Asset Retirement Obligations
What is PSAB?
The Public Sector Accounting Board (PSAB) is an authoritative body for establishing financial reporting standards for public sector entities. It is comprised of stakeholders from government, industry, and public sector management. PSAB publishes and maintains Public Sector Accounting Standards (PSAS), one of which is known as PS 3280 – Asset Retirement Obligations.
What is an Asset Retirement Obligation (ARO)?
An Asset Retirement Obligation is a legal obligation to incur costs when retiring a tangible capital asset (TCA), the legal obligation can be triggered by legislation, agreements, or contracts. If your asset is controlled by the public sector, such as education, health care, or government entity (federal, provincial and municipal) this accounting standard will have implications for your organization under the PSAS. PS 3280 is effective for fiscal years beginning on or after April 1, 2022, and is required to be reconsidered and updated at each financial reporting date.
The following activities often result in the need to recognize an ARO:
- Scholastic Institutions and Municipality oil and gas dismantling, restoring and reclaiming
- Groundwater wells, above ground and below ground storage tanks and on-site sewage systems
- Landfills for closure and monitoring
- Removal of asbestos, lead and PCB in buildings at the time the related asset is retired
- Removal of transmission assets (including transformers and wires)
- Radiologically contaminated medical equipment
How Pinchin can help?
Pinchin’s expertise in helping you with Asset Retirement Obligations extends to providing:
- Estimating liability costs
If you need support with any of your projects or want more information about Asset Retirement Obligations, please contact your local Pinchin office, or call us at 1.855.PINCHIN (746.2446)