H. Financial Reporting Procedures

Core Policy - 3.3(c)

H.1 Fiscal Year-End Close Off/Accrual Accounting Procedures

Time Table

Overview of Year-End Reporting Requirements

Ministry Confirmation of Balances

Reporting Requirements for Balance Sheet Items

Reporting Requirements for Statement of Operations

Additional Reporting Requirements

Trust Funds

Subsequent Events

Management Representation Letter

Time Table

For fiscal year-end information on deadlines and procedures, see the Financial Reporting and Advisory Services (FRAS) website (government access only).

Deadline dates that fall on a weekend or statutory holiday will be changed to the last working day before that date, except for cash – see Reporting Requirements for Balance Sheet Items – Cash.

Overview of Year-End Reporting Requirements

Year-end reports, forms and statements described below are to be forwarded to the Financial Reporting and Advisory Services Branch, Office of the Comptroller General and to the Office of the Auditor General.

Ministries are required to report all assets, liabilities, revenue and expenses in accordance with the accrual accounting policies of the government. Specific requirements are indicated under (government access only):

• Reporting Requirements for Balance Sheet Items
• Reporting Requirements for Statement of Operations; and
• Reporting Requirements for Trust Funds.

Post-closing Adjustments

All post-closing adjustments required as a result of the Office of the Auditor General, Office of the Comptroller General or Ministry reviews must be agreed to by the applicable Senior Financial Officer, or alternate. If a dispute arises regarding any adjustments, the above parties are to meet to resolve the issue promptly.

For journal vouchers accepted by Financial Reporting and Advisory Services Branch, the sequence of events is as follows:

• In ADJ4-0x all inter-ministry accounts will be closed to STOBs 3500-3503 in the ministries
• Ministries running reports for a fiscal year starting with fiscal year 2001/02 should get balances from ADJ3-0x not ADJ4-0x. Transfers of balances for certain STOBs are done in ADJ4 and reports will not give a true picture of the activities of a ministry for that fiscal year.

All post closing adjustments that ministries wish to have considered for posting after ADJ1-0x require the following information:

• a description of the reasons for the entry; and
• a description of the impact on the ministry if the entry is not posted.

Post closing adjustments that correct coding errors but have no material affect on the Public Accounts will not be processed.

Preliminary Preparation

STOBs must be reconciled to the Corporate Accounting System (CAS) on an ongoing basis with any correction/adjustment vouchered on a timely basis. Accrual entries should be processed through CAS monthly with all year-end accruals processed by the close of ADJ1-0x. The cut-off for inter-ministry journal vouchers is four business days prior to the close of ADJ1-0x.

Ministries should be checking the month end expense reports sent out by Financial Reporting and Advisory Services (FRAS) against their reports and notify FRAS of differences. Changing rollups during the preparation of the Public Accounts will not be allowed.

Receivables and payables are not to be set up for inter and intra-ministry transfers. These costs should be transferred and processed by journal voucher in the normal manner.

Statement Detail Forms (FYEs)

Statement Detail Forms are required to provide information used in the preparation of notes, schedules and reports. It is not necessary for ministries to provide a "NIL" FYE form if they have initialled the Nothing to Report column of the checklist, with the exception of the form “Details of Contractual Obligations”.

Ministry Check-off Report

The following Ministry Fiscal Year-End Check-Off Report lists the statement detail forms (FYE) (government access only) that are required from ministries in the completion of the Public Accounts. This supplementary package is to be completed and forwarded to the Financial Reporting and Advisory Services Branch with a copy to the Office of the Auditor General by the FYE form submission date indicated in the Fiscal Year End Schedule.

Ministry Confirmation of Balances

Ministry SFOs or delegates are required to sign the Senior Financial Officer Sign-Off form (FYE 01) (government access only) and return this form to the Financial Reporting and Advisory Services Branch and to the Office of the Auditor General. This form states that the SFO has examined the CAS balances for their ministry and are satisfied that CAS correctly states the assets, liabilities, revenue and expenses, by STOB and service line.

Reporting Requirements for Balance Sheet Items

Assets

All assets are recorded to the extent that they represent cash and claims upon outside parties or items held for resale to outside parties as a result of events and transactions prior to the year-end.

