All Related It was a logical progression for PSAB to consider whether standards were required for Asset Retirement Obligations (“AROs”). An asset retirement obligation is a legal obligation associated with the retirement of a tangible capital asset. This standard is intended to provide guidance, which does not currently exist in the Handbook, on accounting for Asset Retirement Obligations (AROs). The PSA Handbook is the primary authoritative source of public sector GAAP. The standard must be applied by all public sector entities who prepare their financial statements under PSAB, including all Canadian municipalities. Please see, This site uses cookies to provide you with a more responsive and personalised service. That is, standards that apply to assets that are in productive use. It is generally applicable when a company is responsible for removing equipment or cleaning up hazardous materials at some agreed-upon future date. PS 3280 Asset Retirement Obligations. Asset Retirement Obligation is a legal and accounting requirement, in which a company needs to make provisions for the retirement of a tangible long-lived asset in order to bring the asset back to its original condition after the business is done using the asset. An asset retirement obligation (ARO) is a legal obligation that is associated with the retirement of a tangible, long-term asset. Is your municipality ready to meet the requirements of this new standard for fiscal years beginning on or after April 1, 2021? PSAB Asset Retirement Obligations (ARO) Standard - Resources PS 3280 is a new accounting standard covering asset retirement obligations (ARO) that was approved by PSAB in March 2018. The Public Sector Accounting Board (PSAB) asset retirement obligation section will have a significant impact on the public sector. By using this site you agree to our use of cookies. Early adoption is permitted. Release of the Asset Retirement Obligation section and the new Revenues section. Generally-accepted accounting standards (GAAP) require the company to include the present value of the expected (face value of) future decommissioning cost in the total acquisition cost of the asset. component of net income in the PSAB handbook: on consolidation, other comprehensive income is reported as a component of the accumulated surplus/deficit; and c) the guidance in the CICA HB 4400 series relating to asset retirement obligations and interim financial statements has not been incorporated into the PS 4200 series. PSAB at a Glance Topic Standards Included in Topic Page ... Retirement Benefits, Post-employment Benefits, ... Asset Retirement Obligations Section PS 3280 40 Contingent Liabilities Section PS 3300 42 Loan Guarantees Section PS 3310 43 Contingent Assets Section PS … The main features of the Section are: An asset retirement obligation is a legal obligation associated with the retirement of a tangible capital asset. Obtaining early understanding of this standard’s effects is important, as the impact on some public sector entities may be significant. Learn about the new Asset Retirement Obligation standard PS 3280. Link copied Overview. Asset retirement costs associated with an asset no longer in productive use are expensed. FASB Statement no. BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. Section PS 3280, Asset Retirement Obligations, was issued by the Public Sector Accounting Standards Board (PSAB or the “Board”) August 2018. The new standard requires all governments in Canada to identify and account for any assets that have an asset retirement obligation (ARO). We've created the BDO Library as a "go to" source for informative and thought provoking knowledge resources. BDO guides consumer businesses as they navigate the complexities of a rapidly evolving marketplace. This Section establishes standards on how to account for and report a liability for asset retirement obligations. ARO is a legal obligation associated with the retirement of a tangible capital asset. Earlier adoption is permitted. Can be legislated, contractual or created by promissory estoppel. editorial changes have been made to other standards; and. PS 3400 Revenue (New) November 2018 Effective for fiscal years beginning on or after April 1, 2022. In Brief and Podcast – Asset Retirement Obligations, Section PS 3280. On August 19, 2014, the PSAB issued for public comment a Statement of Principles (SOP) entitled Retirement Obligations that addresses the accounting and reporting of asset retirement obligations. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited ("DTTL"), its global network of member firms and their related entities. Entities at the same time must recognize an offsetting asset retirement cost by increasing the carrying amount of the related long-lived asset. Our partner-led practice group provides an integrated suite of services to help our Indigenous clients. Fair value of a contributed tangible capital asset may be estimated using market or appraisal values. AcSOC. At its meeting on December 15-16, 2016, the PSAB approved an Exposure Draft, “Asset Retirement Obligations.” The document is expected to be issued in March 2017. 