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Reporting Requirements for Departmental and Agency Financial Statements for Fiscal Year Ending March 31, 2014

Date:

Message from Michel Vaillant, A/Executive Director, Government Accounting Policy and Reporting, Office of the Comptroller General

To: Deputy Chief Financial Officers

Please see the reporting requirements for departmental and agency financial statements (DFS) for the year ending . Additional guidance and information is included on the following:

General requirements and due dates

Departments and agencies are reminded that their financial statements are to be published as part of the Departmental Performance Report (DPR) process. Instructions on publishing financial statements will be in the preparation guide for the 2013‒2014 DPR.

Departments and agencies are required to submit the following:

  • An unsigned electronic version of the financial statements (i.e., near final draft awaiting signatures) in either official language no later than for selected entities only. Comments will be provided within four weeks of reception date; and
  • A final signed electronic version of the financial statements in either official language no later than . This date will allow entities to process post-closing entries, if necessary, as a result of errors found during the Public Accounts of Canada audit. Note that the final signed version must also include Annex A – Assessment of Internal Control over Financial Reporting as required as this information is required by the Financial Management Policy division.

Electronic versions of the financial statements must be forwarded to the Departmental Financial Statements e-mail box.

In addition, several years of annual reviews indicate that the DFS have reached a level of quality and maturity that no longer warrant a systematic Office of the Comptroller General (OCG) review of all entities’ unsigned DFS. This year, we have adopted a risk-based approach to determine which unsigned DFS will be reviewed. The approach considered mitigating risk factors such as whether the financial statements are audited on a stand-alone basis by an external auditor and whether the department has a departmental audit committee. Other factors were considered such as entities for which there were machinery of government changes or entities for which significant retroactive adjustments were made.

Based on this new approach, the list of entities required to submit an unsigned version of the DFS for review is provided in Appendix A. Consequently, all other entities are not required to send an unsigned version of their DFS by . However, a final signed electronic version is still required no later than . For entities that are not subject to a review this year, please note that we remain at your disposal to answer any specific questions that may arise in the preparation of your financial statements.

All entities must use Treasury Board Accounting Standard 1.2 and this additional guidance to prepare their financial statements for the 2013‒2014 fiscal year. To assist with the preparation of the financial statements, a Frequently Asked Questions document is available, as is the attached self-assessment tool document in Appendix B.

If you have any questions about the preparation of the DFS, please do not hesitate to contact Amy Begley by e-mail or by telephone at 613-952-0914 or Andrée Pelchat by e-mail or by telephone at 613-957-9853.

Change in Audit Status

Following the coming into force of Canada’s Economic Action Plan 2012, the requirement for audited financial statements by the Office of the Auditor General of some entities has been eliminated. For the entities affected by this change, we ask that you inform the OCG of the change in your audit status for the 2013‒2014 financial statements, and whether your financial statements will cease to be audited or will remain audited, and if so, the name of the auditing firm. Please advise of any change in your audit status as soon as possible by sending an email to Andrée Pelchat. Note that a change in audit status may impact whether your unsigned financial statements will be subject to review.

Severance Benefit Liability

Appendix C provides information on how to calculate the severance benefit liability and expense for public service employees, coding for accounting transactions and financial statement disclosure.

Please note that entities are not bound by the severance benefit liability rates provided by the OCG. If the entity has a rate that is more representative and is based on entity-specific information, they are encouraged to use it.

Should you have any questions about calculating the severance benefit liability, please contact Sylvie Cossette by e-mail or by telephone at 613‑946‑4058. Questions about presenting this item in the financial statements should be directed to Amy Begley by e-mail or by telephone at 613‑952‑0914.

Pension Benefits

Both the employees and the Department contribute to the cost of the plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to EAP 2012, employee contributors have been divided into two groups:

  • Group 1 contributors are defined as existing members who were required to contribute to the cost of the plan prior to
  • Group 2 contributors are defined as new members required to contribute on or after .

Each group has a distinct contribution rate. The 2013‒2014 expense represents approximately 1.6 times (1.7 times for 2012‒2013) the contributions by employees for Group 1 and 1.5 times (1.6 times for 2012-2013) the contributions for Group 2. Note that for the Correctional Service of Canada (CSC), all members of the plans are considered Group 1 contributors. These rates should be disclosed in the relevant note of your financial statements.

Disclosure should be provided in accordance with Note 7a) in TBAS 1.2 and, as a result of the new distinction between employee contributors in Groups 1 and 2, should be revised as follows:

7. Employee future benefits

a) Pension benefits

The Department's employees participate in the public service pension plan (the “Plan”), which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plan benefits and they are indexed to inflation.

Both the employees and the Department contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Canada’s Economic Action Plan 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of and Group 2 relates to members joining the Plan as of . Each group has a distinct contribution rate.

The 2013-2014 expense amounts to $XXX ($YYY in 2012-2013). For Group 1 members, the expense represents approximately XX times (YY times in 2012-2013) the employee contributions and, for Group 2 members, approximately XX times (YY times in 2012-2013) the employee contributions.