Tangible capital assets are non-current assets that are acquired, constructed or developed and are held for use in the production or supply of goods and services; have useful lives extending beyond an accounting period and are intended to be used on a continuing basis; and are not intended for sale in the ordinary course of operations.

Valuation Allowances

Each asset must be scrutinized to determine its realizable value and, if necessary, a valuation allowance established. Expenses due to any increase in valuation allowance are reported separately, by asset category, in the Notes to the financial statements in the Public Accounts. In addition, all losses, extinguishments and remissions of assets, uncollectible debts and other obligations to the government under section 17, 18 and 19 of the Financial Administration Act must be reported.

Cash

Cash balances are shown after deducting outstanding cheques issued prior to the year-end.

Cheques issued after March 31 relating to the fiscal year then ended (old year) will be effective dated in the new year. Individual ministries are not required to process an entry to cash as these balances will be recorded in the old year by journal voucher.

All deposits received prior to April 1 are coded as old year and all deposits received after March 31 are coded to the new year.

Temporary Investments

Temporary investments are short-term investments that consist mainly of units in the Province of British Columbia Pooled Investment Portfolios money market funds. Temporary Investments are carried at the lower of cost of acquisition (adjusted by income attributed to the investments) or market value. The STOB to be used for this category is 1170.

Accounts Receivable

All amounts receivable (including trade receivables from Crown corporations and agencies) at year-end for work performed, goods supplied or services rendered are recorded as revenue or recoveries of the fiscal year. Valuation allowances are made where collection is considered doubtful. All or part of an asset that is considered to be unrealizable is written off.

All revenue for which a claim exists prior to each month-end cut-off must be recorded in CAS-Oracle. Where the exact amount to be received is not known, a reasonable estimate should be made.

A provision (valuation allowance) must be made for all receivables (or portions thereof) where collection of an amount is considered doubtful.

Accounts receivable are grouped into the following STOB categories under Level 2 roll-up AA25 for publishing in the Public Accounts:

Note: Please ensure that all clearing/suspense STOBs have a zero balance at the fiscal year-end.

Inventories

Inventories comprise items held for resale and are recorded at the lower of cost or net realizable value. Inventories of supplies are charged to the respective programs when the items are used. Property under development, which will eventually be sold to outside parties, is recorded at the lower of cost or net realizable value.

Inventory Verification

1. Review all inventories that were on hand at March 31 and provide a reconciliation schedule of any inventories considered to be held for resale. Inventory counts will be concluded on March 31, unless a perpetual inventory system exists and the balances can be reconciled back/ forward to March 31. Physical inventory counts are required to prove that there have been no serious lapses in either physical custody or accounting controls over inventories. Physical counts should be performed, summarized and verified with inventory records by persons who are independent of the inventory custodians. Financial officers should participate directly in the planning, performance and review of physical counts to ensure the accuracy and completeness of quantities, physical conditions and values of inventories. If, as a result of the physical verification, significant differences from the accounting records are determined, the differences shall be investigated and a report issued to the Senior Financial Officer, outlining corrective action taken. Where applicable, a report shall be filed in accordance with CPPM 20, Loss Reporting. Ministries should issue written instructions that include the standard procedures of checking cut-off, pricing, control STOB verification, adjusting for discrepancies, reviewing for slow-moving or obsolete stock, etc. The Office of the Auditor General and the Financial Reporting and Advisory Services Branch should receive a copy of these instructions and be advised of the date of any count.
2. Inventories are grouped into the following categories under Level 2 roll-up AA35.

Amounts Due From Other Governments

All amounts from other governments, including loans, advances and trade transactions, must be reported separately on the Balance Sheet.

This group of assets must be recorded under the following categories under Level 2 roll-up AA40:

Current is defined as due and receivable within the next fiscal year.

Other governments include the Government of Canada, other provinces and local governments. Local governments are defined as municipal units established by the provincial government and include regional and metropolitan municipalities, cities, towns, townships, districts, rural municipalities and villages.

Investments In and Loans and Advances to Crown Corporations and Agencies

Investments in and loans and advances to Crown corporations and agencies represent long-term investments and amounts due, other than trade receivables, and are recorded at cost unless significant prolonged impairment in value has occurred; in which case they are written down to recognize this loss in value. If, in periods subsequent to recognizing this impairment, the value of the investment is restored, the investment is written up to the lesser of restored value or original cost.

1. Analysis of these amounts requires a separation of investments from loans and advances to each Crown corporation and agency.
2. Trade receivables from Crown corporations should not be recorded in this section. They should be recorded by individual Crown Corporation in STOB range.

Investments

A separate service line should be established for each Crown Corporation or agency in which the CRF has made an investment. STOBs under Level 2 roll-up AA54 are to be used to record these investments:

Amounts Due

A separate STOB has been established for each Crown corporation and agency to record amounts due, other than trade receivables.

Loans and Advances

Loans, advances and mortgages receivable are a special category of disbursement by the Province under the authority of certain statutes, regulations and directives, subject to the restrictions of section 45(1) of the Financial Administration Act. They are recorded at cost less adjustment for any prolonged impairment in value.

1. Loans include repayable advances such as accountable advances. Forgivable loans are expensed at the time issued, with the responsible ministry maintaining a record of all outstanding forgivable loans. Ministries are to review all loans and advances for realizable value at each fiscal year end (March 31) and where a loan is doubtful of collection, a provision must be made. Loans must be issued (cash actually paid) by fiscal year end (March 31) in order to qualify as old year transactions. Ministries are to allow four working days for processing Electronic Fund Transfer (EFT) transactions for such advances to be paid in time to be recorded as old-year entries. Loans and advances are categorized by the Legislation under which they were issued with a separate line for related provisions. Backup documentation should include a detailed list of all outstanding loans and advances by individual, corporation, etc.

   The STOBs under Level 2 roll-up AA64 provide for the separation of statement of changes information for this category.

   Category

   Loans – Balance Forward

   Loans – Issues

   Loans – Receipts

   Loans – Other Non-cash Transactions

   Loans – Other Charges

   Loans – Reinstatements

   Loans – Returned Cheques

   Loans – Refunds

   Loans – Remissions

   Loans – Write-offs/Extinguishment

   Loans – Concessionary Adjustment

   Loans – Provisions

   A loan made at a rate of interest below the government's borrowing rate is considered a concessionary loan and must be recorded at its net present value. The difference between the face value and the net present value is considered a grant and must be expensed when issued. The net present value is the net loan portion and is considered a financing transaction in the year of disbursement.

   The government's borrowing rate is considered as the average cost of long-term borrowing (5-40 years) and is calculated each quarter. The rate to be used in each quarter is the average long-term borrowing rate for the previous quarter; i.e., September - December rate is to be used for all concessionary loans (grant portion) recognized in the following January - March period. See the quarterly rate at http://www.min.fin.gov.bc.ca/OCG/FMB/Rates/rates.stm – (government access only). Repayments received are first fully applied against the loan balance (net present value); further repayments are to be recognized as revenue.

   Where there is any doubt as to the collectibility of a concessionary loan, a provision must be established. This amount is to be based on the net present value or remaining amount thereof.

2. Ministries must forward to Financial Reporting and Advisory Services Branch an analysis under the following headings:
   1. the name of the Act under which the instrument was issued; the length of time the instrument is due to run (term); the principle outstanding; the interest rate(s); any applicable provision; issues for the fiscal year; and
   2. repayments for the fiscal year.

Other Investments

Other investments, in organizations other than crown corporations and agencies, are recorded at the lower of cost of acquisition adjusted by attributable income or market value.

1. Ministries are to review all other investments for realizable value at each fiscal year end (March 31) and provide a provision where an investment has had a significant and prolonged impairment in value.
2. The name of the Act under which the investment was authorized must be reported.

Note that the STOBs under Level 2 roll-up AA70 provide for the statement of changes information.

Other Assets

Other assets include prepaid program costs that represent payments made during the fiscal year for work to be performed, goods to be supplied, services to be rendered or contractual obligations to be fulfilled by outside parties in a subsequent fiscal year. These costs also include inventories of operating materials held in Corporate Procurement Solutions and Queen's Printer warehouses pending distribution in a subsequent fiscal year.

