Guide to Costing - Checklists

Table of Content

Step 1 - Cost Purpose Checklist

  1. What management decisions will be supported by the costing information? Please specify these decisions.
  2. What is the business issue or issues that triggered the need for cost information?
  3. Are there any central agency, legislative, or policy requirements that may affect the definition of the purpose or determination of the cost base? If yes, please describe these requirements. Did you take them into consideration? If not, please justify this decision.
  4. Who are the stakeholders in the costing project?
  5. What is the scope of the costing exercise? Please list the organizations involved (internal and external), the program activities, the program support services, and the specific IS activities involved.
  6. Are there any OGDs that will be affected by the initiative being costed, and have they been consulted?
  7. What is the time period to be covered by the costing exercise?
  8. What assumptions were made while defining the costing purpose? Have all assumptions been documented along with the supporting rationale?
  9. Does the defined purpose require information on incremental costs, full costs, or both?
  10. Is the cost information needed on a recurrent basis? If so, please specify the rate of recurrence.
  11. What are the deliverables? Please list and describe them along with the related timelines and recipients.
  12. Have all stakeholders been consulted in this step to define the purpose? If not, please explain why not.
  13. Has the defined purpose been confirmed by the ultimate end-user of the information?
  14. Have you documented the defined purpose?

Signature

*Departments are encouraged to add to this checklist to meet their own needs.

Step 2 - Checklist for Defining the Cost Objects

  1. Given the defined purpose, what are the cost objects (such as products, services, regional offices, processes, and program activities) to be costed? Please specify.
  2. Did you use the cost object template provided in Annex B?
  3. Did you consult with the various users of the cost information in order to define your cost objects?
  4. Have you reviewed the appropriate documents related to the defined purpose (such as PAA, RPP, user fee information, audit reports, and public accounts)?
  5. Does your choice of cost objects fully satisfy the defined purpose?
  6. Have the relevant stakeholders (internal and external) confirmed the defined cost objects?
  7. Have you documented your selection of cost objects?

Signature

*Departments are encouraged to add to this checklist to meet their own needs.

Step 3 - Cost Base Checklist

  1. What are the fiscal years to be included in the costing exercise?
  2. Does your departmental financial structure (chart of accounts) allow you to gather costs that are relevant to the purpose and the cost objects? If not, how will you obtain the necessary information?
  3. Is the cost base composed of actual, standard, budget, forecasted costs, or a mix of these costs? Have you documented the rationale for choosing the cost base?
  4. Are any standard costs or rates part of the cost base? How were they developed? Have they been updated within the last two years? If not, please justify.
  5. Has management approved your standard cost rates?
  6. For estimated and forecasted costs, describe the technique used and document all assumptions.
  7. Have senior management and other relevant stakeholders (internal and external) validated your assumptions?
  8. For actual costs, did you consider using a combination of various fields in the departmental financial coding block to build your cost base? Describe the combination.
  9. Have you considered the direct program costs, such as salary, O&M, and capital? Please describe.
  10. Have you considered the support costs of the program to which the cost objects belong? Please describe.
  11. Have you considered the IS costs that are relevant to the purpose and the cost objects? Please describe.
  12. Have you considered the centrally managed costs, such as EBP, legal services, and those pertaining to PWGSC? Please specify.
  13. Is the entity to be costed a revolving fund? Are the financing costs relevant to the defined purpose and cost objects? Please justify.
  14. Have you considered the amortization costs? Please specify the source of your information.
  15. Did you consult with your partner department or departments for joint or horizontal initiatives and for shared service delivery?
  16. Did you consider other departments’ costs related to joint or horizontal initiatives?
  17. Did you consult with the program managers and IS managers (such as for communications, legal, finance, HR, informatics, and material management)?
  18. Did you use the preceding cost base template to determine the relevant costs?
  19. Did the users of cost information confirm the final cost base?
  20. Have you documented your cost base, including such factors as data sources, financial coding fields used, standard costs, forecasting techniques, and assumptions?

Signature

*Departments are encouraged to add to this checklist to meet their own needs.

Step 4 - Cost Classification Checklist

  1. Have you classified each element in your cost base as either “direct,” “indirect” program support, or “indirect” IS?
  2. In order to classify all elements as either “direct” or “indirect,” have you consulted the providers of those services and activities? If not, please justify.
  3. Will the use of available financial systems data assist you in classifying each item as either “direct” or “indirect”? For instance, the extraction from the financial system of the following fields of information may assist you:
    • responsibility centre (RC);
    • purpose (program, activity, or project);
    • object (line object, standard object, or economic object); and
    • a combination of program activity, purpose, object, and RC.
  4. Have the relevant internal and external stakeholders confirmed your cost classification? If not, please justify.
  5. Have you documented your cost classification process, including all assumptions?

Signature

*Departments are encouraged to add to this checklist to meet their own needs.

