Updated Checked by the Tax-Services.ca editorial team How we check
The PSAB, short for Public Sector Accounting Board, writes the accounting standards for Canadian governments. Its standards apply to governments, government components, government organizations and certain government partnerships that issue general purpose financial statements, unless PSAB directs otherwise. Run a private company and you can ignore it. Work for a public body, or sit on its board, and it’s the rulebook behind the numbers you sign off on.
Who must follow the PSAB standards?
The wording on the FRAS Canada site says public sector entities: governments, government components, government organizations and certain government partnerships. In practice that means the statements a province or the federal government publishes, plus those of the bodies they control. Whether a particular school board, hospital, agency or municipality falls inside depends on how it’s classified, and on any direction from PSAB or from its own government. I couldn’t confirm a full list of entity types from a source I could open, so don’t treat any list on the web as final, this one included. The CPA Canada Public Sector Accounting Handbook has an appendix that says which standards apply to which types of entity. Start there.
Private businesses follow a different book. Most use the standards for private enterprises in Part II of the CPA Canada Handbook, or IFRS. Those aren’t PSAB’s rules and you can’t swap one set for the other.
PSAB, PSAS and the handbook, sorted out
People mix these up, and it’s easy to see why. One is a board, one is the rules it writes, and one is the book that collects them.
| Term | What it is |
|---|---|
| PSAB | The Public Sector Accounting Board, the independent body that sets the standards |
| PSAS | Public Sector Accounting Standards, the rules themselves |
| PSA Handbook | The CPA Canada Public Sector Accounting Handbook, where the standards are published |
| FRAS Canada | The site where PSAB publishes information about its standards |
CPA Canada funds and staffs the standard-setting process, but PSAB and CPA Canada work at arm’s length from each other. PSAB doesn’t collect tax or audit anyone, and it isn’t a government department.
What do the standards say about a statement?
They set out how transactions should be recognized, measured, presented and disclosed in a public sector entity’s financial statements. That’s the whole job. They don’t say what a government should spend or how much tax it should charge. They only say how the results get reported, so a reader can compare one year, or one body, with another.
Say a town reports $12,000,000 of revenue and $11,400,000 of spending. The surplus is $600,000, or 5% of revenue, and the percentage calculator shows that in a second. The standards don’t decide whether 5% is good. They decide which items count as revenue and spending, and when.
Why should a taxpayer care?
Because a consistent way of reporting lets an ordinary person read their own municipality’s results. If you own a home, you pay property tax to a local government, so its statements are worth a glance, especially in the year your bill jumps and you want to know where the money went. You can see what your own bill looks like on the property tax calculator, and plan around it with the budget calculator.
Picture Priya in Saskatoon, who gets a property tax notice about 8% higher than last year. She doesn’t need to be an accountant to ask a sensible question: did the city’s spending go up, did revenue from somewhere else drop, or did a one-time project land this year? The annual statements are where those answers live.
Where do you find a public body’s statements?
Most governments post annual financial statements on their own websites, often under “finance” or “reports”. Open the PDF and read the notes first. The notes name the accounting standards used, and that’s the first thing to check. Then look for the auditor’s report near the front: it tells you whether an outside auditor was satisfied the statements are fairly presented. If a municipality or agency doesn’t publish them, you can usually ask its clerk or finance office for a copy. It’s your town, after all, and a few minutes with the numbers beats guessing at council meetings.
Mistakes and limits
The first mistake is assuming every non-profit follows PSAB. Some do, some don’t, and the appendix in the handbook sorts that out. The second is assuming PSAB sets tax rules, which it doesn’t. Tax comes from legislation. A third is treating a statement that follows the standards as proof of good management. It’s a consistent report, nothing more.
One more limit: I couldn’t confirm recent amendments to specific sections, so check the current handbook before you quote a section number.
The sources behind this page
The scope of the standards comes from the Financial Reporting and Assurance Standards Canada website and from CPA Canada‘s description of the board. The example figures are invented round numbers and aren’t any real government’s results. This site isn’t part of PSAB, CPA Canada or any government.
Frequently asked questions
What does PSAB stand for?
The Public Sector Accounting Board. It's an independent body that develops accounting standards for the public sector.
Who has to follow PSAB standards?
Public sector entities that issue general purpose financial statements: governments, government components, government organizations and certain partnerships, unless PSAB directs otherwise.
Does a private company follow PSAB?
No. Private companies use the private enterprise standards in Part II of the CPA Canada Handbook, or IFRS.
Is PSAB part of the government?
No. CPA Canada funds and staffs the process, and PSAB works at arm's length from it. It doesn't set tax rules.
How do I know if my organization is covered?
Check the appendix of the CPA Canada Public Sector Accounting Handbook, which says which standards apply to which types of entity. We couldn't confirm a complete list.
- How Canadian income tax works: brackets and credits
How federal and provincial Canadian income tax stack up, what marginal and average rates mean, and how credits and deductions change your bill