The Department's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

Should you have any questions about the pension contribution rate, please contact Sylvie Cossette by e-mail or telephone at 613‑946‑4058. Questions about presenting this item in the financial statements should be directed to Amy Begley by e-mail or by telephone at 613‑952‑0914.

Obligation for Termination Benefits

As per last year, entities must ensure that the obligation for termination benefits associated with the estimated workforce adjustment costs is complete and fairly presented in their 2013‒2014 financial statements. The obligation for termination benefits is recognized in compliance with Public Sector Accounting Standard (PS) 3255, Post-Employment Benefits, Compensated Absences and Termination Benefits.

For presentation purposes in the departmental financial statements, the obligation should include the amount recorded in the Central Financial Management and Reporting System (CFMRS) for the PAYE and also an estimate of the residual obligation for termination benefits at . To support you in calculating the residual obligation, you can refer, among other sources, to the tool provided by the Expenditure Management Sector of the Treasury Board of Canada Secretariat in . This portion of the obligation should not be recorded in CFMRS.

Entities that have disclosed the obligation for termination benefits last year must continue to do so in order to present comparative information. Disclosure should be provided in accordance with Note 4 in TBAS 1.2, as in the following example:

4. Accounts payable and accrued liabilities

The following table presents details of the Department's accounts payable and accrued liabilities:

  2014 2013
(in thousands of dollars)
Accounts payable - Other government departments and agencies 32,456 27,894
Accounts payable - External parties 144,266 126,116
Total accounts payable 176,722 154,010
Accrued liabilities 13,719 8,006
Total accounts payable and accrued liabilities 190,441 162,016

In Canada’s Economic Action Plan 2012, the Government announced savings measures to be implemented by departments over the next three fiscal years starting in 2012‒2013. As a result, the Department has recorded at , an obligation for termination benefits for a $xxx ($yyy in 2012‒2013) as part of accrued liabilities to reflect the estimated workforce adjustment costs.

Should you have any questions about calculating the obligation, please contact Sylvie Cossette by e-mail or by telephone at 613‑946‑4058. Questions about presenting these items in the financial statements should be directed to Amy Begley by e-mail or by telephone at 613‑952‑0914.

Related party transactions

Amounts to be reported in the DFS in the note on related party transactions as common services provided without charge by other government departments can be obtained from the following sources:

  • Employer’s contribution to the health and dental insurance plans
    The rate to be used for government payments to employee insurance plans, such as the Public Service Health Care Plan and the Public Service Dental Plan, is 8.3 per cent.
  • Accommodation - Public Works and Government Services Canada
    Linda Oremush by e-mail or by telephone at 819-956-7406
  • Legal services - Justice Canada
    Chantal Breton by e-mail or by telephone at 613-952-2046 or Philippe Ménard by e-mail or by telephone at 613-867-9025
  • Workers’ compensation - Employment and Social Development Canada
    Christine Nadon by e-mail or by telephone at 819-654-4527

As per last year, the estimated costs of services provided without charge by Shared Services Canada (SSC) are not to be accounted for in the DFS. However, as a best practice, departments and agencies could reflect these services provided without charge by SSC via note disclosure in the related party transactions note.

Environmental liabilities

Departments and agencies are reminded that measurement uncertainty related to the remediation estimate or choice of estimates does not constitute contingent liability disclosure. Contingent liability disclosure is related to responsibility.

Although the government may have determined that it is not directly responsible and does not accept responsibility, there still may be uncertainty as to whether the government may be held responsible. This uncertainty is related to a future event where the outcome is currently not determinable, in which case a contingent liability may be disclosed.

Uncertainty related to the estimate should be disclosed in accordance with PS 2130, Measurement Uncertainty.

Disclosure should be provided in accordance with Notes 2j) and 14a) in TBAS 1.2 and should be revised as noted in the illustrative examples below:

2. Summary of significant accounting policies

(j) Environmental liabilities:

Environmental liabilities consist of estimated costs related to the remediation of environmentally contaminated sites as well as estimated costs related to obligations associated with future asset restoration.

i. Remediation liabilities are recorded as accrued liabilities to recognize the estimated costs related to the management and remediation of contaminated sites where the Department is obligated, or likely to be obligated, to remediate the sites. If the responsibility to remediate is undeterminable, the amount is disclosed as a contingent liability. If the responsibility to remediate is undeterminable and a reasonable estimate cannot be made, the nature, source and extent of contamination is disclosed as a contingent liability.

ii. Future Asset Restoration Obligations are recorded as accrued liabilities to recognize the estimated costs related to the restoration of tangible capital assets. These costs are usually capitalized and amortized over the asset’s estimated useful life based on an obligation imposed by legislation, regulation or contractual agreement where the Department is obligated, or likely to be obligated, to restore the tangible capital asset. If the obligation to restore the tangible capital asset is undeterminable, the amount is disclosed as a contingent liability. If the obligation to restore the tangible capital asset is undeterminable and an estimate cannot be made, the nature and source of the potential obligation is disclosed as a contingent liability.

14. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. They are grouped into two categories (if applicable) as follows:

(a) Environmental Liabilities

The Department has identified approximately 50 sites (49 sites in 2012-2013) where the department is obligated, or likely to be obligated, to remediate for which a remediation liability of $10,300,000 ($8,000,000 in 2012-2013) has been recorded in accrued liabilities. In addition, the Department has disclosed a contingent liability in the amount of $13,000,000 for one site ($14,000,000 in 2012-2013 for one site) where the department has determined that it is not directly responsible, nor does it accept responsibility, however, there is uncertainty as to whether the department may be responsible. The Department's ongoing efforts to assess contaminated sites may result in additional environmental liabilities related to newly identified sites, or changes in the assessments of existing sites. These liabilities will be accrued by the Department in the year in which they become likely and are reasonably estimable.

The Department has recorded $3,000,000 ($4,000,000 in 2012-2013) in future asset restoration obligations related to 8 out of a total of 50 unexploded explosive ordnance (UXO) affected sites (10 out of a total of 43 UXO sites in 2012-2013) where clearance action is likely. In addition, the department has disclosed a contingent liability ranging from $180,000,000 to $524,000,000 that is not accrued as the obligation to restore the site is not determinable at this time.

Should you have any questions about the changes to the environmental liabilities note, please contact Cindy Laprade by e-mail or by telephone at 613-952-0909.

Transfers to Shared Services Canada

In , SSC was given the mandate to provide services related to the acquisition and provision of hardware and software, including security software, for workplace technology devices. For those departments/agencies transferring responsibilities to SSC, please note that TBAS 1.2 contains specific guidance on disclosure requirements for transfers to other government departments.

Error(s) identified in DFS following the tabling of the Departmental Performance Report (DPR)

If an error is identified in the 2013-2014 DFS following the tabling of the 2013-2014 DPR, please contact Amy Begley by e-mail or by telephone at 613-952-0914 to discuss the error before taking action. The appropriate procedures to follow are dependent on the nature and significance of the error, timeframe when the error is identified following the tabling of the DPR, and impact on the condensed financial statements.

Appendix A – List of entities required to submit unsigned financial statements for review

The following entities will be required to submit an unsigned version of their financial statements by for review by the OCG:

  • Atlantic Canada Opportunities Agency
  • Canada Industrial Relations Board
  • Canada School of Public Service
  • Canadian Environmental Assessment Agency
  • Canadian Human Rights Commission
  • Canadian Human Rights Tribunal
  • Canadian Intergovernmental Conference Secretariat
  • Canadian International Development Agency
  • Canadian International Trade Tribunal
  • Canadian Northern Economic Development Agency
  • Canadian Radio-Television and Telecommunications Commission
  • Canadian Transportation Agency
  • Citizenship and Immigration Canada
  • Commission for Public Complaints Against the RCMP
  • Copyright Board of Canada
  • Foreign Affairs, Trade and Development Canada
  • Economic Development Agency of Canada for the Regions of Quebec
  • Federal Economic Development Agency for Southern Ontario
  • Indian Residential Schools Truth and Reconciliation Commission
  • Military Grievances External Review Committee
  • Military Police Complaints Commission
  • National Defence
  • Northern Pipeline Agency
  • Office of the Commissioner for Federal Judicial Affairs
  • Office of the Communications Security Establishment Commissioner
  • Office of the Correctional Investigator
  • Office of the Secretary to the Governor General
  • Parole Board of Canada
  • Patented Medicine Prices Review Board Canada
  • Public Service Labour Relations Board
  • Public Service Staffing Tribunal
  • Registry of the Competition Tribunal
  • Registry of the Public Servants Disclosure Protection Tribunal
  • Registry of the Specific Claims Tribunal
  • Royal Canadian Mounted Police External Review Committee
  • Security Intelligence Review Committee
  • Shared Services Canada
  • Status of Women Canada
  • Supreme Court of Canada, Office of the Registrar of the
  • Transportation Appeal Tribunal of Canada
  • Transportation Safety Board of Canada
  • Veterans Review and Appeal Board

Appendix B - Self-Assessment Tool for Departments and Agencies Departmental Financial Statements (DFS) Fiscal Year 2013-14

Note: The template below can be modified for departmental use. Departments are encouraged to include the completed assessment tool with the unsigned DFS submission to minimize the number of questions/comments that may be raised during the OCG review process.

Overall Assessment

Statement of Management Responsibility Yes No N/A Comments
Is the department subject to a core control audit by the Office of the Comptroller General ( OCG)?
  • If yes, ensure that the template for organizations subject to core control audits by the OCG is used
  • If no, ensure that the template for organizations not subject to core control audits by the OCG is used
       
Includes statement regarding:
Responsibility of management
       
Prepared in accordance with the government’s accounting policies
       
Use of estimates
       
Management responsible for internal control over financial reporting ( ICFR)
       
Objectivity and integrity of data
       
Role of internal audit and audit committee
       
Other (specific to department)
       
New: Signature block
Signed by Deputy Head
       
Signed by Chief Financial Officer
       
Dated
       
General Requirements for Statements and Notes Yes No N/A Comments
All comparative figures (statements and notes) match prior year’s signed DFS
       
