Severance Pay Liability in Departmental Financial Statements 2005-06
To: Senior Full-time Financial Officers
The purpose of this note is to communicate to departments the requirement to include in their financial statements for fiscal year 2005-06 the severance pay liability for their eligible employees. As explained in the 2001-02 Financial Information Strategy Transition Protocol, the accounting for certain allowances and liabilities recorded centrally was not devolved to departments. The devolution of central allowances has progressed over the last couple of years with the allowance for loan guarantees being devolved in fiscal year 2003-2004 and the allowance for environmental liabilities being devolved in 2004-2005. The devolution of additional items has occurred in 2005-06, such as the allowance for contingent liabilities. A key objective of this initiative is to enable departments to produce financial statements which include all allowances and liabilities relevant to their operations.
The attached document (Accounting Treatment for Severance Pay Liability) provides information on how to calculate the liability and expense, coding for the accounting transactions and the financial statement disclosure requirements.
If you have any questions, contact me at 957-2527 or Lemyre.Chantal@tbs-sct.gc.ca.
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