143, which clarifies the term conditional asset retirement obligation used in FAS 143. novartis.org Im März 2005 veröffentlichte das FASB This new section is the only ARO standard to explicitly define buildings with asbestos as in scope. The main features of the new Section are: This Section applies to fiscal years beginning on or after April 1, 2021. Practical advice to help organizations succeed in a highly competitive environment. FIN 47 clarifies that the term conditional asset retirement obligation as used in SFAS Number 143, Accounting for Asset Retirement Obligations, refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of [...] settlement are conditional on a future event [...] that may or may not be within the control of the entity. accounting for asset retirement obligations other relevant reporting issues public sector accounting board (PSAB) standard-setting activities and the potential impact on financial reporting by First Nations The Pennsylvania State Association of Boroughs (PSAB) is a statewide, non-partisan, non-profit organization dedicated to serving 956 borough governments. Earlier adoption is permitted. On December 7, the Governmental Accounting Standards Board (GASB) issued guidance for state and local governments addressing liabilities known as “asset retirement obligations.” An asset retirement obligation (ARO) is a legally enforceable liability associated with the retirement of a tangible capital asset. issued August 2018 establishes standards for recognition, measurement, presentation and disclosure of legal obligations associated with the retirement of tangible capital assets and is effective July 1, 2021. Michael A. Puskaric, Director. Asset Retirement Obligations – Basis for Conclusions and new standard. Subsequent measurement of the liability can result in either a change in the carrying amount of the related tangible capital asset (or a component thereof), or an expense, depending on the nature of the remeasurement and whether the asset remains in productive use. Measurement of a liability for an asset retirement obligation should result in the best estimate of the amount required to retire a tangible capital asset (or a component thereof) at the financial statement date. In January 2018, the PSAB staff updated this project to indicate that the PSAB expects to issue the final standard in Q3/2018. • Expected contamination related to a TCA controlled by the entity in productive or no … Publications Financial Reporting Developments. X PSAB _ Other Issue Description In March 2017, the Public Sector Accounting Standards Board released a new exposure draft entitled Asset Retirement Obligations, Proposed Section PS 3280. Given this standard is closely tied to Section PS 3280, Asset Retirement Obligations, the Board decided not to carry out a post-implementation review of Section PS 3260 at this time. (PSAB) – Update. This standard is intended to provide guidance, which does not currently exist in the Handbook, on accounting for Asset Retirement Obligations (AROs). As of April 1, 2021, the new Public Sector Accounting Standard, PS 3280 goes into effect. 143, Accounting for Asset Retirement Obligations— which was seven years in the making—shifts to a balance-sheet approach, requiring businesses to recognize a liability for a retirement obligation when they incur it—even if that is far in advance of the asset’s planned retirement. • Asset retirement obligations not related to contamination associated with entity’s Tangible Capital Asset (TCA) in productive or no longer in productive use (e.g. dismantling of a TCA). Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox. asset, other than land, is finite, and is normally the shortest of the physical, technological, commercial and legal life. o Expense asset retirement obligations associated with unrecognized tangible capital assets. Our professionals combine hands-on farm experience with strategic and financial insight. BDO is the brand name for the BDO network and for each of the BDO Member Firms. Exposure Draft – Asset Retirement Obligations, Proposed Section PS 3280. Asset Retirement Obligations (ARO): A Practical Approach to Section PS 3280 July 01, 2020 Section PS 3280, Asset Retirement Obligations, was issued by the Public Sector Accounting Standards Board (PSAB or the “Board”) August 2018. Navigating the Challenges in Professional Services. • Contamination needs to exist. At its meeting on March 21-22, 2019, the PSAB discussed the need for a post-implementation review of Section PS 3260, Liability for Contaminated Sites. Please read our. PS 3280 Asset Retirement Obligations (cont’d) Determining which standard should be applied Section PS 3280 Section PS 3260 Cause for the retirement or remediation obligation • Acquisition, construction, development, normal use. - The Public Sector Accounting Board (PSAB) asset retirement obligation section will have a significant impact on the public sector. * The project will address the reporting of legal obligations associated with the retirement of long-lived tangible capital assets currently in productive use. Disclaimer. The PSADG covered a number of topics earlier in June, including a Consultation Paper and two Statements of Principles issued for comment by the PSAB, and more. In November 2017, the PSAB staff updated this project to indicate that the PSAB expects to issue the final