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Standard on Recording Financial Transactions in the Departmental Chart of Accounts

1. Effective Date

1.1 This standard takes effect on April 1, 2012. It will be updated on a regular basis, as required.

1.2 The policy requirement related to the use of common line objects, under Appendix B: Department Classification Structure - Departmental Line Objects, will come into effect on April 1, 2013.

2. Application

2.1 This standard applies to departments as defined in section 2 of the Financial Administration Act. Throughout this standard, the terms "government-wide" and "across government" refer to these organizations.

3. Context

3.1 This standard supports the objectives of the Policy on the Stewardship of Financial Management Systems and the Directive on Recording Financial Transactions in the Accounts of Canada by outlining the responsibilities of the chief financial officer for developing and maintaining a departmental chart of accounts for the organization to ensure consistent and reliable financial information government-wide.

3.2 This standard defines a common departmental chart of accounts structure which allows for consistent classification, recording, aggregation and reporting of financial transactions within the departmental financial and materiel management system (DFMS).

3.3 This standard supports consistent classification of information on a government-wide basis by providing detailed information at the departmental level to support decision making and reporting requirements. The departmental chart of accounts is incorporated as part of the accounting system and together with budgetary information provides management at various levels with information necessary to manage financial resources and control functions.

3.4 This standard supports the government's results-based management approach by ensuring that the departmental chart of accounts reflects the departmental program alignment architecture (PAA). The PAA integrates financial and non-financial program performance information in order to improve allocation and reallocation decisions in departments and across government. The departmental chart of accounts supports the collection, management, and reporting of financial performance information necessary for the efficient delivery of government programs.

3.5 The classification structure for the departmental chart of accounts is composed of the following six elements: departmental responsibility/organization; departmental financial reporting; departmental authority; departmental program; departmental line object and departmental transaction type (internal/external).

3.6 This standard is issued pursuant to section 7 and 9 of the Financial Administration Act.

3.7 This standard is to be read in conjunction with the Policy on Management Resources and Results Structures, the Policy on the Stewardship of Financial Management Systems and the Directive on Recording Financial Transactions in the Accounts of Canada.

3.8 Additional mandatory requirements are set out in the Policy on Financial Resource Management, Information and Reporting, the Policy on Internal Control, the Policy on Management Material and the Treasury Board Accounting Standards.

4. Definitions

Definitions to be used in the interpretation of this standard are in Appendix A.

5. Standard Statement

5.1 Objective

To ensure that the departmental chart of accounts structure provides more consistent financial information government-wide.

5.2 Expected result

Financial information is consistently reported in the departmental chart of accounts and the Public Accounts of Canada.

6. Requirements

6.1 The chief financial officer is responsible for the following:

  • 6.1.1 Developing and maintaining a departmental chart of accounts that is in accordance with the Government-wide Chart of Accounts for Canada and integrated with the departmental financial and materiel management system.
  • 6.1.2 Ensuring that when recording financial transactions, each coding element is used as defined and for the intended purpose and allows for the identification of all elements of the departmental chart of accounts shown in Appendix B.

6.2 Monitoring and Reporting Requirements

  • 6.2.1 Chief financial officers are responsible for supporting their deputy head by overseeing the implementation and monitoring of this standard in their departments, bringing to the deputy head's attention any significant difficulties, gaps in performance or compliance issues, developing proposals to address these, and reporting significant performance or compliance issues to the Office of the Comptroller General.
  • 6.2.2 The Comptroller General is responsible for monitoring departments' compliance with the requirements of this standard and conducting a review within five years.

7. Consequences

7.1 In instances of non-compliance, the deputy heads are responsible for taking corrective measures within their organizations with those responsible for implementing the requirements of this standard.

7.2 Chief financial officers are to ensure corrective actions are taken to address instances of non-compliance with the requirements of this standard. Corrective actions can include requiring additional training, changes to procedures and systems, the suspension or removal of delegated authority, disciplinary action, and other measures as appropriate.

7.3 For a range of consequences of non-compliance refer to Appendix C: Consequences for Institutions & Appendix D: Consequences for Individuals in the Framework for the Management of Compliance.

8. Roles and responsibilities of government organizations

Note: This section identifies other significant departments in this policy area. In and of itself, it does not confer an authority.

8.1 Treasury Board Secretariat, Office of the Comptroller General of Canada:

The Office of the Comptroller General is responsible for development, oversight and maintenance of this standard and for providing interpretative advice.

8.1.1 Within the area of financial management systems, the Office of the Comptroller General provides functional leadership in determining business process and data requirements by supporting Treasury Board in issuing appropriate policy instruments as and when required to define government-wide data and standardized business processes.

9. References

9.1 Relevant Legislation

9.2 Related Treasury Board Policy Instruments and Publications

10. Enquiries

Please direct enquiries about this standard to your department's headquarters. For interpretation of this standard, departmental headquarters should contact:

Financial Management Policy Division
Financial Management Sector
Office of the Comptroller General
Treasury Board Secretariat
Ottawa ON K1A 0R5