Also included in Other Assets are certain deferred charges related primarily to public debt.

Any amounts that have been disbursed and recorded by the province in the old fiscal year for goods and services not received by March 31 are also to be recorded in this section. As soon as these goods or services are received in the new fiscal year they should be transferred from the prepaid program account to the applicable new fiscal year expense.

Prepaid Capital Advances

Prepaid capital advances (PCAs) are provided to school districts, post secondary institutions, health organizations and any other designated organizations to fund capital asset acquisitions. The PCA is amortized over the useful life of the assets funded.

1. The responsible ministry must verify the PCA opening balance, current year issues and accumulated amortization. Advances must be issued (cash actually paid) by fiscal year-end (March 31) in order to qualify as old year transactions. Annual amortization is to be calculated on the basis of the annual amortization of the assets funded through the PCAs. The value of the PCAs should never exceed the provincial share of the value of the assets held by the recipient organizations.
2. The STOBs under Level 2 roll-up AA94 are to be used for this category:

   Category

   PCA – Balance Forward Historical Cost

   PCA – Additions

   PCA – Balance Forward Open Accumulated Amortization

   PCA – Accumulated Amortization Changes

Tangible Capital Assets

Specific classes of tangible capital assets, with an estimated useful life of greater than one year, are recorded at historical cost and reported on the Balance Sheet as well as on the Statement of Tangible Capital Assets. If actual cost is unknown, then an estimate of cost can be used. Tangible capital assets costs include all costs directly attributable to the acquisition, construction, development or installation of the tangible capital asset. The recorded cost, less the residual value, is amortized over the estimated useful life of the asset.

Tangible capital assets and work-in-progress must be accounted for and reported on the Statement of Tangible Capital Assets (government access only) for each major category of assets.

1. Subsidiary ledgers for tangible capital assets must be reconciled to the total in the Corporate Accounting System (CAS). Ministries are to observe the established procedures for the reconciliation of tangible capital assets that are utilized each quarter and signed off to Financial Reporting and Advisory Services Branch, OCG.
2. A statement of details of WIP balances is required quarterly and in the year-end sign-off package for each client. This information is to be reported on the Details of Work-in-Progress Balances Form. (government access only)

Accounts Payable and Accrued Liabilities

All liabilities are recorded to the extent that they represent claims payable to outside parties as a result of events and transactions prior to the fiscal year-end. These accrued liabilities include:

• accruals for the value of all goods and services received prior to the fiscal year-end;
• accruals for estimated losses on loan guarantees issued by the government; and
• accruals for contingent losses when it is likely a loss amount will be payable and the amount can be reasonably estimated.

The accrual must include all amounts payable to any entity, whether Crown corporation, agency or outside enterprise, for work performed, goods delivered, services known to have been rendered or for charges incurred in accordance with the terms of a contract. Estimates of liabilities to be accrued are to be made on the best available information wherever an amount can be reasonably determined. For example, environmental clean up accruals would be based on the cost estimates of work to be done.

Liabilities payable in US funds are recorded in Canadian dollars using the March 31 exchange rate. Exchange and interest rates are available on the OCG intranet page at http://www.min.fin.gov.bc.ca/OCG/FMB/Rates/rates.stm (government access only).

The discounted value of a capital lease must be recorded as a liability.

Generally Accepted Accounting Principles require the government to segregate and disclose separately in the published financial statements the amounts charged to expense for restructuring and the accrued liability for future restructuring costs. Payables are grouped under Level 2 roll-up LA00 into the following categories:

Include trade payables of Crown corporations and agencies in 3160 to 3209. Loans and advances from Crown corporations and agencies and funds other than trade payables are recorded as Due to Crown Corporations, Agencies and Funds.

Due to Other Governments

All amounts due to other governments, including loans, advances and trade transactions are reported separately on the Balance Sheet.

This group of liabilities are recorded under Level 2 roll-up LA20 the following categories:

Due to Crown Corporations, Agencies and Funds

All amounts due to Crown corporations, agencies and funds (owned or controlled by the Province of British Columbia) represent liabilities incurred, other than trade payables, which are payable in the following year. A list of Crown corporations and government entities, owned or controlled by the Province of British Columbia that will be reported in the Public Accounts are listed on the FRAS intranet site.