standard in Q2/2018. In December 2015, the PSAB staff updated this project to advise that the Exposure Draft would be issued in Q3/2016. It was a logical progression for PSAB to consider whether standards were required for Asset Retirement Obligations (“AROs”). The standard must be applied by all public sector entities who prepare their financial statements under PSAB, including all Canadian municipalities. Asset Retirement Obligation is a legal and accounting requirement, in which a company needs to make provisions for the retirement of a tangible long-lived asset in order to bring the asset back to its original condition after the business is done using the asset. Asset retirement obligations essentially must be accounted for as follows. PS3280 Asset Retirement Obligations In August 2018, PSAB issued the new standard PS3280 on asset retirement obligations. Asset retirement obligation accounting often applies to companies that create physical infrastructure which must be dismantled before a land lease … It is effective for fiscal years beginning on or after April 1, 2022 which means March 31, 2023 and December 31, 2023 will be the first year ends impacted. Discover why Brazil’s tax law’s alignment with OECD guidelines is a matter of when not if. This year’s. Examples of asset retirement obligations Items that would not be asset retirement obligations Infrastructure assets, such as roads and bridges, are usually never removed from service and therefore would not typically have asset retirement obligations associated with them. Examples of what’s in: • Removal of Asbestos • Retirement of x-ray machines • Boilers • Leased site restoration • Landfill closure / post-closure Asset Retirement Obligations In March 2018, the Board issued new Section PS 3280 on asset retirement obligations. DTTL (also referred to as "Deloitte Global") and each of its member firms are legally separate and independent entities. Public Sector Accounting Board Exposure Draft: Asset Retirement Obligations, Proposed Section PS 3280. Asset retirement obligations. Message from the PSAB Chair – January 2017. This new section is the only ARO standard to explicitly define buildings with asbestos as in scope. Release of the Asset Retirement Obligation section and the new Revenues section. Helping real estate and construction companies thrive in every economic environment. PSAB Asset Retirement Obligations (ARO) Standard - Resources PS 3280 is a new accounting standard covering asset retirement obligations (ARO) that was approved by PSAB in March 2018. Public sector finance perspectives How to raise your game for disruptive changes ahead. contributed asset is considered equal to its fair value at the date of contribution. In July 2016, the staff updated this project to indicate that the PSAB now expects to issue an Exposure Draft in Q1/2017. j)Asset Retirement Obligations PS3280 (for fiscal years beginning on or after April 1, 2021 – see Note 2 w)) (Prior to implementation of PS3280, refer to GAAP Hierarchy in PS 1150 for other sources of GAAP, which may include international financial reporting standards or Canadian accounting standards for private enterprise.) The entire disclosure for an asset retirement obligation and the associated long-lived asset. PSAB Alert Page 1 application of this material. Jan 27, 2017. About PSAB. This new Section establishes standards on how to account for and report a liability for asset retirement obligations. The PSA Handbook is the primary authoritative source ... • Asset Retirement Obligations, Section PS 3280 April 1, 2022. A present value technique is often the best method with which to estimate the liability. It's official - PSAB approved the final Handbook Section PS 3280, Asset Retirement Obligations late March 2018. DTTL does not provide services to clients. These words serve as exceptions. Asset retirement costs associated with a tangible capital asset controlled by the entity increase the carrying amount of the related tangible capital asset (or a component thereof) and are expensed in a rational and systematic manner. • Unexpected event, improper use. PSAB approved an Asset Retirement Obligations project. The opinions stated in the presentation are those of the author and do not necessarily reflect the views of PSAB. SAP Asset Retirement Obligation Management is an application that allows companies to manage their asset retirement obligations (AROs) from an accounting point of view. PS 3280 Asset Retirement Obligations (cont’d) Determining which standard should be applied Section PS 3280 Section PS 3260 Cause for the retirement or remediation obligation • Acquisition, construction, development, normal use. PS3280 Asset Retirement Obligations In August 2018, PSAB issued the new standard PS3280 on asset retirement obligations. In August 2018, the Public Sector Accounting Board (PSAB) issued Section PS 3280 Asset Retirement Obligations. Recognition and Measurement The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Read our status update o…, Learn more about manufacturers’ views and concerns from the latest BDO-sponsored CME Management Issues survey:…, Acting as an exclusive financial advisor to @, Financial benchmarking can help identify areas to improve for your farm. Back to search. X PSAB _ Other Issue Description In March 2017, the Public Sector Accounting Standards Board released a new exposure draft entitled Asset Retirement Obligations, Proposed Section PS 3280. The primary objective of a Basis for Conclusions document is to set out how the Public Sector Accounting Board (PSAB) reached its conclusions. 