Step 5 - Cost Assignment Checklist

  1. Have you assigned your direct program costs to the cost objects?
  2. In what sequence did you allocate the following indirect costs? Please explain.
    1. Internal services (IS)
    2. Program support costs
  3. In designing a costing approach, did you assess the investment in time and resources and level of precision necessary against the benefits to be derived from that investment to ensure that there is a balance?

Internal services (IS) costs

  1. In consultation with the IS managers, have you identified any IS areas that provide a significant amount of service to another IS area, and will you reflect those interactions in the cost base and allocation (as per CMA Management Accounting Standard 2400-4)? This approach requires judgment.
  2. In consultation with the IS managers, have you identified IS costs that can be attributed directly to the target cost objects? If yes, have you attributed these costs to the cost objects and excluded them from the IS costs to be allocated using another basis of allocation?
  3. For the remaining IS costs, have you consulted the IS managers for the purpose of assessing the extent to which there is a cause-and-effect relationship between their costs and the target cost object? Explain how you assessed the cost drivers. Is it appropriate to pool some or all of them before allocating them to the cost objects? Describe and justify the use of the pooling process. Describe the cost drivers identified.
  4. For those IS costs that bear no causal relationship with the target cost objects, have you pooled and allocated them using a reasonable basis, such as the number of FTEs, salary budget, or operating budget?

Program support costs

  1. In consultation with the program support managers, have you identified the program support costs that can be directly traced to the target cost objects (such as dedicated units)? If yes, have you attributed these costs to the cost object and excluded them from the remaining program support costs to be allocated using another basis of allocation?
  2. For the remaining program support costs, have you consulted the appropriate managers for the purpose of assessing to what extent there is a cause-and-effect relationship between these costs and the target cost object? Explain how you assessed the cost drivers. Is it appropriate to pool some or all of them before allocating them to the cost objects? Describe and justify the use of the pooling process. Describe the cost drivers identified.
  3. For indirect program support costs that bear no causal relationship with the target cost objects, have you pooled and allocated them using a reasonable basis?

Documentation

  1. Have you documented your cost assignment process, assumptions, and details of data sources?

Signature

*Departments are encouraged to add to this checklist to meet their own needs.

Step 6 - Calculations and Results Validation Checklist

Calculations

  1. Please describe the customized spreadsheets and specify the costing software and other methods you used.
  2. Did you ensure that that all the headings and data (cost objects, cost base, cost pools, cost drivers, and related volumes) were accurately entered into the spreadsheet or software program? Did you add footnotes where needed? Did you confirm that the formulae are correct?
  3. Have you performed all the relevant calculations up to the unit cost (if needed)?

Results validation

  1. Did you review the checklists and sign-offs of the first five steps to ensure that all work was completed, at a minimum, in compliance with this Guide?
  2. Did you ensure that the data sources, assumptions, methodology, and calculations are valid by reconciling them with the financial reports corresponding to the time period covered by the costing exercise?
  3. Have you reconciled the resulting cost information (in the cost objects) with your cost base?
  4. Have you collected the appropriate financial information from the appropriate sources?
  5. Have you verified the mathematical accuracy of your calculations?
  6. Have you confirmed that the resulting cost information is reasonable?
  7. Have you collected the appropriate non-financial information, such as the drivers’ volumetrics, from the appropriate sources? Please describe the non-financial data and its sources.
  8. Did you need to calculate a unit cost? If yes, have you collected the appropriate output and outcome volumes from the appropriate sources?
  9. Have you reviewed the supporting checklists for Steps 1 through 5 for completeness?
  10. Have you consulted with stakeholders (internal and external) and senior management and confirmed that the results of the costing exercise respond to the purpose statement that was defined at the outset?

Signature

*Departments are encouraged to add to this checklist to meet their own needs.

Step 7 - CFO Sign-off Template

 

Yes/No

(If negative, please explain)

1. Has the DCFO signed-off to confirm that adequate consultation with the end-user took place in order to clearly define the purpose of the need for the cost information?

 

2. Has the DCFO signed-off to confirm that adequate consultation for the purpose of capturing all relevant costs took place between the DCFO organization, program and IS managers, and OGDs?

 

3. Has the DCFO signed-off to confirm that all methodologies used, data sources, and assumptions were documented?

 

4. Has the DCFO signed-off to confirm that all other supporting internal sign-offs have been completed by the necessary stakeholders?

 

5. Has the DCFO signed-off to confirm that the first six steps detailed in the Secretariat Guide to Costing have been followed and that the templates and checklists have been completed for each? (This, the CFO sign-off, is the seventh step.)

 

CFO signature

In my capacity as CFO, I attest that in my professional opinion the costing information was prepared in accordance with the Guide to Costing; the information is fairly presented; proper analysis has been performed; and due diligence has been exercised.

*Departments are encouraged to add to this checklist to meet their own needs.

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