All pages of the statements contain the correct reporting date
       
New: Title of each statement indicates that it is “consolidated”, if applicable
       
New: Any reference to the “financial statements” in the notes indicates that they are “consolidated”, if applicable
       
All pages of the statements have “unaudited” in the heading
       
All statements and notes are mathematically accurate, and there are no rounding issues present
       
All statements contain the basis of presentation (i.e., in $ or $000)
       
Terminology and presentation is consistent throughout the financial statement package
       
Terminology avoids government jargon (i.e., specified purpose accounts)
       
Notes have been appropriately tailored to the organization (i.e., not just a strict copy of the TBAS 1.2 package)
       
Overall, immaterial items were appropriately grouped or not disclosed (both in financial statements and notes)
       
Was there an opening balance adjustment, and is it presented appropriately?
       
Statement of Financial Position Yes No N/A Comments
Liabilities
Listed before assets if the liabilities amount is more important than the financial assets amount
       
“Liabilities Held on Behalf of Government” are presented separately (as an offset of liabilities)
       
Listed in order of repayment
       
Assets
Segregated between financial and non-financial assets
       
Amount due from the Consolidated Revenue Fund ( CRF) is present
       
If considered immaterial, cash (in transit) can be grouped with accounts receivable, unless the department or agency has its own bank account
       
“Financial Assets Held on Behalf of Government” are presented separately from other financial assets (as an offset of financial assets)
       
Non-financial assets presented after “Departmental Net Debt” indicator (if liabilities exceed financial assets) or “Net Financial Asset” indicator (if financial assets exceed liabilities)
       
Intangible capital assets excluded
( TBAS 3.1)
       
Other
“Departmental Net Debt” or “Net Financial Asset” indicator is presented (represents the difference between the sum of all liabilities and the sum of financial assets)
       
New: Signature block
Signed by Deputy Head
       
Signed by Chief Financial Officer
       
Dated
       
General
Dated “As at March 31”
       
Cross-references to notes
       
Other
       
Statement of Operations and Departmental Net Financial Position Yes No N/A Comments
Expenses
Expenses appear before revenues when revenues are less significant
       
Expenses are presented by major programs, and their labelling is consistent with the Report on Plans and Priorities labelling and DFS Note 1
       
Expenses incurred on behalf of government presented as a separate line item (as an offset to expenses)
       
Costs of internal services are presented as a separate program activity
       
Revenues
Revenues are presented by type as opposed to by major programs
       
Revenues earned on behalf of government presented as a separate line item (as an offset to revenues)
       
Transferred operations
Ensure that both planned amounts and the prior-year comparative have been reclassified to be presented on the same basis as the current year actual; if not, a note disclosure must be present to advise the reader.
       
Ensure that this section refers to appropriate note disclosure, which should include more details on the transferred operations
       
Government funding and transfers include:
Net cash provided by Government
       
Change in the “Due from Consolidated Revenue Fund ( CRF)”
       
Services provided without charge by other government department ( OGD)
       
Transfer of assets and liabilities from or to OGD
       
Beginning and ending balance of the departmental net financial position
       
Other
Includes planned amounts column
       
Figures consistent with published Report on Plans and Priorities ( RPP) (if figures do not match the RPP, ensure there is disclosure in the notes to that effect)
       
General
Dated “For the year ended March 31”
       
Cross-references to notes
       
Other
       
Statement of Change in Departmental Net Debt Yes No N/A Comments
Net cost of operations after government funding and transfers
       
Change due to tangible capital assets
       
Change due to inventories
       
Change due to prepaid expenses
       
Beginning and ending balances of departmental net debt presented
       
Includes “Planned Amounts” column if applicable
       
Figures consistent with published RPP (if figures do not match the RPP, ensure there is disclosure in the notes to that effect)
       
Other
New: If financial assets exceed liabilities, statement title is changed to “Statement of Change in Departmental Net Financial Assets”
       
General
Dated “For the year ended March 31”
       
Cross-references to notes
       
Other
       
Statement of Cash Flow Yes No N/A Comments
Operating, capital investing and financing activities are appropriately segregated
       
Reference to Statement of Financial Position, Statement of Operations and Departmental Net Financial Position, and relevant notes to the Financial Statements are accurate and amounts cross-referenced
       
Dated “For the year ended March 31”
       
New: Amounts and direction of signs are correct with appropriate wording
       
Other
       
New: General
Dated “For the year ended March 31”
       
Cross-references to notes
       
Other
       
Notes to the Financial Statements Yes No N/A Comments
1. Authority and Objectives
Defines main objectives of the department
       
Identifies key legislation under which the department operates or administers
       
Describes programs and/or strategic outcomes. If there is a change in the current year, please ensure that the description is updated, prior-year amounts are reclassified accordingly, and that a note on comparative information is present to explain this change.
       
