Government of Canada Accounting Update

Diane Peressini, CPA, CA, Executive Director Government Accounting Policy and Reporting

Office of the Comptroller General

Agenda

• Financial Management Policy Reset Overview

• Directive on Accounting Standards (DAS) – Proposed DAS Architecture – GC Accounting Handbook – GC Accounting & Coding Manual – Consultation & Training – Timelines

• Government-wide and Departmental Chart of Accounts

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FINANCIAL MANAGEMENT POLICY RESET

OVERVIEW

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Financial Management Policy Reset Overview

• Eliminate duplication and reduce the number of instruments and requirements

• Provide clear direction on controls and safeguards • Clarify roles, responsibilities and accountabilities • Improve accessibility and navigability

Instruments From ToPolicies 12 2Directives 25 9Standards 12 0Frameworks 1 0Sub-Total 50 11

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DRAFT Financial Management Policy Reset Overview Proposed Architecture

Financial Management (FM) Policy

Directive on Departmental Financial Management

Responsibilities

Directive on the Management of Taxes

Directive on Payments

Directive on the Delegation of

Expenditure Authorities

Directive on Travel, Hospitality, Conferences and Event Expenditures

Directive on Charging and Special Spending

Authorities

Directive on Accounting Standards

Role-based Directives Process-based Directives

Directive on Assets and Liabilities

Collaborative Community Tools

Formal OCG Tools

Guidelines (TBS)

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Financial Management Policy Reset Guidance

Explore ways to best structure and deliver guidance and support tools to assist users in the discharge of their roles

DIRECTIVE ON ACCOUNTING STANDARDS

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Proposed DAS Architecture

TBAS 1.2 – Departmental and Agency Financial Statements

TBAS 1.3 – Departmental and Agency Quarterly Financial Report

TBAS 2.2 – Materiality TBAS 3.1 – Capital Assets TBAS 3.1.1 – Software TBAS 3.2 – Transfer Payments (Grants and

Contributions) TBAS 3.4 – Inventories TBAS 3.6 – Contingencies Policy on Accounting for Inventories Policy on Accounting for Non-Monetary

Transactions Policy for Valuation of Assets and Liabilities Directive on Contingencies Directive on Recording Financial Transactions

in the Accounts of Canada

Financial Management Policy

Directive on Accounting Standards

Government of Canada Accounting Handbook

Illustrative DFS

GC Accounting & Coding Manual

Introduction

Individual Sections

FIS Manual

RG Manual Ch. 10

PSAS

Directive on Accounting Standards

• Outlines the accounting, reporting and recording frameworks for consolidated financial statements, Departmental Financial Statements (DFS) and Quarterly Financial Reports (QFR)

• Streamlines and consolidates TBAS, Policies, and Directives

• Based on Public Sector Accounting Standards (PSAS)

• Focuses on accrual accounting (except for QFR) 9

GC Accounting Handbook

• Supplementary information in the GC Accounting Handbook:

•When options exist under PSAS • In absence of guidance in PSAS • In relation to DFS • In absence of above, follow GAAP Hierarchy

• GC Accounting Handbook Format – Introduction – Individual Sections – Appendix A: Summary of Applicability of PSAS

• Mirrors and references PSAS, provides guidance beyond PSAS when required

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GC 2700 – Segment Disclosures Primary PSAS Reference: PS 2700 Segment Disclosures Effective Date: TBD 1. As permitted by PS 2700.30, inter-segment transfers are measured at the exchange amount Government of Canada consolidated financial statements 2. For the purposes of the Government of Canada consolidated financial statements, the government has determined that segmented information should be based on the ministry structure. This structure groups the activities of departments and agencies, Crown Corporations, and other entities for which a Minister is responsible (PS 2700.07). Departmental and agency financial statements 3. For departmental and agency financial statements, segmented information should be based on the department’s program alignment architecture (PS 2700.07). Other Related References: PS 1201 Financial statement presentation GC 4500 Departmental and agency financial statements

DRAFT

Appendix A: Summary of Applicability of PSAS

PSAS PSAS Applies without choices or interpretation

PSAS Applies with choices or

interpretation for the Consolidated FS

PSAS Applies with choices or

interpretation for DFS

Accounting guidance

available in addition to PSAH

PS 1300 Government reporting entity

GC 1300 Government reporting entity GC 4500 Departmental and agency financial statements

PS 2700 Segment disclosures

GC 2700 Segmented disclosures GC 4500 Departmental financial statements GC 1201 Financial statement presentation

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Accounting & Coding Manual

• Procedural in nature, provides examples of financial coding • Developed collaboratively between OCG and the RG • Merge and replace: RG Manual Chapter 10 – Accounting

Entries and the FIS Manual/GC Accounting Guide – Consolidates guidance – Provides consistent guidance – More practical to maintain and update

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Consultation and Training

Consultation • An interdepartmental working group has been established

to understand users’ needs and for feedback on early drafts

• We encourage involvement from the financial reporting community and are interested in feedback from senior managers in financial reporting when the instruments go out for departmental consultation

Training • OCG is exploring a number of training options • Information will be provided

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Timelines

• Approximate completion date of January 2016 for the final drafts of the Directive on Accounting Standards and the GC Accounting Handbook

• Accounting and Coding Manual completion projected for

April 2016 • Release timelines to be coordinated with the overall Policy

Reset

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GOVERNMENT-WIDE AND

DEPARTMENTAL CHART OF ACCOUNTS

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• Enable Chief Financial Officers and their Financial Management functions to provide higher-value services and advice to programs and decision makers; timely accurate financial and resource management information;

• Streamlined financial services; efficient and effective Financial Management systems environment; and

• Fewer systems; streamlined systems support.

Financial Management Transformation Vision

Evolve and modernize the financial management function across the Government of Canada in order to:

Culture shift from “spending and reporting” to “managing and accountability” 17

Chart of Accounts Current Situation

• Government Wide Level – Standards already exist for classification of financial transactions (i.e.

economic objects, standard objects)

• Departmental Level – Significant latitude for departments and agencies to classify transactions at

lower levels of aggregation (i.e. line objects) to tailor codes to their information needs

– Anticipate some commonality – Anticipate that object codes may be used for multiple purposes (i.e.

financial statement disclosures, material management, etc.)

Objective of the review of Government-wide Chart of Accounts

• Simplification of the Government-wide Chart of Accounts

• Will require us to: – Understand the relationship between the Government-wide and

departmental coding blocks – Assess the purpose of each of the six elements and how they

interact and if they are necessary. Propose to amalgamate FRA and ECON if possible.

– Leverage the capabilities of SAP and eliminate the use of the chart

of accounts for tracking data that is not required to meet Government of Canada reporting needs

Objectives of the review of Departmental Chart of Accounts

• Standardize and simplify the Departmental Chart of Accounts

• Eliminate duplications in the operating of the Chart of Accounts and rely on subsidiary ledgers and/or other detailed elements such as the United Nations Standard Products and Services Code (UNSPSC) for financial information and analysis

• Will require us to: – Define the usage, content and nomenclature of general ledger

accounts – Create standardized general ledger account list – Design a coding structure that will support future process and

organizational changes – Define the level required to capture the information at the general

ledger account level

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Thank you

Questions?

Senior Policy Analysts: DAS - Francine Giannotti – francine.giannotti@tbs-sct.gc.ca GWCOA - Nassima Aouchiche – nassima.aouchiche@tbs-sct.gc.ca