Canada’s Public Sector Accounting Board (PSAB) currently does not allow public-sector entities (e.g., local governments) to recognize natural assets in their financial statements. Therefore, the Intact Centre on Climate Adaptation, KPMG, and the Municipal Natural Assets Initiative coordinated a response to a PSAB consultation, making a strong case for the inclusion of natural assets in financial statements. Sixty-nine organisations representing Canada’s financial sector, most of Canada’s major cities, professional associations, asset management groups, consultancies, think tanks, research centres, river basin authorities, and NGOs are all requesting this change and have signed and submitted the consultation response to the PSAB (read it here bit.ly/Joint_Response).
Reflecting the monetary value of natural assets would mean that every public entity – not just the leaders currently practicing natural asset management – would have to understand and account for all the natural assets they own and rely on, which would, in turn, require that they be managed better.
By excluding the value of natural assets, Canadian public-sector entities are not providing adequate information about all assets and users do not have information about the state of natural assets, or their potential impairment. This lack of information has historically led to the mismanagement of natural assets and to the deterioration of the services they provide to the communities and economies over which public-sector entities have jurisdiction. Degraded natural assets may also present otherwise undocumented liabilities. The status quo in Canada is also out of step with international accounting trends to move beyond very narrow interpretations of value.
This latest effort builds on an earlier effort by MNAI (here: Opening the public sector accounting door for natural assets) by having it championed by KPMG’s national lead for municipal audit, expanding technical content and having a diverse group of signatories.
Natural assets include forests, wetlands, riparian areas, streams, aquifers, foreshores, etc., which provide many benefits including carbon sequestration and storage, flood protection and biodiversity.