Alert: Financial Instruments Project Phase III - Presentation Narrow-Scope Amendments

Alert: Financial Instruments Project Phase III - Presentation Narrow-Scope Amendments

At its December 9, 2020 meeting, the Public Sector Accounting Board (“PSAB”) approved amendments to Section PS 1201, Financial Statement Presentation to clarify the presentation of derivatives (the “Amendments”). 

The Amendments relate to Phase III of the PSAB’s Financial Instruments Narrow-Scope Amendments project intended to develop a series of amendments to address specific stakeholder concerns raised related to:

  • the presentation of the fair value of derivatives;
  • the presentation of certain foreign exchange gains/losses and changes in the fair value of associated derivatives; and
  • the accounting for rate-setting transactions.

Financial Instruments, Section PS 3450, requires that derivatives be measured at fair value, with changes in fair value recognized in the statement of remeasurement gains and losses until the financial instrument is derecognized. Section PS 1201 requires the statement of changes in net debt to separately distinguish between changes in the fair value resulting from derivatives, portfolio investments and financial instruments which had been designated to the fair value category. Prior to the Amendments, however, PS 1201 only instructed for the statement of changes in net debt to separately present changes resulting from remeasurement gains and losses. The Amendments clarify that the remeasurement impact of derivatives may be presented separately from other remeasurement gains and losses on the statement of changes in net debt.

The Amendments also include other minor presentation clarifications:

  • Entities are permitted to include a footnote reference on the net debt indicator on the statement of financial position that refers readers to the detailed breakdown presented in the statement of change in net debt; and
  • Allowance for a new subtotal on the statement of change in net debt to present the change in net debt excluding the impact remeasurements.

The Amendments apply to fiscal years beginning on or after April 1, 2022 except for those government organizations that applied the CPA Canada Handbook – Accounting prior to adopting the PSA Handbook. Earlier adoption is permitted.

Full details on the PSAB’s projects can be found here.


This communication contains a general overview of the topic and is current as of December 9, 2020. The application of the principles addressed will depend upon the particular facts and circumstances of each individual case. Accordingly, this publication is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional who can address any variance that may be required to reflect your circumstances. Please contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2020. All rights reserved.

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Michelle Balmer

Michelle Balmer CPA, CA

Vice President, Assurance

Michelle Balmer, CPA, CA, is a Senior Assurance Services Partner with MNP. With 14 years of experience in public practice, Michelle helps a broad range of public and privately held companies in a variety of industries. She also works on special projects, including costing studies, benchmarking and best-practice studies, operational analyses, litigation support and due diligence.

As a key member of MNP's Assurance team, Michelle has played an instrumental role in assurance policy development, implementing accounting and assurance standards firm-wide and educating assurance practitioners regarding methodologies and new pronouncements. She also provides technical advice and consultation on accounting and assurance issues, as well as on rules of professional conduct issues, to all MNP practitioners.

Michelle was certified a Chartered Accountant (CA) after obtaining a Bachelor of Commerce degree from the University of Alberta. She has been actively involved with the Institute of Chartered Accountants of Alberta, including the Chartered Accountants School of Business, in an instructional and marketing capacity. An avid volunteer, she has assisted numerous groups such as the Easter Seals of Alberta, Paralympic Sports Association and Junior Achievement of Northern Alberta.