Department of Finance Canada Future-Oriented Statement of Operations (unaudited) - 2026

For the year ending
March 31, 2027

Notes to the Future-Oriented Statement of Operations (unaudited)

1. Methodology and significant assumptions

The Future-Oriented Statement of Operations (FOSO) has been prepared on the basis of the government priorities and departmental plans as described in the 2026–27 Departmental Plan of the Department of Finance Canada (the department).

The information in the forecasted results for fiscal year 2025 to 2026 (2025–26) is based on actual results as at 30 November 2025 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for fiscal year 2026 to 2027 (2026–27). The fiscal year starts April 1 and ends March 31.

The main assumptions underlying the forecasts are as follows:

• Operations and statutory requirements of the department will remain substantially the same as the previous year;
• Significant management estimates are consistent with those disclosed in the most recently published departmental financial statements unless otherwise indicated;
• Expenses and revenues, including the determination of amounts internal and external to the government, are based on past experience. The general historical pattern is expected to continue;
• Foreign exchange gains and losses and other gains or losses, such as those arising from the sale of marketable securities, are not forecasted past the actual results as at 30 November 2025 given the high degree of uncertainty inherent in forecasting these items;
• Amounts reported for certain investment income and interest on bank deposits incorporate forecasts of future interest rates derived from current yield curves and average private sector forecasts; and
• Certain other external economic and market variables which can impact the net cost of operations of the department are assumed to be consistent throughout the forecast periods in order to permit comparability of financial results. These variables can fluctuate significantly.

These assumptions are made as at January 16, 2026.

2. Variations and changes to the forecast financial information

Although every attempt has been made to forecast final results for the remainder of 2025–26 and for 2026–27, actual results achieved for both years are likely to differ from the forecast information presented, and this variation could be material.

In preparing this FOSO, the department has made estimates and assumptions about the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are based on past experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances and are continually evaluated.

Factors that could lead to material differences between the FOSO and the historical statement of operations include:

• Changes in foreign-exchange, interest and inflation rates;
• Future legislative, budgetary and policy requirements;
• Borrowing requirements of Crown corporations participating in the Crown Borrowing Program;
• The level or mix of the Official International Reserves of Canada, and the gain or loss from sales of marketable securities in the Exchange Fund Account;
• Changes to the operating budget through new initiatives, programs, or technical adjustments following the preparation of this report;
• Implementation of new collective agreements; and
• Economic conditions, which may affect both the amount of revenue earned and the collectability of loans receivable.

After the Departmental Plan is tabled in Parliament, the department will not be updating the forecasts for any changes, including with respect to economic conditions or subsequent spending authorities requested or granted.

3. Summary of significant accounting policies

The FOSO has been prepared using the Government of Canada's accounting policies in effect for fiscal year 2025–26, and is based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

a) Expenses

• Expenses are reported on an accrual basis;
• Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established therefore. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses when enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements;
• Interest expense is recognized using the effective interest method (EIM). For items classified as cost or amortized cost, transaction costs (including the cost of issuing new borrowings) are added to the carrying amount at initial recognition and subsequently recognized in interest expense using the EIM; Debt servicing costs are expensed as incurred and presented in interest and other costs;
• The cost of domestic coinage sold is recognized in the period in which the related sale takes place;
• Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment;
• Services provided without charge by other Government departments for accommodation, employer contributions to health and dental insurance plans and legal services are recorded as operating expenses at their estimated cost; and
• Expenses include amortization of tangible capital assets used in operations, which is computed on a straight-line basis over the estimated useful life of the assets.

b) Revenues

• Revenues are reported on an accrual basis;
• Interest income is recognized using the effective interest method. Investment income other than interest income is recognized as revenue in accordance with the terms and conditions of underlying agreements or relevant legislation, as applicable;
• Sales of domestic coinage are recognized in the period in which the sales take place;
• Interest on bank deposits is recognized as revenue when earned;
• Guarantee fees are recognized when earned and are determined by reference to the terms of the guarantee program or underlying contract;
• Uncashed Receiver General cheques, warrants and bank account cheques for all departments and agencies are recognized as revenue of the department if they remain outstanding for 10 years after the date of issue;
• Unclaimed matured bonds are recognized as revenue if they remain unredeemed for 15 years after the date of call or maturity, whichever is earlier;
• Unclaimed bank balances are recognized as revenue when there has been no owner activity in relation to the balance for a period of 40 years for balances under one thousand, and for 100 years for balances over one thousand;
• Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place; and
• Revenues earned on behalf of Government are non-respendable revenues which are not available to discharge the department's liabilities. While the Deputy Minister of the department is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are presented as a reduction of the department's gross revenues.

4. Parliamentary authorities

The department is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the department differs from financial reporting according to generally accepted accounting principles because authorities are based mainly on cash flow requirements. Items recognized in the Future-Oriented Statement of Operations in one year may be funded through parliamentary authorities of prior, current, or future years. Accordingly, the department has a different net cost of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables: