Report of the Senior Committee on the Review of the Financial Management Framework of the Government of Canada
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Annexe E - Financial Management Policy Framework and Related Suite of Policies
E-5: Policy on Financial Information and Reporting - Draft
1. Effective date
1.1 This policy takes effect on XXX 1, 20XX. Upon approval of the Financial Management Policy Framework and the related suite of financial management policies, an implementation schedule, including full compliance instructions, will be issued.
1.2 The Policy on Financial Information and Reporting supersedes Treasury Board Accounting Standard (TBAS) 1.1 - Policy and Principles (dated September 21, 1999).
1.3 For year-end occurring after April 1, 20XX, unless an exemption has been granted by the President of the Treasury Board, the annual departmental financial statements will be audited and accompanied by an independent audit opinion report.
This policy applies to all departments and organizations defined as departments within the meaning of section 2 of the Financial Administration Act. Throughout this policy, the terms "government-wide" and "across government" refer to these organizations.
3.1 The financial management policy suite is summarized in the Financial Management Policy Framework (FMPF), which includes five financial management core policies and a series of directives and standards supporting the policies. The FMPF establishes the Treasury Board financial management policy structure and provides an overview of the financial management roles and responsibilities of deputy heads and key officials for each policy.
3.2 The financial management policy suite, along with the FAA and its regulations, convey an integrated approach to the discipline of public sector management. Applied consistently across government, this framework fosters public service values such as probity, prudence, equity and transparency and provides clear direction to senior departmental managers on how to be good stewards of public resources and assets, and assist ministers in their accountability to Parliament.
3.3 The Policy on Financial Information and Reporting is one of the five core policies of the Financial Management Policy Framework. This policy outlines the responsibilities of deputy heads, the Comptroller General of Canada, Chief Financial Officers, and senior departmental managers with respect to the management of integrated financial and related non-financial information, and the production of departmental financial statements and public accounts disclosures.
3.4 This policy ensures that departmental decision-making and reporting is supported by integrated financial and related non-financial information that is fairly presented in all material respects, and is timely, relevant, reliable, and complete.
3.5 This policy sets out the requirements for use of Treasury Board Accounting Standards (TBAS) of the Government of Canada in relation to generally accepted accounting principles and reporting standards for financial statements and reporting disclosures.
3.6 At the departmental level, this policy ensures that deputy heads are provided with assurance that departmental accounting processes meet the government's accounting standards and that departmental managers have access to reliable financial and related non-financial information they need to manage effectively.
3.7 The preparation and publication of departmental audited financial statements will result in more reliable financial information for managers government-wide, Parliamentarians, and Canadians in general. Stronger support for the development of common data and financial information infrastructure improves information management across all departments and agencies.
3.8 This policy is consistent with the Policy Framework for Information and Technology, which states that information is a strategic business resource to support decision-making and management activities, policy development, program and service delivery, evidential needs, and for historical purposes.
3.9 For purposes of this policy, all references to the expression "financial information" include both financial and related non-financial information. "Financial information" is any data, information and knowledge used in understanding, managing, and reporting upon the monetary aspects of any activity. "Related non-financial information" is any data, information and knowledge contributing to the understanding, managing and reporting upon, of financial information.
3.10 This policy should be read in conjunction with the Policy on Internal Audit and the other four core policies under the FMPF. Further contextual information is included in the FMPF and in the Foundation Framework for Treasury Board Policies.
3.11 This policy is issued pursuant to section 7 and subsection 9(1) of the Financial Administration Act.
4. Policy statement
The objective of this policy is to define the roles and responsibilities for financial information management and reporting that deputy heads, the Comptroller General of Canada, Chief Financial Officers, and senior departmental managers must exercise and be accountable for in the stewardship, management and oversight of public resources.
The expected results of this policy is a clear understanding by all key stakeholders of their financial information management and reporting responsibilities across government, and fair and timely presentation of financial information.
5. Policy requirements
Accounting standards - Treasury Board Accounting Standards:
5.1.1 Treasury Board Accounting Standards (TBAS) apply to all departments. They are issued under authority of the Financial Administration Act subsection 9(1) and based on Canadian generally accepted accounting principles and public sector guidelines as defined in the Canadian Institute of Chartered Accountants Public Sector Accounting (PSA) Handbook, unless otherwise directed by Treasury Board;
5.1.2 When a specific financial statement item is not found in TBAS, the Chief Financial Officer will exercise professional judgement to adopt accounting policies and disclosures that are consistent with TBAS and the public sector generally accepted accounting principles hierarchy enunciated in the PSA Handbook. When the issue is material, the Chief Financial Officer will obtain advice from the Comptroller General of Canada prior to adoption.
