Departmental Financial Reporting Requirements for Fiscal Year Ended March 31, 2010

Message sent on behalf of Mrs. Suzie Gignac Executive Director, Government Accounting Policy and Reporting Office of the Comptroller General

The purpose of this communication is to advise you of reporting requirements related to the March 31, 2010 year-end.  This letter contains information on departmental financial reporting requirements related to:

• Reporting of unrecorded departmental financial transactions;
• Liabilities related to contaminated sites;
• Requests for publication exemption for certain payments of claims against the Crown, ex gratia payments and court awards and changes resulting from the new Treasury Board Guidelines on Claims and Ex Gratia Payments; and
• Departmental and agency financial statements.

Reporting Unrecorded Departmental Financial Transactions

The Treasury Board Policy on Allowances for Valuations of Assets and Liabilities requires departments to perform an annual assessment of the collectability of financial claims and supply details related to any liabilities of a material amount that are not or cannot be recorded in departmental accounts.

Financial transactions of departments should be accurately recorded in the Accounts of Canada.  For the most part, this occurs through departmental entry of financial transactions into their departmental financial management system from which the trial balance is submitted to the Central Financial Management Reporting System (CFMRS).  However, there may be situations where material amounts affecting departmental accounts will not have been recorded as of the close of accounting period 12-2 on May 17, 2010. These include:

1. Transactions resulting from events that occur between the close of the CFMRS and the date of completion of the Government's financial statements in late August which provide evidence of conditions that existed at year-end (e.g. the bankruptcy of a recipient of a significant unconditionally repayable contribution or loan guarantee, the unexpected loss of a claim against the department, etc.). In light of the existing economic situation, particular attention should be given in the course of this period to monitor if certain events could have a significant effect on the estimates and the assumptions used for the valuation of assets and liabilities;
2. The correction of a significant error discovered either by the department or their auditor following the close of CFMRS. Hard errors found as a result of the Public Accounts audit should be corrected, if feasible. Errors not corrected, which will be included in the Office of the Auditor General's Summary of Unadjusted Differences, should be supported and understood. As part of the preparation of the Public Accounts, the Comptroller General reserves the right to require a post-closing entry for these latter items; and
3. Allowances for likely contingent liabilities that have not been recorded by the department because of one of the exceptions listed in Treasury Board Accounting Standard (TBAS) 3.6 – Contingencies. Specifically:

• Where the magnitude of the estimated liability is so significant that its inclusion in expenses/liabilities risks revealing the estimate of potential liability; or
• Where the contingency relates to Treasury Board Secretariat (TBS) as the Public Service employer and the potential impact of the claim extends across many departments.

In the situations described in paragraphs 1 and 2, departments should notify TBS of the possible requirement for a post-closing entry by providing the amount and details of the nature of the transaction as soon as the information is available.

It should be noted, other than the exceptions mentioned under point 3 above, that if a post-closing entry is recorded, the department's financial statements will need to reflect the transaction as if it had been recorded in the department's trial balance.

In the situations described in paragraph 3, departments should notify TBS, by April 26, 2010, of the amount of the allowance, the details of the nature of the allowance and the reasons why the department has not recorded the allowance. For any developments after April 26, 2010, departments are to provide the information to TBS as soon as it is available.

In all situations, information should be treated as confidential and forwarded to:

Mrs. Suzie Gignac
Executive Director
Government Accounting Policy and Reporting
Financial Management and Analysis Sector
Office of the Comptroller General
Treasury Board Secretariat
300 Laurier Avenue West, 8^th floor
Ottawa, Ontario, K1A 0R5
Tel: 613-952-0886;  Suzie.Gignac@tbs-sct.gc.ca

Liabilities related to contaminated sites

Departments must provide summary financial information on environmental liabilities to the Deputy Receiver General on Table TA5a as per the Public Accounts Instructions  (page 126). New this year, the deadline for submitting this Table is May 20, 2010, the same date that plates and forms of  Volumes I and II are submitted to the Deputy Receiver General.

Additionally, departments must update the Federal Contaminated Sites Inventory (FCSI) by April 30, 2010, so that the related information is available for TBS to review.

If there are any questions on the financial reporting requirements for environmental liabilities for contaminated sites, please contact Cindy Laprade at 613-952-0909 or cindy.laprade@tbs-sct.gc.ca. If there are any questions on FCSI-related technical issues, please contact Frank Dugal at 613-954-4678 or Frank.Dugal@tbs-sct.gc.ca

Requests for Publication Exemptions for Payments of Claims against the Crown, Ex gratia Payments and Court Awards and changes resulting from the new Treasury Board Guidelines on Claims and Ex gratia payments

As provided in Chapter 15 of the Receiver General's Manual of the Public Accounts Instructions, in the rare instance where a department wishes to withhold publication of the details (i.e. names of recipients and/or reasons), a written request must be submitted by March 31, 2010 to:

Mrs. Suzie Gignac
Executive Director
Government Accounting Policy and Reporting
Financial Management and Analysis Sector
Office of the Comptroller General
Treasury Board Secretariat
300 Laurier Avenue West, 8^th floor
Ottawa, Ontario
K1A 0R5
Tel: 613-952-0886; Suzie.Gignac@tbs-sct.gc.ca

TBS will coordinate all departmental requests and then seek the support of the Standing Committee on Public Accounts. If there are any questions on exemption requests, please contact Nadia Lapointe-Mills at 613-952-0914 or Nadia.Lapointe-Mills@tbs-sct.gc.ca. Public Accounts instructions to complete the requests can be found on pages 252 - 262.

Under the new Treasury Board Guidelines on Claims and Ex Gratia Payments, effective October 1, 2009, claims for damages to servant's effects cannot be treated as ex gratia payments, unless a legal opinion to the contrary is obtained.  As such, claims for damages to servant's effects are to be treated as a claim against the Crown. Further guidance on the appropriate reporting of these transactions will be incorporated in the Receiver General Manual, Chapter 15, Public Accounts Instructions.

Departmental and Agency Financial Statements

Departments and agencies are reminded that their financial statements are to be published as part of the Departmental Performance Report (DPR) process.  Instructions on their publication will be included in the preparation guide for the 2009-2010 DPR. Departments are required to submit:

• An unsigned version of the financial statements (i.e. near final draft) in the language of their choice to the Office of the Comptroller General (OCG) for review, no later than June 15, 2010. Comments will be provided to departments within one month of receipt.
• A final signed version to the OCG no later than August 16, 2010. This extended date gives more time than in previous years to allow departments to process post-closing entries, if necessary, as a result of errors found during the Public Accounts audit. Only one version (French or English) of the departmental financial statements is to be forwarded to the OCG.

Entities that are currently being audited on a stand alone basis are not required to send their draft to the OCG; only a final signed version should be sent, along with the auditor's report, once available.

To assist with the preparation of the financial statements, please refer to TBAS 1.2.

The departmental financial statements are to be forwarded to:

Mr. Marcel Lalande
Director
Government Accounting Policy and Reporting
Financial Management and Analysis Sector
Office of the Comptroller General
Treasury Board Secretariat
300 Laurier Avenue West, 8^th floor
Ottawa, Ontario
K1A 0R5

Should you have any questions related to the departmental financial statements please contact Marcel Lalande at 613-957-9853, Hamid Haffaf at 613-957-9676 or Alexandre St-Germain at 613-952-0896.