KPMG

Preparing for Asset Retirement Obligations

Are you ready to implement PSAB Standard PS3280 Asset Retirement Obligations?

In August 2018, PSAB issued the new standard PS3280 on asset retirement obligations. This section addresses the reporting of legal obligations associated with the retirement of certain tangible capital assets and solid waste landfill sites by public sector entities.

Whether you are a university, health institution or government entity (federal, provincial, municipal or Indigenous) this accounting standard will have implications for your organization if you report under the Public Sector Accounting Standards.

Key matters public sector entities need to consider

• – The scope of retirement obligations included in the standard
• – The criteria for recognition of a retirement obligation
• – When it's appropriate (and how) to measure a retirement obligation
• – Developing a comprehensive plan to assess all in-scope assets
• – Addressing Board and Stakeholder information needs through implementation
• – Developing a consistent level of documentation to support the auditability of PS3280 implementation

An overview

• – PS3280 will apply to fiscal years beginning on or after April 1, 2021. Earlier adoption is permitted.
• – Asset retirement activities are defined to include all activities related to an asset retirement obligation. These may include but are not limited to:
• – decommissioning or dismantling a tangible capital asset that was acquired, constructed or developed
• – decontamination created by the normal use of the tangible capital asset
• – post-retirement activities such as monitoring
• – constructing other tangible capital assets in order to perform postretirement activities.
• – In addition to asset retirement obligations associated with tangible capital assets that are in productive use and those that are no longer in productive use, PS3280 includes in scope legal obligations, and solid waste landfill closure and post-closure liabilities.