Financial reporting and disclosures - Published financial statements and disclosures:
5.1.3 Every deputy head will provide annually to his or her responsible Minister or oversight body, the Secretary of Treasury Board, and the Comptroller General of Canada, a complete set of financial statements that:
- Provides an accounting of the nature and extent of the activities of the department, describes the department's financial position and the results of operations, changes in cash flow and equity of Canada, and discloses whether the resources entrusted in the department were administered in accordance with legislative authorities;
- Fairly presents in all material respects the financial position, results of operations and changes in cash flows of the department prepared in accordance with Treasury Board accounting standards;
- For fiscal years beginning on or after April 1, 20XX, unless an exemption has been granted by the President of the Treasury Board, is audited and accompanied by the report of the independent external auditor on the departmental financial statements;
- Includes a Statement of Management Responsibility, accompanied by a Financial Statements Discussion and Analyses (FSD&A);
- Will be delivered within 90 days after the end of the fiscal year and will be published annually in the respective Departmental Performance Report;
5.1.4 Where it could reasonably be expected that the accounting treatment of a transaction could lead to a material misstatement, an inappropriate application of authorities or a qualification in the external audit report, the Chief Financial Officer must seek advice in writing from the Comptroller General of Canada;
- when the Comptroller General does not agree with the proposed accounting treatment of material transactions, the Comptroller General must inform in writing the deputy head of the disagreement, as well as the President and the Secretary of Treasury Board Secretariat;
- in exceptional circumstances, the Comptroller General may request an advance audit opinion from the Auditor General of Canada.
5.2 Deputy head - The deputy head:
5.2.1 Is responsible for the fair presentation in all material respects of departmental financial information, reporting and disclosures, in accordance with Treasury Board policy and standards, as well as statutory requirements;
5.2.2 Reviews and approves the departmental financial information and reporting strategy developed by the Chief Financial Officer, in accordance with Treasury Board Secretariat and Comptroller General of Canada guidance, and the Management Resources and Results Structure (MRRS) policy;
5.2.3 Obtains assurance from the Chief Financial Officer that the financial information included in Memoranda to Cabinet and Treasury Board submissions is fairly presented in all material respects to enable informed decisions by ministers;
5.2.4 Causes a set of accounts to be maintained and managed effectively to provide a centralized record of the department's financial transactions, in accordance with Treasury Board policy and standards, and the department's approved Program Activity Architecture (PAA);
5.2.5 Approves, on the recommendation of the Chief Financial Officer and the Departmental Audit Committee, the departmental annual financial statements.
5.3 Comptroller General - The Comptroller General:
5.3.1 Provides functional support to Treasury Board, deputy heads, and Chief Financial Officers for financial information management, reporting and disclosure matters; the design and development of departmental financial information and reporting strategy; and financial reporting integrity across government;
5.3.2 Issues Treasury Board Accounting Standards (TBAS), under authority of the Financial Administration Act subsection 9(1), to be followed by departments across the Government of Canada, based on Canadian generally accepted accounting principles for the public sector as defined in the Canadian Institute of Chartered Accountants Public Sector Accounting (PSA) Handbook;
5.3.3 Approves the government-wide Chart of Accounts, including government-wide coding block structures and classifications, to support financial information reporting and disclosures, including those in the Public Accounts of Canada and Canada's Performance Report;
5.3.4 Supports Treasury Board Secretariat and departments government-wide in the design, development and maintenance of standards for the common departmental chart of accounts, common enterprise financial data principles and departmental financial information architectures.
