and tax revenues. Detailed information about these projects is available on the PSAB's web site [www.psab-csp.ca]. We are also quite active at the international level. To that end, we provide technical support to Richard Neville, Canada's representative on the International Federation of Accountants' International Public Sector Accounting Standards Board. Michael Eastman: Tim, CCAF has enjoyed working with you and your colleague Ed Archer on the Performance Reporting project. What led the PSAB to take on this project? Tim Beauchamp: We recognized that measuring a government's financial position and resultsalone cannot provide a complete picture of a government's financial performance. Governments need to demonstrate to taxpayers – in language taxpayers can understand – not only for revenue raising, costs and spending, but also for whether those inputs and outputs resulted in improved services. In Canada, some governments have made significant progress in their public performance reporting, and others have only started. The objective of the Statement of Recommended Practice is to set out recommended practices for linkingboth financial and non-financial performance information in order to provide a comprehensive, balanced and transparent picture of a government's performance. Michael Eastman: What have been the key activities to date? Tim Beauchamp: Our starting point was the principles outlined in the CCAF's 2002 publication, Reporting Principles: Taking Public Performance Reporting to a New Level. In March 2005, the PSAB approved a draft Statement of Recommended Practice on performance reporting principles for comment. In September 2005, in partnership with CCAF, we held a one-day Performance Reporting Forum in Toronto with participants from across the country and internationally. Based on the inputwe received, we then produced an exposuredraft Statement of Recommended Practice, which was approved by the PSAB in January 2006. The final version was approved in June 2006. Michael Eastman: Terry, what is in the Statement of Recommended Practice on Public Performance Reporting? Terry Paton: Well, as the name suggests, it provides recommended practices for reporting performance information in a public performance report. It addresses a report's non-financial performance information and the linkage of financial and non-financial performance information, without being either prescriptive with respect to the report's structure or a template for a report. It also encourages the inclusion of information about governance practices and the conduct of business. We expect that the Statement will provide valuable guidance to governments in preparing their performance reports. Much remains to be done to enhance public performance reporting in Canada, and we are currently considering how we can best contribute to that ongoing process. Michael Eastman: Public performance reporting has been a long-standing priority of CCAF, and we've greatly appreciated the work of PSAB in moving performanc reporting forward. The PSAB's work has been a major catalyst in maintaining the momentum for improved performance reporting, and the existence of the completed Statement of Recommended Practice will serve as an incentive to governments to find ways to strengthen their reports. As you know, we have received funding from the Alfred P. Sloan Foundation to work with governments and others to produce new public performance reporting approaches and to stimulate increased use of performance reporting. I expect that the ongoing efforts of both our organizations will contribute to the strengthening of public performance reporting. Terry Paton: We view CCAF as a pioneer in the area of public performance reporting, and we're pleased that your Sloan Program will help governments find concrete ways to improve their reporting. At the PSAB, our goal is to improve public sector financial reporting in Canada through a consultative due process. Your initiative to work with governments and increase awareness of the benefits of performance reporting is welcomed. Michael Eastman: Congratulations to you both on your success in making the Statement of Recommended Practice on public performance reporting a reality. My colleagues and I at CCAF look forward to working with you again in the future.
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Terry Paton, FCA is the Chair of the Public Sector Accounting Board. Terry, who has served on the CICA Accounting Standards Board, is the Provincial Comptroller for the Province of Saskatchewan. He has a Bachelor of Commerce degree from the University of Saskatchewan.
Tim Beauchamp, CMA is the Director of Public Sector Accounting. He assigns and provides oversight to the PSAB's research, technical and administrative activities. Prior to joining the PSAB, he worked in accounting, budgeting and debt management at the Regions of Peel and Halton in Ontario.