Reporting Requirements for Departmental and Agency Financial Statements for Fiscal Year Ending March 31, 2013

Date: 

Message from Sylvain Michaud, Executive Director, Government Accounting Policy and Reporting, Office of the Comptroller General

To: Deputy Chief Financial Officers

This is to advise departments and agencies of the reporting requirements for departmental and agency financial statements for the year ending , and to provide specific information on the following:

  • General requirements and due dates;
  • Change in audit status;
  • Severance benefits liability;
  • Pension benefits: department contribution rate for the Public Service Pension Plan;
  • Obligation for termination benefits: disclosure update;
  • Services provided without charge by Shared Services Canada; and
  • Transition provision for financial instruments and foreign currency as set out in the Public Sector Accounting Standards.

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 2012-13 DPR.

Departments and agencies are required to submit the following:

  • An unsigned electronic version of the financial statements (i.e., near final draft) in either official language no later than . 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 August 30, 2013. 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.

Electronic copies of the financial statements must be forwarded by e-mail.

Entities that are being audited on a stand-alone basis are not required to send their draft to the Office of the Comptroller General (OCG); only a final signed electronic version should be sent, along with the auditor's report when it is available.

All entities must use Treasury Board Accounting Standard 1.2 to prepare their financial statements for the 2012-13 fiscal year. To assist with the preparation of the financial statements, a Frequently Asked Questions document is available, as is the assessment tool document.

The OCG will hold information sessions for financial officers who are directly involved in preparing financial statements and who would like supplementary assistance. These sessions will discuss common errors found in draft financial statements and will include a question and answer period. Entities can send up to two representatives to any one of the following sessions:

  • , 10:00 to 11:00 am (English)
  • , 1:30 to 2:30 pm (French)
  • , 1:30 to 2:30 pm (English)

All sessions will be held in Meeting Room 8D, West Tower, 300 Laurier avenue West, Ottawa. To reserve a place, please send an email to Ahmad Mir.

If you have any questions on the standard, please do not hesitate to contact Anne-Marie Dionne by e-mail or by phone at 613-952-1004, or Andrée Pelchat by e-mail or by phone 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 or will be eliminated. For the entities affected by this change, we ask that you inform the OCG of the change in your audit status for the 2012-13 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.

Severance Benefits Liability

Annex A provides information on how to calculate the severance benefits liability and expense relating to severance for public service employees, coding for accounting transactions including new coding for payables at year-end (PAYE), and financial statement disclosure requirements.

Entities should strive to record these adjustments in P12-2.

Please note that entities are not bound by the severance benefits 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.

Pension Benefits: Department Contribution Rate for the Public Service Pension Plan

Both the employees and the Department contribute to the cost of the plan. The 2012-2013 expense represents approximately 1.7 times (1.8 times for 2011-2012) the contributions by employees. This rate should be disclosed in the relevant note of your financial statements.

Should you have any questions about calculating severance benefits liability or the pension contribution rate, 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 Anne-Marie Dionne by e-mail or by telephone at 613-952-1004.

Obligation for Termination Benefits: Disclosure Update

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 2012-2013 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.

The obligation for termination benefits will continue to be recorded centrally and only the PAYE should be recorded by departments in the Central Financial Management and Reporting System (CFMRS) as per the additional guidance provided on on Departmental Financial Requirements for Fiscal Year .

For presentation purposes in the departmental financial statements, the obligation should include the amount recorded in the 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. Disclosure should be provided in Note 4, 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:

Accounts payable and accrued liabilities
  2013 2012
(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 an amount of $xxx ($yyy in 2011-2012) 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 phone at 613-946-4058. Questions about presenting these items in the financial statements should be directed to Anne-Marie Dionne by e-mail or by phone at 613-952-1004.

Services Provided Without Charge by Shared Services Canada

As per last year, the estimated cost of services provided without charge by Shared Services Canada are not to be accounted for nor presented in the financial statements.

Transition Provision for Financial Instruments and Foreign Currency Public Sector Accounting Standards

This note is to provide guidance on the transition date to PS 3450, Financial Instruments; PS 2601, Foreign Currency Translation; and PS 1201, Financial Statement Presentation.

These standards contain transitional provisions that state that government organizations apply the standards in fiscal years commencing , fiscal year 2012-2013, whereas governments apply the standards in fiscal years commencing . The intent of the earlier transition date was to provide continuity for those government organizations previously applying the financial instruments standards in the Canadian Institute of Chartered Accountants Handbook that were transitioning to the Public Sector Accounting (PSA) Handbook. The later date for governments is to allow entities that had not previously applied financial instruments standards additional time for their implementation.

Since entities have been applying the same accounting policies as the government, which are in accordance with the PSA Handbook, these new standards should be implemented on . This allows additional time for implementation. Treasury Board Accounting Standard 1.2 will be updated in the 2015-2016 fiscal year to reflect the impact of these new standards.

Should you have any questions about adopting these standards, please contact Leona Melamed by e-mail or by phone at 613-946-7538. Questions on preparing departmental financial statements should be directed to Andrée Pelchat by e-mail or by phone at 613-957-9853.

Annex A: Severance Benefits 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 benefits liability in their 2012-13 financial statements. This applies to all organizations defined as departments in accordance with section 2 of the Financial Administration Act.

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

  • Annual gross payroll for employees in groups where severance benefits have been eliminated (these employee groups are indicated in the table below); and
  • All other employees.