Email: fin-www@tbs-sct.gc.ca
Telephone: 613-957-7233
Fax: 613-952-9613


Appendix A: Definitions

Departmental Authority (Classification par autorisation ministérielle)
Is the authority (parliamentary appropriation (vote), statute or other legislative authority) under which the financial transaction is authorized. The authority element can be further sub-divided for budgetary and control purposes.
Departmental chart of accounts (Plan comptable ministériel)
Is a list of departmental accounts and codes for all fields used to classify, record and report financial transactions in the government-wide coding block.
Departmental financial and materiel management system (DFMS) (Système ministériel de gestion financière et materiel (SMGFM))
Is a financial management system (FMS) whose primary objectives are to demonstrate compliance by the government with the financial authorities granted by Parliament, comply with the government's accounting policies, inform the public through departmental financial statements, provide financial and materiel information for management and control, provide information for economic analysis and policy formulation, meet central agency reporting requirements and provide a basis for audit.
Departmental Financial Reporting (Classification par rapport financier ministériel)
Is Level 5 of the Financial Reporting Account classification in the Government-wide Chart of Accounts for Canada for which the financial transaction is associated.
Departmental Line Object (Classification par article d'exécution ministérielle)
Is the element which identifies the financial reporting classification in the Government-wide Chart of Accounts for Canada (financial reporting account) and the object classification in the Government-wide Chart of Accounts for Canada (object codes) for which the financial transaction is associated.
Departmental Program (Classification par programme ministériel)
Is the program within the department's program alignment architecture to which the financial transaction is associated. Program must be broken down further into program sub-program and sub-sub-program, as appropriate to capture the lowest level of the departmental program alignment architecture.
Departmental Transaction Type (Internal/External) (Classification par type d'opération ministérielle (interne/externe))
Identifies whether the transaction is internal to the Government of Canada, or the transaction is external to the Government of Canada reporting entity.
Departmental Responsibility/Organization (Classification par responsabilité/organisation ministérielle)
Is the organizational unit, for which a position has delegated authority that is responsible and accountable for the financial transaction.
Financial information (Information financière)
Is any data or information used in understanding, managing and reporting on the monetary aspects of any activity. Financial information is not limited to accounting data, but includes aggregated information and knowledge developed and use to understand, manage and report on the monetary aspects of any activity.
Financial management systems (FMS) (Systèmes de gestion financière (SGF))
Is any combination of business processes (end-to-end, automated and manual), procedures, controls, data and software applications, all of which are categorized as either departmental financial and materiel management systems (DFMS) or program system or central system that produces financial information and related non-financial information.

Financial management systems are used for any of the following:

  • Collecting, processing, maintaining, transmitting and reporting data about financial events and to maintain accountability for the related assets, liabilities and equity;
  • Supporting financial management, planning, budgeting and decision-making activities;
  • Accumulating and reporting cost information; or
  • Supporting the preparation of internal and external reports, such as departmental financial statements and input to the Public Accounts of Canada.

Appendix B: Departmental Classification Structure

Departmental Chart of Accounts

This diagram exhibits the six government-wide classifications for financial transactions in relation to the six departmental elements. Each of these elements must aggregate to the appropriate classification in the Government-wide Chart of Accounts.

Relationship between departmental chart of accounts elements and government-wide chart of accounts classifications
Text version: Relationship between departmental chart of accounts elements and government-wide chart of accounts classifications

Departments are required to maintain information corresponding to each of the departmental chart of accounts elements described in the following sections.

Departmental Responsibility/Organization

The departmental chart of accounts responsibility element identifies the organizational unit, for which a position has delegated authority that is responsible and accountable for the financial transaction.

The organizational unit must align with the department's organization structure and includes branches, regions/directorates, responsibility and cost centres, as appropriate. The responsibility element must align to the authority element in the departmental chart of accounts, to support budgetary/funds control.

The structure of the organizational units must aggregate to the Responsibility classification in the Government-wide Chart of Accounts (department number).

Departmental Financial Reporting

The departmental chart of accounts financial reporting element identifies Level 5 of the Financial Reporting classification in the Government-wide Chart of Accounts (financial reporting account level 5) for which the financial transaction is associated.

The financial reporting element must correlate to the line object element in the departmental chart of accounts.

Departmental Authority

The departmental chart of accounts authority element identifies the authority (parliamentary appropriation (vote), statute or other legislative authority) under which the financial transaction is authorized. The authority element can be further sub-divided for budgetary and control purposes.

The structure of the authority element must align with the structure of organizational units within the responsibility element of the departmental chart of accounts to support budgetary/funds control. The authority element must aggregate to the Authority classification in the Government-wide Chart of Accounts (authority code).

Departmental Program

The departmental chart of accounts program element identifies the program within the department's program alignment architecture to which the financial transaction is associated. Program must be broken down further into sub-program and sub-sub-program, as appropriate to capture the lowest level of the departmental program alignment architecture.

The program element values must be consistent with the Management, Resources and Results Structure (MRRS) and Program Alignment Architecture (PAA) as approved by the Treasury Board.

The program element must aggregate to the program classification in the Government-wide Chart of Accounts for Canada (program codes).

Departmental Line Object

The departmental chart of accounts line object element identifies the financial reporting classification in the Government-wide Chart of Accounts for Canada (financial reporting account) and the object classification in the Government-wide Chart of Accounts for Canada (object codes) for which the financial transaction is associated. The line object element enables the classification of financial transactions into accounting categories which provides additional detail about the type of goods or services acquired, the transfer payments made, the source of receipts or the cause of increases or decreases in assets and liabilities.

The line object element must correlate to the financial reporting element in the departmental chart of accounts.

The line object element must aggregate to the Object classification in the Government-wide Chart of Accounts for Canada (object codes).

The line object element must correlate to the list of common line objects established by Treasury Board Secretariat. Common line objects are derived from valid combinations of financial reporting account and object codes that all departments can use. The list of common line objects is not inclusive of all valid combinations, and it specifically excludes any combinations based on department specific or restricted use financial reporting accounts or object codes (as noted in the Government-Wide Chart of Accounts for Canada). Departments may define additional line objects correlating to these other valid combinations, as appropriate.

Departmental Transaction Type (Internal/External)

The departmental chart of accounts transaction type (internal/external) element identifies whether the transaction is internal to the Government of Canada, or the transaction is external to the Government of Canada with a non-Government of Canada entity.