How will recognition of intangible assets in the public sector change with new PSAB Standards?

This is a huge step for PSAB. Historically, public sector standards prohibited the recognition of any intangible assets on the balance sheet. The idea behind this ban was that governments are too powerful and can create assets because they control the laws. For example, the legal right to tax is an intangible asset with infinite value. PSAB's thinking was it might be too easy for governments to create assets from thin air to manipulate financial results.

Now PSAB has drawn an important and practical line that really reflects how society and the economy has changed. Consider: the value of the most powerful companies in the world all stems from intangibles (software, licenses, patents, people, processes). PSAB's removal of the prohibition means that if an intangible asset is purchased in a market transaction, the public sector can record an asset on its balance sheet. This will have an immediate benefit to Indigenous governments across Canada, who have for years had to expense things like fishing licenses (even though these assets is how they support their way of life). Once the public sector has some time to reflect on its own intangible infrastructure, we may realize that this small change will actually have a material impact on all public sector balance sheets.