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Guidelines for the Preparation of Corporate Plans


ANNEX I

GUIDELINES ON THE CONTENT OF OPERATING AND CAPITAL BUDGETS

I OPERATING BUDGETS

Operating budgets should include:

1. Assessment of Past Results

Significant differences in operating results between recent (actual) results and planned budget performance should be explained. Similarly, important variances in operating results currently projected for the current year and past forecasts should be reviewed.

2. Presentation of Budget Year Data

Major assumptions used in preparing budget projections for the budget year, and the sensitivity of budget projections to changes in these assumptions should be explained. The operating budget should also provide an overview of significant operating expense commitments or expectations for the budget year.

Differences between budget year projections and projections for the current year should also be reviewed.

3. Overview of Operating Results

Operating results, by major category of revenue and operating expense, should be presented for the recent actual, current and budget year (3 years in all).

Amended operating budgets should include:

  • a statement of the strategy underlying the amendment
  • an explanation of any variances between the results projected in the originally-approved operating budget for the budget year and the results projected in the proposed amendment
  • a description of the major assumptions used in preparing the amendment and the sensitivity of amended budget projections to changes in these assumptions
  • revised financial statements including: statement of income and retained earnings, statement of changes in financial position, and a balance sheet
  • an overview, by major categories of revenue and operating expenses, of actual or projected operating results and the budget year projections.

II CAPITAL BUDGETS

Capital budgets should include:

1. Presentation of Budget Year Data

The capital budget should describe the corporation's capital expenditures for the budget year. This should include details on prior year, budget year and future year expenditures.

The capital budget should also identify capital expenditure commitments by major project (including information on cash flows and loans, investments and subsidies). In cases where projects are to be funded by appropriations, details on the sources of capital funds for each project should be provided. A description of the major assumptions used in preparing the budget, for each major project, and the sensitivity of budget projections to changes in these assumptions should also be provided.

2. Review of Context for Capital Expenditures

The capital budget should present a brief overview of the criteria used for selecting significant capital investment and the anticipated impact of these investments on financial performance and the objectives set out in the corporate plan submitted for the same (current) year.

Where a capital expenditure in the budget year can be related to a similar expenditure in the current year, an explanation of the differences between these should be provided. The capital budget should also report on recent (actual) capital expenditures and commitments, current projections and projected results for the budget year.

Lastly, the capital budget should briefly review variances between recent (actual) capital expenditures and commitments and those projected for that year in the capital budget approved for that year, as well as the variance between projected capital expenditures and commitments projected for the current year and those foreseen in the capital budget approved for that year.

Amended capital budgets should include:

  • a description of the proposed amendment:

    including details on amendments to capital expenditures made in previous years, and projections for the budget year and commitments for future years approved in the last capital budget

    including details on amendments to commitments to make capital expenditures by major project, including any amendments to cash flows, loans, investments and subsidies approved in the last capital budget.

  • an explanation of any variances between the results projected in the originally-approved capital budget for the budget year and the results projected in the proposed amendment.

  • an outline of the criteria employed for significant capital investment not included in the previously-approved capital budget, and the anticipated impact of the investment on financial performance and on objectives set out in the corporate plan submitted for the same (current) year.

  • a description, for each major project, of the major assumptions used in preparing the amendment and the sensitivity of amended budget projections to changes in these assumptions.

  • revised financial statements including: statement of income and retained earnings, statement of changes in financial position, and a balance sheet.

  • an overview of amended capital expenditures and commitments in the budget year to projections, or actual (if available), capital expenditures and commitments in the current year.



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