TBAS 1.2 - Frequently Asked Questions

It all depends on what type of authority the department has regarding the respending of the principal and interest components of the loan. If the receipts of the loans receivable (principal portion), once received by the department, cannot be used to discharge existing liabilities or issue new loans, then these amounts should be offset (reported in the “financial assets held on behalf of Government”). If the receipts of the loans receivable (principal portion), once received by the department, can be used to discharge liabilities or issue new loans, then these amounts should remain in the financial statements and not be offset.

For the interest component as well, the classification depends on whether or not the funds can be respent. Please note that it is possible that the principal portion and the interest portion of the same loan can be disclosed differently.

No, loans that are managed within an authorized limit, i.e., the receipts of loans can be used to issue new loans without further parliamentary authorization, are not considered “financial assets held on behalf of Government”.

For the related interest component, if the interest amounts cannot be respent, the interest receivable and the revenues must be offset in the respective sections of the financial statements, “held/earned on behalf of Government.”

If the receipts of the loans receivable, once received by the department, cannot be used to discharge existing liabilities, then these amounts should be offset (reported in the “financial assets held on behalf of Government”).

The related transactions arising from the recording of the loans receivable, including the recording of the discount and the future amortization of the unamortized discount component, should be classified in the same manner as the related loans receivable.

No, accountable and standing advances should be treated as prepaid expenses because they represent funds that have already been disbursed and that will be recorded as an expense in a future period. Departments are not expecting that these funds will be returned, so the question of “held on behalf of Government” does not apply in this situation.

This would depend on whether the amounts stem from respendable amounts, or not. If the receivable is of a non-respendable nature, then it would be included in the “financial assets held on behalf of Government”; if not, the receivable would stay in the department’s financial assets.

No, GST/HST is special in nature as it affects both the payables and the receivables, and the amounts are netted in the financial statement presentation. A GST/HST payable represents a financial obligation of the department to the Canada Revenue Agency (CRA) as the department has collected taxes on the CRA’s behalf. A GST/HST receivable represents rights to receive funds from the CRA to pay the GST/HST portion of the supplier invoice.

As a result, if the GST/HST net balance is an amount payable, this amount payable is not to be offset in the section “liabilities held on behalf of Government” because it is an obligation of the department. If the GST/HST net balance is an amount receivable, this receivable is available to use to offset the GST/HST portion of the supplier invoices included in your accounts payable; it is not to be offset in the section “financial asset held on behalf of Government”.

No, an SPA representing a financial obligation of the department to a third party from whom the funds were received through either a statutory or a contractual obligation should not be reported as “liabilities held on behalf of Government” since this is an obligation of the department. These amounts should continue to be presented in the departmental financial statements and should not be offset as “liabilities held on behalf of Government”.

Generally yes, non-respendable revenues reported for the purpose of Volume II of the PA provide a good indication that the revenues are non-respendable for the purpose of the DFS. However, caution should be used to ensure that these non-respendable revenues meet the accrual accounting definition of revenues for the purpose of DFS.

Differences will exist between Volume II of the PA and the DFS. For example, the reimbursement of prior years’ expenditures and the adjustment to prior year’s payables are recorded as revenue in Volume II of the PA; however, these transactions are not considered revenue from a DFS perspective. Also, there are revenues recorded as respendable in the DFS that could be considered non-respendable in Volume II of the PA, such as the revenue for departmental corporations. Another indication that the department has respendable revenues is if the department does not receive an appropriation or receives an appropriation for only a portion of its operating costs.

Generally no, for the purpose of Volume II of the PA, revenues are reported differently depending on the departments’ type of authorities such as for departmental corporations. Even if these amounts are reported as non-respendable for the purpose of PA, if a dollar earned gives the department the right and authority to spend a dollar, then in substance these revenues are respendable for the purpose of the DFS.

For the purpose of DFS, these revenues which can be spent in future years should be considered regular respendable revenues and should not be presented in the section “revenues earned on behalf of Government.” These revenues will also have an impact on the Note 3a reconciliation in the year they are earned because they will be in the net cost of operations, but not in the authorizations used. In these cases, a reconciling item will have to be added to Note 3a to consider this and could be entitled “Revenues not available for spending in the fiscal year”.

No, for the purpose of Volume II of the Public Accounts of Canada, the refund of prior years’ expenditures and adjustment to prior year’s payables are reported as revenue that is non-respendable. For the purpose of the DFS, these transactions are considered adjustments to previously recorded expenses. The transactions regarding refunds of prior years’ expenditures and adjustments to prior year’s payables in an accrual accounting framework are not revenues; they should therefore remain in the DFS and not be offset in the “expenses incurred on behalf of Government” section.

Yes, proceeds received from the sale of surplus Crown assets are established as a spending authority for a period of two years. For the purpose of Volume II of the Public Accounts of Canada, these amounts are presented on a modified cash basis of accounting. The transaction that gave rise to this authority to spend is the sales transaction. For the purpose of the DFS, the sales transaction is accounted for as part of the gain or loss on the disposal of the capital assets. Since the amounts of the proceeds are respendable within two years of the disposal of the asset, this portion of the gain or loss is expected to remain in the DFS.

Yes, the planned results originating from the department’s FOFS for 2011–12 should be restated to reflect the accounting policy changes for presentation in the DFS.

In order to comply with Public Sector Accounting Standards PS 1200.122 on Financial Statement Presentation, note disclosure should be added to inform the reader of the changes to the planned amounts disclosed in the financial statements. In the paragraph below, please see the text in bold to add to your DFS:

TBAS 1.2 – 4.Financial statements package - Note 2 (a) Parliamentary authorities––The Department is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Department do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. (Departments including planned results in the Statement of Operations and Departmental Net Financial Position should add the following: The planned results amounts in the Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2011-12 Report on Plans and Priorities). The future-oriented financial statements for 2011-2012 have been restated to reflect the revenue net of non-respendable amounts. This restatement resulted in a $xx increase in net costs of operations before government funding and transfers. In addition, the future-oriented financial statements have also been reclassified to conform to the current year presentation.

Specific guidance on the disclosure of the estimated WFA cost included in Budget 2012 has been issued in a separate communication on June 5, 2012.

No, when the FOFS were prepared for 2011–12, the new organization SSC had not been announced. The forecast presented in the financial statements represents the estimated amounts at a certain point in time, in this case, at the date of preparation of the FOFS. For this reason, SSC amounts must remain in the planned amounts.

However to ensure comparability of the information presented, the transferred operations relating to SSC that are included in the planned results should be reclassified to the transferred operations section to be consistent with the presentation of the actual results in the financial statements and to comply with PS 1200.122 on Financial Statement Presentation.