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

1. Employee Groups with Severance Eliminatedtable 1 note * 2. All Other Employee Groups

Table 1 Notes

Table Note 1

For groups with severance eliminated but for which employee elections were not yet due as of , please use the rate in column 2 ("All Other Employee Groups").

Return to table 1 note * referrer

Employee groups included

AI, UT, PE, OM, PMMC (01-04), PA, SV, PE, EX and other senior employees, NR, SH, EC, TR, EL, RO, PR(NS), SR(W), CS and RE (see Appendix B for more detail)

All other groups

Severance rate 2012-13

6.7%

26.4%

Severance rate 2011-12

6.1%

26.4%

The severance percentages are derived from the actuarially determined liability for severance benefits for the entire public service population, taking into account the plan curtailments of the groups noted above. For the groups with severance elimination, the severance percentage is based on the assumption that 75% of participants will decide to receive their severance benefits on the date of the curtailment and 25% will receive their severance benefits on termination. The 2012-13 annual expense for severance benefits is determined by the difference between your opening and closing liability, added to (or subtracted from) the actual severance expenditure for the year.

Please 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 or Anne-Marie Dionne by e-mail or by telephone at 613-952-1004.

Special attention must be paid to employee groups for which the employee elections related to severance benefits elimination (for immediate cash-out or payment on retirement) are not yet due as at . These groups should use the rate for "All Other Employee Groups" category for the purposes of this calculation.

The severance benefits liability calculation above assumes that employees electing immediate cash-out of severance have been paid. Therefore, a payable at year-end (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, actual severance benefits payable for severance payments to individuals who have been struck off strength by ,must also be established as a PAYE and charged against the appropriation.

Accounting Entries 

1) The following accounting entry should be recorded in CFMRS to reflect the change in the severance benefits liability calculated above relating to public service employees for the department:

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

Amount FRA Auth Obj

Table 2 Notes

Table Note 1

51846 - Provision for severance benefits - public service

Return to table 2 note 1 referrer

Table Note 2

F124 - Allowances set up for severance pay

Return to table 2 note 2 referrer

Table Note 3

3469 - Charges to other liability accounts

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

F413 - Charges to accruals for severance pay

Return to table 2 note 5 referrer

Table Note 6

7023 - Allowance for employee benefits

Return to table 2 note 6 referrer

DR Provision for Severance Benefits - PS

[$ amount] 

51846table 2 note 1

F124table 2 note 2

3469table 2 note 3
CR Allowance for Severance Benefits [$ amount]  21415table 2 note 4 F413table 2 note 5 7023table 2 note 6

2) New this year, the following accounting entry should be recorded in CFMRS to establish the PAYE for employees electing immediate cash-out of severance benefits and severance payments to individuals who have been struck off strength by ,who have not been paid at .

All PAYE related to severance benefits must be recorded 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 3 Notes

Table Note 1

3469 - Charges to other liability accounts

Return to table 3 note 1 referrer

Table Note 2

21415 - Allowance for severance benefits - departments

Return to table 3 note 2 referrer

Table Note 3

51311 - Salaries and wages (including allowances)

Return to table 3 note 3 referrer

Table Note 4

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

Return to table 3 note 4 referrer

Table Note 5

7099 - Net increase or decrease in other transactions

Return to table 3 note 5 referrer

Table Note 6

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

Return to table 3 note 6 referrer

Table Note 7

6299 - Net increase or decrease in other liability

Return to table 3 note 7 referrer

DR Salaries and Wages  

[$ amount] 

51311table 3 note 3

B11Atable 3 note 4

3469table 3 note 1/7099table 3 note 5
CR Allowance for Severance Benefits [$ amount]  21415table 3 note 2 R300table 3 note 6 6299table 3 note 7

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

Appendix B Employee groups with severance elimination

Group BUD Code Agreement Signed Severance Accumulation Terminated Effective
Air Traffic Control (AI)

402

University Teaching (UT)

227

Personnel Administration Group (PE)

307

Organizational and Methods Group (OM)

306

PMMC-(01-03)

30801

PMMC-04

30801

Program and Administrative Services (PA)

301, 305, 308, 310, 501, 502, 503, 504, 505

Operational Services (SV)

602, 652, 603, 653, 604, 654, 605, 655, 606, 656, 607, 657, 612, 662, 659

Education and Library Services (EB)

209, 215, 414

Executive Group (EX) and other senior employees including

 

EX

102, 104

Deputy Ministers and Governor in Council appointed after

701, 710

Defence Scientific Service (DS)-07 and DS-08

229

Excluded Medical Officers and Medical Specialists

217

Architecture, Engineering and Land Survey (NR)

203, 210

Health Services (SH)

207, 213, 217, 219, 220, 221, 223, 226, 228

Economics and Social Science Services (EC)

208, 412, 231

 

Translation (TR)

313

 

Electronics (EL)

404

 

Radio Operations (RO)

409

 

Non-Supervisory Printing Services [(PR(NS)]

609

 

Ship Repair (West) [SR(W)]

614

 

Computer Systems (CS )

303

 

Research (RE)

212, 216, 225, 229

Audit, Commerce and Purchasing (AV)

204, 309, 311

Audit, Financial and Scientific (AFS) at Canada Revenue Agency

90540, 90541, 90542, 90550, 90552, 90560, 90500, 90502, 90543, 90561 90503, 90597, 90546, 90549, 90548, 90564, 90499

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