Categories match Statement of Operations and Departmental Net Financial Position
       
Level of detail is appropriate
       
2. Summary of Significant Accounting Policies
Basis of accounting: Prepared using the Government's accounting policies based on Canadian public sector accounting standards
       
(a) Parliamentary authorities: Not generally accepted accounting principles ( GAAP); reference to Note 3 reconciliation
       
Planned results description is included in Note 2a
       
(b) Consolidation: Method and sub-entities
       
List of consolidated entities if applicable
       
New: Title of statements indicates that they are "consolidated"
       
(c) Net cash provided by Government: CRF; difference between receipts or disbursements
       
(d) Amounts due from or to CRF: Description (i.e., timing differences)
       
(e) Revenues
Recognition tailored to revenues of the department
       
Deferred revenue policy
       
Non-respendable revenues description 
       
(f) Expenses
Transfer payments
       
Vacation pay and compensatory leave
       
Services without charge (recorded as operating expenses)
       
(g) Employee future benefits
Pension benefits
       
Severance benefits
       
(h) Accounts receivables and advances
Basis of valuation
       
Provision
       
Concessionary loans
       
Loans, if an entity has significant loans, a distinct accounting policy should be included
       
(i) Contingent liabilities
       
(j) Environmental liabilities
       
(k) Inventories: Nature and valuation method
       
(l) Foreign currency transactions: Indicates line on Statement of Operations and Departmental Net Financial Position or note
       
Exception of foreign exchange gain or loss relating to a long-term foreign currency denomination
       
(m) Tangible capital assets (including leased capital assets)
Threshold (is appropriate given size of organization)
       
Not including intangibles, etc.
       
Amortization method and periods
       
Asset under construction note included
       
(n) Measurement uncertainty: Tailored to financial statement elements
       
(o) Other
       
3. Parliamentary Appropriations
Introductory paragraph
       
(a) Reconciliation of net cost of operations to current year authorities used
Appropriate aggregation
       
Appropriate wording
       
Amounts and direction of signs are correct
       
Ensure consistency of figures with the Cash Flow Statement where applicable
       
(b) Authorities provided and used
Appropriate aggregation
       
Appropriate wording
       
Amounts and direction of signs are correct
       
4. Accounts Payable and Accrued Liabilities
Segregated between OGD and external (including crown corporations)
       
Split between accounts payable and accrued liabilities
       
Paragraph added for obligation for termination benefits
       
New: Amounts agree to Statement of Financial Position
       
New: Variation between current and prior year amounts agrees to Statement of Cash Flows
       
New: Amounts owing to other government departments and agencies agree to related party transactions note
       
5a. Deferred Revenue
Nature and source of external restrictions and brief description of each major deferred revenue category
       
Continuity schedule showing beginning balance, receipts, payments and ending balance for each major deferred revenue category
       
Deferred revenues held on behalf of government are offset from the closing balance
       
New: Amounts agree to Statement of Financial Position
       
New: Variation between current and prior year amounts agrees to Statement of Cash Flows
       
5b. Other Liabilities (Specified Purpose Accounts (SPAs))
Nature and source of external restrictions and brief description of each major SPA
       
Continuity schedule showing beginning balance, receipts, payments and ending balance for each major SPA
       
New: Use of term " SPAs" ("specified purpose accounts") in DFS is avoided – consider using the term "other liabilities" instead (if appropriate)
       
6. Lease Obligation for Tangible Capital Assets
Show separately from other long-term obligations
       
Particulars, including interest rates and expiry dates, should be shown separately from other long-term obligations
       
Significant restrictions imposed on the lessee as a result of the lease agreement should be disclosed
       
Future minimum lease payments in aggregate and for each of the five succeeding years. A separate deduction should be made from the aggregate figure for amounts included in the minimum lease payments representing executory costs and imputed interest (show range of imputed interest).
       
Interest expense: Disclosed separately or as part of interest on long-term indebtedness
       
New: Amounts agree to Statement of Financial Position
       
7. Employee Future Benefits
(a) Pension benefits
New: Text has been revised in accordance with the updated wording provided in the call letter
       
Description of the department's responsibility with regard to the plan
       
Amount expensed by the department for current and prior year
       
(b) Severance benefits
Description of severance benefits
       
Information with respect to changes to the accumulation of severance pay as a result of the collective agreement bargaining process
       
Continuity schedule: Accrued benefit obligation (beginning and end of year), expense for year, benefits paid for year
       
New: Amounts agree to Statement of Financial Position
       
New: Variation between current and prior year amounts agrees to Statement of Cash Flows
       
8. Accounts Receivable and Advances
Segregated between OGD and external (including crown corporations)
       
OGD includes GST, not presented separately
       
External split between trade and other unusual items of material amounts
       
Allowance for doubtful accounts: Shown separately and specified to external
       
"Accounts Receivable Held on Behalf of Government" are offset from gross accounts receivable
       
New: Amounts agree to Statement of Financial Position
       
New: Variation between current and prior year amounts agrees to Statement of Cash Flows
       
New: Amounts due from other government departments and agencies agree to related party transactions note
       
9. Loans Receivable (i.e., transfer payments recoverable or other loans receivable) (PS 3050)
Recorded value of the loan should be the face value discounted by the amount of the "grant portion" if applicable
       
Loan discount amortized to revenue in a rational and systematic manner over the term of the loan (effective interest rate method or straight-line, if applicable)
       