Deferred Revenue

Deferred revenue represents amounts received prior to year-end relating to revenue that will be earned in subsequent years. Amounts should be reversed in the new year, as they are earned.

This group of liabilities are recorded under Level 2 roll-up LA50 in the following categories:

Reporting Requirements for Statement of Operations

The only statements for this section that ministries are required to submit to the Financial Reporting and Advisory Services Branch (FRAS) are those contained in the Additional Reporting Requirements section.

Amounts in the general ledger will be reported in accordance with the overall corporate Chart of Accounts structure and the service line rollup structure set up by FRAS for reporting by function in the Statement of Operations.

Ministries will confirm during the year that a correct corporate account structure has been established, that service line balances will appear in the Public Accounts where appropriate and that balances have been posted to the correct service lines for Appropriation reporting.

Revenue

All revenues are recorded on an accrual basis except where the accruals cannot be determined with a reasonable degree of certainty or where their estimation is impracticable.

Deposits to Accelerated Funds Transfer bank accounts and phone transfers made prior to 3:00 p.m., March 31, will be recorded in the old fiscal year. Deposits or phone transfers after March 31 will be recorded in the new fiscal year. Refer to Provincial Treasury Deposit Information (TDI) System for the date and time (eastern) that the bank processed your deposit and the fiscal year in which the revenue was recorded in the general ledger.

In the case of revenues deposited with the Government Agent on a Revenue Deposit Form, the deposit must be delivered to the government agent before 2:00 p.m. local time on March 31 in order to be credited to old year revenue. Any large cheques (i.e., over $100,000) received later that day should still be forwarded as a separate transaction.

All monies received after March 31 that relate to the old fiscal year must be credited to accounts receivable. Revenue accrual journal vouchers should be entered into CAS prior to March 31. Accruals can be corrected in subsequent periods up to the close of ADJ1-0x as more information becomes available.

Expenses

The cost of goods and services must be recorded as expenses in the year received. Goods received or services rendered after March 31 are new fiscal year expenses regardless of when the order was placed.

Government transfers, paid before expense recognition criteria have been met are recorded as financial assets until those criteria have been met. (see CPPM 4.3.14, Transfer Payments).

Recoveries of expenses may be recorded as a credit to an appropriation when:

1. they can be specifically identified with the expense transactions and payment has actually been made from an appropriation; provision for them has been approved through the Estimates; and
2. the expense to which they relate was incurred in the same fiscal year.

Treasury Board may authorize the use of section 26(3) of the Financial Administration Act where a liability has been incurred before the end of a fiscal year, and as a result of this liability an overexpenditure will occur. The excess may be charged against a suitable appropriation for the following fiscal year, and must be reported in the financial statements for the fiscal year in which the expense occurred.

Invoices in respect of vote expenditures actually incurred up to and including March 31 must be drawn against the old fiscal year. The time period for processing these old fiscal year invoices ends with the close of ADJ1-0x. These invoices will be posted in the new fiscal year and accrued in the old fiscal year. Ensure that an invoice that is paying an old year item is assigned a special batch name to differentiate it from current year processing. Ministries should use FY0x (with x being the fiscal year the invoices relate to) in the batch name to aid in the building of the accruals.

Section 26(3) of the Financial Administration Act was designed to cover exceptional situations at year-end. For example, situations when goods and services scheduled to be delivered in the new fiscal year are delivered before April 1. A submission must be made to Treasury Board, no later than May 15 of the following year to authorize the use of part of an appropriation of the subsequent year pursuant to section 26(3) of the FAA, subject to the following conditions:

1. the over-expenditure is due to minor year-end closing adjustments that does not exceed the lesser of 10% of the vote or $250,000; or
2. the vote over-expenditure in excess of these limits arises from non-recurring or extraordinary transaction at year-end.

The total outlined above will be deducted from a suitable appropriation in the following year.