17 Aug 2020 PDF. Later winter 2017, PSAB will issue an exposure draft for a new accounting standard that addresses the reporting of legal obligations associated with the retirement of long-lived tangible capital assets currently in productive use. Next Session: May 19th, 2020 at 1 PM ET. The new standard requires all governments in Canada to identify and account for any assets that have an asset retirement obligation (ARO). New changes impacting public sector accounting and finance are underway and will significantly affect public sector organizations in the years to come. Mar 09, 2017. PSAB Alert: Release of PS 3280 Asset Retirement Obligations This communication contains a general overview of the topic and is current as of June 25, 2020. As well, it sets out significant matters arising from PSAB requested further analysis and examples from the task force. The new Section PS 3280 applies to fiscal years beginning on or after April 1, 2021. Is your municipality ready to meet the requirements of this new standard for fiscal years beginning on or after April 1, 2021? That is, standards that apply to assets that are in productive use. As a consequence of the issuance of Section PS 3280: Section PS 3270 will remain in effect until the adoption of Section PS 3280 for fiscal periods beginning on or after April 1, 2021, unless a public sector entity elects earlier adoption. Strategies and support for a continuously evolving marketplace. • Unexpected event, improper use. Municipal councils have a vital role to play in setting the tone for a successful implementation and financial reporting success. This new Section establishes standards on how to account for and report a liability for asset retirement obligations. The project will address the reporting of legal obligations associated with the retirement of long-lived tangible capital assets currently in productive use. November 21, 2018. The Public Sector Accounting Board (PSAB) asset retirement obligation section will have a significant impact on the public sector. Published on April 4, 2017. A final standard will be presented for approval at the Board’s next meeting in March 2018. How to adopt construction technology in a smart and minimally disruptive way. PSAB's New ARO Standard - A Deep Dive. PS 3280 Asset Retirement Obligations (New) August 2018 Effective for fiscal years beginning on or after April 1, 2021. The Public Sector Accounting Board (PSAB) recently issued Asset Retirement Obligations, Section PS 3280. It's official - PSAB approved the final Handbook Section PS 3280, Asset Retirement Obligations late March 2018. ACCOUNTING .06 Governments need to present information about the complete stock of their tangible capital assets and amortization in the summary financial statements to demonstrate stewardship and the cost of using those assets to deliver programs and provide services. This information 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. In unusual circumstances, where an estimate of fair value cannot be made, the tangible capital asset would be recognized at nominal value. Asset retirement obligation/decommissioning cost broadly refers to the amount that a company expects to incur in disposing of the asset and reversing modifications made to the installation site. -Capitalize asset retirement obligation and allocate the cost in a rational and systematic manner.-Capitalize vs. expense: o Capitalize asset retirement obligations associated with fully amortized tangible capital assets. Asset retirement obligations are recognized as at the financial reporting date when all of the following criteria are met: There is a legal obligation (i.e., a clear duty or responsibility to another party) to incur retirement costs in relation to a ... PSAB Alert: Release of PS 3280 Asset Retirement Obligations Public Sector Accounting Board (PSAB) – Update. Note: An asset retirement obligation can apply to an asset that is in productive use or not in productive use. This change in financial reporting will require a substantial undertaking for all public sector organizations. Standard-Setting in Canada. Combining vertical industry alignment with cannabis business services in Canada and internationally. It will reconsider this matter when considering the need for a post-implementation review of Section PS 3280. Whether you are a university, health adm.com. Official positions of PSAB are established only after extensive public due process. Likely the most significant reason for this is that PS 3260 applies, for the most part, to assets that are not in productive use. Each word should be on a separate line. adm.com. In addition, PSAB is working on other new sections that will impact municipality financial reporting. In a market with complex regulatory requirements, BDO’s efficient, tailored approach turns risks into opportunities. An asset retirement obligation (ARO) initially should be measured at fair value