Interest revenue when earned, no accrual of revenue when deemed uncollectible
       
"Loans Receivable Held on Behalf of Government" are offset from gross loans receivable
       
New: Amounts agree to Statement of Financial Position
       
Disclose:
Recorded cost, related valuation allowance and net recoverable value
       
General terms and conditions:
       
Repayment terms
       
Interest terms
       
Forgiveness and other conditions
       
Security held
       
Foreign-denominated loans: Amount outstanding in foreign currency, Canadian equivalent, basis of translation
       
(a)  Impaired Loans (PS 3050)
Total recorded investment in individual loans identified as impaired and the amount of the related allowance for loan impairment, analyzed by groups of loans with similar characteristics
       
The net charge or credit to income in respect of loan impairment, identifying separately recoveries of loans written off in previous periods
       
Write-offs of loans during the reporting period, identifying separately amounts relating to loans restructured during the reporting period
       
The basis of determining the amount of the allowance for loan impairment as well as the events and conditions considered in determining the charge to income for the period in respect of the allowance for loan impairment
       
(b)  Temporary Investments (PS 3030)
Nature and terms of investments and related valuation allowance, including outstanding amounts and method of valuation
       
Market and carrying value for marketable securities (valuated at lower of carrying value or quoted market value)
       
(c)  Portfolio Investments  (PS 3040)
Portfolio investments (excluding investments in Crown corporations)
Write-downs for permanent declines in value
       
Disclose basis of valuation (lower of carrying value or quoted market value and average carrying value for gains or losses, quoted market value if marketable securities)
       
Reported separately on Statement of Financial Position
       
Income reported separately on Statement of Operations or segmented information note
       
Investments in Crown corporations
As per the reporting entity, since departments do not normally have the risk and rewards of ownership and as these assets are not normally under the department's responsibility, departments are generally not expected to have investments in Crown corporations
       
10. Inventory
Inventory is presented by category
       
Method of valuating inventory is stated at cost using the [name of method] (e.g., average cost method,…)
       
Cost of inventory consumed is disclosed
       
New: Amounts agree to Statement of Financial Position
       
New: Variation between current and prior year amounts agrees to Statement of Change in Departmental Net Debt
       
New: Variation between current and prior year amounts agrees to Statement of Cash Flows
       
New: Variation between current and prior year amounts agrees to Note 3 (Parliamentary authorities)
       
11. Tangible Capital Assets (PS 3150, TBAS 3.1)
New: Acquisitions (amount agrees to Statement of Change in Departmental Net Debt, Statement of Cash Flows, and Note 3 on Parliamentary authorities)
       
Adjustments (includes assets under construction transferred to an asset category upon completion and transfer of assets to or from OGD)
       
Disposals and write-offs
       
New: Net book value of current and prior year agrees to Statement of Financial Position
       
New: Amortization (amount agrees to Statement of Change in Departmental Net Debt, Statement of Cash Flows, Note 3 on Parliamentary authorities, and Note 17 on Segmented information)
       
Asset categories match accounting policy note and categories of prior-year signed DFS
       
Continuity schedules to include assets under capital leases, by major categories
       
Note on "Assets Under Construction Transferred Upon Completion" is present
       
Calculation of gain (loss) is adequate with the elements found in schedule and Statement of Cash Flows
       
Proceeds of disposal are in the Statement of Cash Flows
       
New: Transfers should agree to Note 16 (Transfers from/to other government departments)
       
12. Departmental Net Financial Position
Note showing split of the departmental net financial position balance between unrestricted and restricted
       
Nature and source of restrictions and brief description of each major consolidated SPA
       
Continuity schedule showing beginning balance, revenues, expenses and ending balance for each major consolidated SPA
       
Use of term " SPAs" ("specified purpose accounts") in DFS is avoided
       
New: Departmental net financial position – End of year agrees to Statement of Financial Position as well as Statement of Operations and Departmental Net Financial Position
       
13. Contractual Obligations
Introductory paragraph
       
Obligations for five years (transfer payments, operating leases, acquisition of capital assets, acquisition of other goods or services)
       
14. Contingent Liabilities
(a) New: Environmental liabilities
New: Text has been revised in accordance with the updated wording provided in the call letter
       
Description: When liabilities accrued and not accrued
       
Nature and amount (if possible) of environmental liabilities where likelihood is not determinable or an amount cannot be reasonably estimated
       
Number of sites that have been identified as a liability and also recorded as such
       
Ensure that the amounts provided are consistent with the Public Accounts submitted
       
(b) Claims and litigation
Description: When liabilities accrued and not accrued
       
Nature and amount (if possible) of claims and litigation where outcome is not determinable or an amount cannot be reasonably estimated
       
Disclosure is not excessive (i.e., confidentiality issues)
       
Ensure that the amounts provided are consistent with the Public Accounts submitted
       
(c) Others (i.e., loan guarantees) if applicable
       
15. Related Party Transactions (RPTs)
Description regarding common ownership of departments, transactions occurred in normal course of business, and services received without charge
       
