Glossary
Public Sector Accounting Standards
Public Sector Accounting Standards (PSAS) are the accounting rules that Canadian public sector entities use to prepare their financial statements. They apply to federal, provincial, territorial, and local governments and to the organizations those governments control, and they are set by the Public Sector Accounting Board (PSAB) and published in the CPA Canada Public Sector Accounting Handbook. At Treewalk, we help public sector and Indigenous government finance teams prepare PSAS financial statements, close their books, and get audit-ready, without providing the audit itself.
If you have searched “PSAS”, “PSAS accounting”, or “public sector accounting standards Canada”, you are almost certainly in one of two seats: a government or First Nation finance lead who has to report under these standards, or a controller who just inherited a mandate that does. This page covers what the standards are, how they differ from the private sector frameworks, and where Indigenous governments fit.
What Public Sector Accounting Standards actually cover
PSAS is a full reporting framework, not a single rule. It governs how a government recognizes revenue (including tax revenue and government transfers), how it accounts for tangible capital assets and long-term liabilities, and how it reports its financial position and annual surplus or deficit. The signature statement in a PSAS set is the statement of financial position built around net debt, a measure that tells readers whether a government has enough financial assets to cover its liabilities.
Who reports under PSAS:
- Federal, provincial, and territorial governments
- Municipalities, regional districts, and local government bodies
- Government organizations, agencies, and Crown corporations those governments control
- Government not-for-profit organizations, which apply PSAS plus a set of not-for-profit specific sections
The framework is deliberately different from business accounting because a government is not trying to report a profit. It is accounting for stewardship of public money, so accountability and the net debt picture matter more than earnings.
PSAS versus IFRS and ASPE
This is where most confusion starts, because the word “public” means two different things. A public company is a business whose shares trade on an exchange, and in Canada those companies report under International Financial Reporting Standards (IFRS). A public sector entity is a government. The two frameworks are not interchangeable.
| Framework | Who uses it |
|---|---|
| PSAS | Governments and government organizations |
| IFRS | Publicly traded companies |
| ASPE | Canadian private enterprises |
The trap we see most often is a government business enterprise, a self-sustaining Crown corporation that sells goods or services, being told it should follow PSAS like its parent. It usually reports under IFRS instead. Getting that classification wrong at the start means restating a full year of statements later.
The team that handles this at Treewalk knows both sides. We prepare IFRS statements every quarter for public company clients such as public companies in mining, technology, and healthcare, and we bring that same technical discipline to PSAS work. That dual fluency is exactly what a government business enterprise needs, because someone has to decide which framework applies before a single journal entry is posted.
Where First Nations governments fit
First Nations governments and their entities generally report under PSAS, and the standard is woven directly into the accountability regime many communities operate in. A First Nation that operates under the First Nations Fiscal Management Act must maintain financial administration and reporting that lines up with public sector standards, and its annual audited statements are prepared on that basis.
We treat this as one of the more demanding areas of PSAS work, not because the accounting is exotic, but because the context is. A First Nation finance team often manages government transfers, own-source revenue, trust arrangements, and economic development entities inside one reporting package. Our Indigenous and government advisory group, led by David Dick, CPA, Director of Indigenous Services, Government and Sustainability, is built for exactly that mix. Joshua Buffalo, CPA, a member of Samson Cree Nation and the first CPA from his Band, brings hands-on PSAS experience from years of Indigenous advisory and public company reporting.
How we approach PSAS work at Treewalk
We are a Vancouver-based firm serving clients across British Columbia and Western Canada, and we do not perform audits. That shapes how we help. We sit on the preparation and controllership side of the table, which means our job is to make your PSAS statements clean, defensible, and ready before your external auditor arrives.
A typical engagement looks like this:
- Confirm the right framework and the reporting entity, including which controlled organizations consolidate in
- Build or clean up the PSAS working papers, from capital asset continuity schedules to government transfer recognition
- Draft the financial statements and note disclosures in the PSAS format
- Compile the auditor’s prepared-by-client list and act as the liaison through the audit
The value is speed and fewer surprises. When the preparation is done properly, the audit is shorter, the queries are fewer, and the finance lead is not scrambling in the final week.
Frequently asked questions
What accounting standards do public companies use?
Publicly traded companies in Canada use International Financial Reporting Standards (IFRS), not Public Sector Accounting Standards. PSAS is for governments and government organizations. The word “public” causes the mix-up: a public company is a listed business, while the public sector is government. We prepare IFRS statements for listed clients and PSAS statements for government clients, so we work in both.
What is the difference between public sector accounting standards and IFRS?
PSAS reports on a government’s stewardship of public funds and centres on net debt and the surplus or deficit for the year. IFRS reports a business’s financial performance for investors and centres on profit and earnings. They handle revenue, capital assets, and liabilities differently, so statements prepared under one are not comparable to the other.
What is the government equivalent of GAAP?
In Canada, PSAS is the generally accepted accounting principles (GAAP) for the public sector. When people say a government follows GAAP, they mean the Public Sector Accounting Handbook set by PSAB. It is the government counterpart to the IFRS and ASPE handbooks that businesses use.
What is the difference between IPSAS and IFRS?
International Public Sector Accounting Standards (IPSAS) are the global standards for governments and are used or referenced in many countries. IFRS are the global standards for business reporting. Canada does not use IPSAS directly; it uses its own PSAS, which shares many of the same public sector principles as IPSAS but is set nationally by PSAB.
Do we need help with PSAS if we already have an auditor?
Often yes. Your auditor checks the statements; they do not prepare them for you. Many government and First Nation finance teams use us to build the working papers, draft the PSAS statements, and manage the audit request list, so the audit runs faster. We handle preparation and controllership, and your independent auditor stays independent.
Where to next
If you are preparing financial statements under public sector accounting standards and want the preparation and audit-readiness handled properly, our Indigenous and government advisory team is the right first call. Email David Dick at dave.dick@treewalk.com. To understand who writes the rules, see our explainer on PSAB, and if you are a First Nation government, read how the First Nations Fiscal Management Act shapes your reporting obligations.