and should be recognized at the time the obligation is incurred (provided that a reasonable estimate of fair value can be made). The main features of the new Section are: Asset retirement obligation involves the retirement of a long-lived asset that depends on a future event beyond the control of an obligated party. Our dedicated Private Equity Practice offer a full spectrum of services to help navigate today’s complex and global business environment. AcSB. Visit: https://www.farhatlectures.com To access resources such as quizzes, power-point slides, CPA exam questions, and CPA simulations. Since 1911, PSAB has represented the interests of boroughs and helped to shape the laws that laid their foundation. Aug 01, 2018. At its meeting on March 22-23, 2018, the PSAB approved the final Handbook Section PS 3280, "Asset Retirement Obligations". Providing clients with the tailored guidance and resources they need to compete domestically and internationally. Government and Government Organizations • Revenue, Section PS 3400: November 21, 2018: 2018-19 Annual Plan. On August 1, 2018, new Section PS 3280 was issued to the PSA Handbook. Entities recognize a liability for an asset retirement obligation when incurred if its fair value reasonably can be estimated. On August 1, 2018, the PSAB issued the new standard, Section PS 3280, "Asset Retirement Obligations". Webinars on the Exposure Draft will be held on April 6 (English) and April 13 (French). For example, certain obligations, such as nuclear decommissioning costs, generally are incurred as the ass et is operated. At its meeting on March 23-24, 2016, the PSAB received an update on the project, including consideration of the accounting for the asset retirement costs and provided feedback to the Task Force. On August 1, 2018, new Section PS 3280 was issued to the PSA Handbook. At its meeting on December 14-15, 2017, the PSAB reviewed the comments received on its Exposure Draft and gave feedback to the staff in this regard. Once entered, they are only See Legal for more information. PSAB approved an Asset Retirement Obligations project. At its meeting on September 26-27, 2016, the PSAB considered guidance to be included in an exposure draft to address various issues raised by respondents to the August 2014 Statement of Principles, “Retirement Obligations.” PSAB expects to review an exposure draft at its December 2016 meeting. Municipal councils have a vital role to play in setting the tone for a successful implementation and financial reporting success. Early adoption is permitted. Please read our cookie notice (, PSAB - Concepts Underlying Financial Performance - Overview [Completed], PSAB - Improvements to Not-for-Profit Standards in the public sector [Completed], PSAB - Withdrawal of Disclosure of Related Party Transactions by Not-for-Profit Organizations, Section PS 4260 [Completed], PSAB – Purchased Intangibles – Narrow Scope Amendment [Completed], PSAB – 2019-2020 Annual Improvements Project [Completed], PSAB – 2018 – 2019 Annual Improvements Project [Completed], PSAB - Strategic Plan for 2017 – 2021 [Completed], PSAB - Review of International Strategy [Completed], PSAB - Asset Retirement Obligations [Completed], PSAB - Financial Instruments – Subsequent Issues [Completed], CIPFA: Exploring Accounting for the Cloud [Completed], PSAB - Concepts Underlying Financial Performance - Measuring Financial Performance in Public Sector Financial Statements [Completed], PSAB - Concepts Underlying Financial Performance - Conceptual Framework Fundamentals and the Reporting Model [Completed], http://www2.deloitte.com/ca/en/legal/cookies.html, Section PS 3270 - Solid waste landfill closure and post-closure liability, In Brief – Asset Retirement Obligations and Liability for Contaminated Sites — determining which standard should be applied, In Brief – How Asset Retirement Obligations, Section PS 3280 applies to asset retirement obligations associated with landfills, In Brief and Podcast – Asset Retirement Obligations, Section PS 3280, Asset Retirement Obligations – Basis for Conclusions and new standard, Exposure Draft – Asset Retirement Obligations, Proposed Section PS 3280, Message from the PSAB Chair – January 2017, Deloitte LLP Response to Retirement Obligations SOP. Topics More topics. Recognition and measurement of the liability will be a major issue as will be accounting for the related expense. The proposed standard would apply to fiscal years beginning on or after April 1, 2021. This Section provides guidance on: Which activities are included in a liability for retirement of a tangible capital asset; When to recognize and how to measure a liability for an asset retirement obligation; and Appropriate financial statement presentation and disclosures. Accounting for Conditional Asset Retirement Obligations - an interpretation of FASB Statement No. As of April 1, 2021, the new Public Sector Accounting Standard, PS 3280 goes into effect. Visit: https://www.farhatlectures.com To access resources such as quizzes, power-point slides, CPA exam questions, and CPA simulations. The project is expected to commence in 2012. Explanation. contained a new standard, ASSET RETIREMENT OBLIGATIONS, Section PS 3280. 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