(a) Services provided without charge
Included in Statement of Operations (at minimum the following services without charge):
       
Accommodation
       
Employer's contribution to health and dental insurance plans
       
Legal services
       
Workers' compensation ( new: for entities with references to "Human Resources and Skills Development Canada", these have been changed to "Employment and Social Development Canada")
       
Other significant services without charge to the department are disclosed
       
Paragraph indicating that government is centralized so that some administrative functions are performed on an overall basis
       
New: Amounts agree to Statement of Operations and Departmental Net Financial Position, Statement of Cash Flows, and Note 3 (Parliamentary authorities)
       
(b) Common services provided without charge to OGD
If a department provides significant services without charge to other government departments, this is disclosed in the financial statements of the department providing the services, with an estimate of the amounts involved
       
(c) Administration of programs on behalf of other government departments
Disclosed if significant to the department
       
Should include the MOU, name of OGD, and description of agreement and amounts involved
       
(d) Other transactions with related parties
Accounts receivable and payable with OGD to be disclosed (to appear as part of RPT note or elsewhere in notes)
       
New: Accounts receivable and payable with OGD agree to amounts presented in Note 4 (Accounts payable and accrued liabilities) and Note 8 (Accounts receivable and advances)
       
Expenses and revenues with OGD to be disclosed
       
16. Transfers From or To OGD
Contains a description of the transferred activities/responsibility being transferred (to and from what entity)
       
The initiation (reason) of the transfer (according to Act of Parliament, Order-in-Council, Treasury Board of Canada Secretariat Directive, etc.)
       
Date of the transfer
       
Statement of Financial Position items being transferred (in the standard Statement of Financial Position presentation format)
       
Note on "Administering Transferred Activities on Behalf of Another Department" is included
       
Transactions (expenses and revenues) prior to the OIC date are reported in the "Transferred Operations" section in the Statement of Operations and Departmental Net Financial Position
       
17. Segmented Information
Expenses section
Appropriate aggregation: Consistent with Statement of Operations and Departmental Net Financial Position (by type)
       
Appropriate wording (expense-oriented, not objects of expenditure)
       
Reimbursements of expenses should be offset against the original object of expense
       
Expenses incurred on behalf of government is presented as an offset
       
Total matches the Statement of Operations (continuing operations) and Departmental Net Financial Position expenses
       
New: Total amortization of tangible capital assets agrees to Note 11 (Tangible capital assets)
       
Revenues section
Appropriate aggregation: Consistent with Statement of Operations and Departmental Net Financial Position (by type)
       
Appropriate wording (by revenue-generating activity, not respendable / non-respendable)
       
Revenues earned on behalf of government presented as an offset
       
Total matches the Statement of Operations and Departmental Net Financial Position revenues
       
Other
       
18. Accounting Changes
A. If change in accounting policy, disclosure includes:
New: i) For prospective or retroactive application:
       
Description of the change/amendment to TBAS 1.2
       
New: Effect of the change on the financial statements of the current period
       
Reason for the change
       
Date of the change
       
New: ii) For retroactive application only:
       
Explanation of changes: $ impact of the adoption on prior-year figures; 3 columns: as previously stated, effect of changes, restated amount
       
New: Financial statements indicate that prior year amounts are "restated"
       
B. New: If correction of an error in prior period financial statements, disclosure includes:
Description of the error
       
$ impact of the correction of error on financial statements of current and prior periods; 3 columns: as previously stated, effect of changes, restated amount
       
The fact that the prior periods have been restated
       
19. Subsequent Event
Detailed review of all subsequent events must be performed, as this cannot be a repetition of previous year's event
       
New: Includes a description of the nature of the event; and
       
New: An estimate of the financial effect, when practicable, or a statement that such an estimate cannot be made
       
20. Comparative Information
This note is required when prior-year figures have been reclassified
       

Consider comments or follow-up from prior year:

Appendix C - Severance Benefit Liability

Context and application: In line with Treasury Board Accounting Standard (TBAS) 1.2, departments are reminded that they must account for their provision and related severance benefit liability in their 2013-2014 financial statements. This applies to all organizations defined as departments in accordance with section 2 of the Financial Administration Act.

Calculation: The calculation of the severance benefit liability is composed of two components – the determination of the allowance and the establishment of the payable at year-end (PAYE).

Determination of the allowance

The determination of the severance benefit allowance relating to public service employees reflects the elimination of severance benefits for voluntary departures for most employee groups. In order to perform the calculation, the annual gross payroll subject to severance benefits, which is the total of annual salary rates for indeterminate employees as at , is to be divided as follows:

  1. Annual gross payroll for employees where the accumulation of severance benefits for voluntary departures has been eliminated and the employee election for immediate cash-out or payment upon departure from the public service has been submitted on or prior to ; and
  2. All other employees.

The severance benefit allowance is calculated by multiplying each of these two payroll amounts by the applicable severance percentage factor as indicated in the table below:

  1. Employees with severance benefits eliminated and employee election has been submitted on or prior to 2. All other employees
Severance rate 2013-2014 5.84% 22.86%
Severance rate 2012-2013 6.7% 26.4%

The severance percentages are derived from the actuarially determined obligation for severance benefits for the entire public service population, taking into account the plan curtailments of most groups of employees and the plan settlements to date. The severance percentages are based on the assumption that 75% of participants have decided to receive their severance benefits on the date of the plan curtailment and 25% will receive their severance benefits on termination.