5.4 Chief Financial Officer - The Chief Financial Officer:
5.4.1 Provides assurance to the deputy head that departmental financial information reporting and disclosures fairly present in all material respects the department's resource utilization, financial position, results of operations, changes in cash flow, equity of Canada, and program activity cost allocations, consistent with the Management Resources and Results Structure (MRRS) policy;
5.4.2 Leads the design, establishment and maintenance of the departmental financial information and reporting strategy that outlines the departmental financial information architecture and controls;
5.4.3 Leads, in collaboration with assistant deputy ministers or equivalents, the integration of financial information and related non-financial information across the department, unless the deputy head designates another member of the management team to lead this activity;
5.4.4 Provides assurance to the deputy head, that the financial information provided to central agencies fairly presents in all material respects the costs of proposed activities, capital investments, actual and forecasted resource requirements and utilizations, revenues, and when appropriate, the impact on departmental appropriations and government-wide costs;
5.4.5 Ensures the deputy head and departmental managers have access, throughout the year and on a timely basis, to financial information and reports, including:
- Budget, forecasts and variance reporting showing the department's budgetary position;
- Allocations of costs to program activities, consistent with the Management Resources and Results Structure (MRRS) policy;
- Analyses of high-risk areas in relation to reference levels by program activity and major funding approvals (actual and projected), including anticipated funding pressures and resource reallocation requirements;
- Integrated financial and related non-financial information linked to results and that meet the needs of managers for decision-making;
5.4.6 Maintains a set of accounts of the department's financial transactions and ensures that the common departmental chart of accounts, and related financial information and reporting, are aligned with the department's Treasury Board approved Program Activity Architecture, government-wide Chart of Accounts, and classifications;
5.4.7 Prepares the complete set of annual (audited) financial statements in a timely manner and provides assurance to the deputy head that these financial statements comply with subsections 5.1.1 and 5.1.2 of this policy;
5.4.8 Provides to the Receiver General for Canada financial information and related disclosures in accordance with Receiver General direction.
5.5 Assistant deputy minister or Equivalent - The assistant deputy minister or equivalent:
5.5.1 Is responsible for the integrity of all financial information, reporting and disclosures within his or her area of responsibilities;
5.5.2 Supports the Chief Financial Officer in the design, implementation, and maintenance of the departmental financial information and reporting strategy for the financial information within his or her area of responsibility;
5.5.3 Ensures that financial records and related non-financial data, within his or her purview of responsibilities, are managed and controlled effectively;
5.5.4 Provides assurance to the deputy head and the Chief Financial Officer that financial information within his or her area of responsibilities provided to central agencies fairly presents in all material respects the costs of proposed activities, capital investments, actual and forecasted resource requirements and utilizations, revenues, and where appropriate, the impact on departmental appropriations and government-wide costs;
5.5.5 Supports the Chief Financial Officer in providing complete financial information for his or her area of responsibilities for Memoranda to Cabinet and Treasury Board submissions, the departmental planning process, and the assessment of significant business risks, program delivery and policy options, and their impact on resource allocation.
6. Monitoring and reporting
6.1 At the departmental level, monitoring of this policy will be carried out through the:
- Management Accountability Framework (MAF) process;
- Review of recommendations prepared by the Departmental Audit Committee;
- Review of internal and external auditor reports; and
- Review of the reports and management representations issued by the department.
6.2 In addition, the Comptroller General will have measures in place to monitor the adequacy and skill capacity and capability of the financial management community across government for all aspects of financial management.
6.3 The Comptroller General will report periodically to Treasury Board on the state of financial management, control and reporting across government.
6.4 The Comptroller General will establish an evaluation framework for this policy.
7.1 Consequences of non-compliance of this policy can include any measure allowed by the Financial Administration Act that the Treasury Board would determine as appropriate and acceptable in the circumstances, such as the establishment and freezing of an allotment under section 31 of the Financial Administration Act.
7.2 Two types of consequences are applicable, institutional or personal. Institutional consequences may involve withdrawal of delegated authorities, imposition of various conditions, additional reporting, special audits or reviews, and a request that corrective action be taken and reported to Treasury Board. Personal consequences may involve a range of disciplinary measures, including the withdrawal of financial authorities delegated to managers and executives.
7.3 When corrective action is not implemented satisfactorily, the Secretary of Treasury Board may recommend to Treasury Board the withdrawal of spending authority or other measures as appropriate.
Please send any questions about this policy to:
Assistant Comptroller General
Financial Management and Analysis Sector
Office of the Comptroller General
300 Laurier Avenue West
Ottawa ON K1A 0R5
Appendix - Definitions
Financial information(information financière) - Is any data, information and knowledge used in understanding, managing, and reporting upon the monetary aspects of any activity and includes both financial and related non-financial information. Financial information is not limited to accounting data, but includes aggregated information and knowledge developed and used to understand, manage and report on the monetary aspects of any activity.
Related non-financial information(information non financière connexe - Is any data, information and knowledge contributing to the understanding, managing and reporting upon of financial information.
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