Read the document
DownloadUpdated: July 2020
Effective Date: Fiscal years beginning on or after April 1, 20221
Definitions
- Transactions of the government whose terms are denominated in a currency other than its reporting currency.
- They include transactions arising when a government either:
- Borrows or lends funds when the amounts payable or receivable are denominated in a foreign currency; or
- Becomes a party to a contract involving foreign currencies.
- The difference that arises when a monetary item denominated in a foreign currency or a non-monetary item denominated in a foreign currency that is included in the fair value category in accordance with Section PS 3450, Financial Instruments, is settled or translated at an exchange rate different from that at which it was previously recorded or carried.
- Include revenues and expenses arising:
- When prior to an item's settlement an exchange gain or loss is recognized in accordance with the provisions of this Section; and
- When financial instruments in the fair value category are remeasured in accordance with Section PS 3450, Financial Instruments.
Accounting
- At the transaction date, each asset, liability and amount reported in the Statement of Operations arising from a foreign currency transaction of the government must be translated into Canadian dollars by applying the exchange rate in effect at that date.
- At each financial statement date, the following must be adjusted to reflect the exchange rate in effect at that date:
- Monetary assets and monetary liabilities denominate in a foreign currency; and
- Non-monetary items denominated in a foreign currency that are included in the fair value category in accordance with Section PS 3450, Financial Instruments.
- Arise due to changes in the foreign exchange rate between the transaction date and the subsequent financial statement dates.
- Must be accounted for in the financial statements.
- There is uncertainty during the life of a foreign currency denominated item as to the actual gain or loss that will arise upon settlement.
Presentation
- An exchange gain or loss that arises prior to settlement is recognized in the Statement of Remeasurement Gains and Losses.
- In the period of settlement:
- The cumulative amount of remeasurement gains and losses is reversed in the Statement of Remeasurement Gains and Losses; and
- An exchange gain or loss measured in relation to the exchange rate at the date of the item’s initial recognition is recognized in the Statement of Operations.
1 For those government organizations that applied the CPA Canada Handbook – Accounting prior to their adoption of the CPA Canada Public Sector Accounting Handbook, this Section applies to fiscal years beginning on or after April 1, 2012. Governments and government organizations would also adopt Section PS 3450, Financial Instruments, at the same time. Earlier adoption is permitted.
BDO can help you navigate the road ahead
Applying financial reporting standards can be quite complex. The BDO team can help you assess your situation and prepare for the opportunities and challenges involved.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.
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. BDO is the brand name for the BDO network and for each of the BDO Member Firms.