Note that if an entity requires a different assumption than 75%‒25% for employee election noted above, please contact Sylvie Cossette by e-mail or by telephone at 613-946-4058.

Within the core public administration, a tentative agreement with the Ship Repair East (SRE) employee group, which provides for the elimination of the accumulation of severance benefits, has not yet been signed. Also, certain bargaining units in the following separate agencies have not yet eliminated severance benefits for voluntary departures at : National Research Council, Canada Revenue Agency, Statistics Survey Operations, and Communications Security Establishment Canada. Therefore, the severance rate for the “All other employees” category in the table above should be used. For additional detail on the specific bargaining units within the separate agencies listed above that have not yet eliminated severance benefits, please contact Sylvie Cossette by e-mail or by telephone at 613-946-4058.

The table below identifies employee groups who have signed collective agreements in 2013-2014 that include the elimination of severance benefits for voluntary departures. However, the employee election date to opt for settlement of severance benefits varies between organizations for each employee group. Therefore, organizations will have to determine whether employees in the following groups have submitted their elections on or before and use the corresponding severance rate in the table above.

Employee groups that signed collective agreements in 2013-2014 that include the elimination of severance benefits for voluntary departures
Group BUD Code Agreement Signed Severance Accumulation Terminated Effective
Financial Management (FI) 304
Applied Science and Patent Examination (SP) 201, 202, 205, 206, 211, 218, 222, 224, 230
Ships’ Officers (SO) 410
Ship Repair (All Chargehand and Production Supervisor Employees Located on the East Coast) (SRC) 663
Technical Services (TC) 403, 405, 406, 407, 408, 413
Correctional Services (CX) 601, 651
Aircraft Operations (AO) 401
Foreign Service (FS) 312
Border Services (FB) 610

Accounting entry for the allowance

The following accounting entry should be recorded in Central Financial Management and Recording System (CFMRS) to reflect the change in the severance benefit allowance calculated above relating to public service employees for the department.

year-end entry (assuming an increase in the liability):

Amount FRA Auth Obj

Table 1 Notes

Table Note 1

51846 - Provision for severance benefits - public service

Return to table 1 note 1 referrer

Table Note 2

F124 - Allowances set up for severance pay

Return to table 1 note 2 referrer

Table Note 3

0186 - Other Supplementary Personnel Costs (new)

Return to table 1 note 3 referrer

Table Note 4

21415 - Allowance for severance benefits - departments

Return to table 1 note 4 referrer

Table Note 5

F413 - Charges to accruals for severance pay

Return to table 1 note 5 referrer

Table Note 6

7023 - Allowance for employee benefits

Return to table 1 note 6 referrer

DR Provision for Severance Benefits - PS

[$ amount] 

51846table 1 note 1

F124table 1 note 2

0186table 1 note 3

CR Allowance for Severance Benefits

 [$ amount]  21415table 1 note 4 F413table 1 note 5 7023table 1 note 6

Establishment of the PAYE

The severance benefit allowance calculation above assumes that employees electing immediate cash-out of severance have been paid. Therefore, a PAYE and a charge against the appropriation must be established for employees who have elected to receive immediate cash-outs but are not yet paid as at .

In addition, the actual severance benefit payable to individuals who have been struck off strength by must also be established as a PAYE and charged against the appropriation.

Accounting entry for the PAYE 

All PAYE related to severance benefits must be recorded in CFMRS to the coding below in order to facilitate the year-end central entry process. If you have already recorded the entry, we ask that the entry be reversed and recorded to the following:

Amount FRA Auth Obj

Table 2 Notes

Table Note 1

51311 - Salaries and wages (including allowances)

Return to table 2 note 1 referrer

Table Note 2

B11A - Program Expenditures or Operating Expenditures Vote, B12A may also be appropriate

Return to table 2 note 2 referrer

Table Note 3

0186 - Other Supplementary Personnel Costs (new)

Return to table 2 note 3 referrer

Table Note 4

21415 - Allowance for severance benefits - departments

Return to table 2 note 4 referrer

Table Note 5

R300 - Total (or net, as applicable) amounts of all other assets and of all other liabilities

Return to table 2 note 5 referrer

Table Note 6

6299 - Net increase or decrease in other liability

Return to table 2 note 6 referrer

DR Salaries and Wages  

[$ amount] 

51311table 2 note 1

B11Atable 2 note 2

0186table 2 note 3
CR Allowance for Severance Benefits [$ amount]  21415table 2 note 4 R300table 2 note 5 6299table 2 note 6

Annual expense: The 2013-2014 annual expense for severance benefits is determined by the difference between your opening and closing severance benefit liability, added to (or subtracted from) the actual severance expenditure for the year.

Financial statement presentation: The presentation in departmental financial statements of the severance benefit liability and related expense should be in line with TBAS 1.2.

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