Expense for a valuation allowance must be charged to an expense account within the same function area. The valuation adjustment will result in either a valuation expense (an increase in the valuation allowance on the Balance Sheet) or a valuation recovery (a decrease in the valuation allowance on the Balance Sheet). If a valuation recovery is to be made, the offsetting credit entry would be to the valuation expense account in the appropriate function area.

The expense STOBs are:

Additional Reporting Requirements

Capital Leases

A capital lease transfers substantially all the benefits and risks incident to ownership of property to the government, and is treated as a purchase for accounting purposes. Ministries must report all capital leases outstanding as at March 31 on a Statement Detail Form – Statement of Obligations under Capital Leases. (government access only)

Year-End Commitments

A statement of year-end commitments is required to provide details of obligations and commitments pursuant to agreements existing at the end of the fiscal year that are expected to result in expenses in future years.

Ministries are to submit to Financial Reporting and Advisory Services Branch a schedule of commitments with a brief description and estimated future expenses for each commitment.

An obligation or commitment derived from an agreement or contract for goods or services will be reported in the Public Accounts if it meets all of the following criteria:

1. The commitment is for a project or undertaking existing at the end of the current fiscal year. The commitment is non-operating in nature and spans more than one but less than five consecutive years. A non-operating commitment may be defined as one that is abnormal in relation to the usual operations of a ministry, such as a substantial capital asset acquisition.
2. The commitment is significant to the government as a whole (i.e., the total estimated cost to complete the project or undertaking is more than $50 million).

Note: A commitment is not a liability until the goods are delivered, service provided, title passes or a project reaches a specified level of completion.

Contingent Losses

Contingent losses are those existing conditions or situations from which a loss may arise. This applies to circumstances where the existence of a loss is uncertain, not merely where the amount of a loss is uncertain. It is necessary to evaluate existing conditions or situations which may give rise to a loss such as any pending or threatened litigation, threat of expropriation of assets, arbitration, responsibility for environmental clean-up, guarantees of the indebtedness of others and any other potential losses.

1. Ministries must report all contingent losses with potential for debt of $100,000 or more (except guaranteed debt and indemnities that are reported separately) on a Statement Detail Form "Statement of Contingent Losses". (government access only) For environmental losses, use the "Statement of Environmental Contingencies and Ordered Remediation". (government access only). Ministries are requested to list only items that have not reached the litigation stage. Contingent losses that are in litigation will be obtained directly from the Ministry of Attorney General by the Financial Reporting and Advisory Services Branch. It is recommended that ministries verify the items on the Statement Detail Form with the Ministry of Attorney General to avoid reporting any items in duplicate.
2. Statement of Contingent Losses
   1. when amounts of the claim are uncertain, an estimate should be made of the dollar figure. Use an asterisk (*) next to the amount to indicate that the actual claim is still unknown.
   2. there are three "probabilities of occurrence" required to determine if contingent loss should be accrued in the current year. They are:
      • highly likely that loss will occur (greater than 70% probability); not likely that loss will occur (less than 70% probability); or
      • likelihood of loss is not determinable.

      Please indicate which one is applicable. If the probability of occurrence is highly likely and the amount of the loss can be reasonably estimated, the amount should be accrued by a debit to expense and a credit to STOB 3260 Pending Litigation/Arbitration or STOB 3262 – Environmental Clean-up Costs

      If the probability of occurrence is:

   • highly likely, but the amount of the loss cannot be reasonably estimated; or highly likely and an accrual has been made but there exists an exposure to loss in excess of the amount accrued; or
   • not determinable,

   the existence of the contingent loss is to be disclosed in the Notes to the Financial Statements in the Public Accounts.

   3. if there is a range for the estimated settlement, indicate the low and high amounts, noting that the amount cannot be reasonably estimated.
   4. all amounts should be rounded to the nearest thousand dollars.

Guaranteed Debt and Indemnities

Guaranteed debt consists of the reportable debt of municipalities and other local governments, private enterprises and individuals, and debt and non-controlling interests of provincial Crown corporations that has been explicitly guaranteed or indemnified by the government, under the authority of a statute, as to net principal or redemption provisions.

Financial Administration Act section 72(8) requires the reporting to the Legislature, as soon as possible after the commencement of each fiscal year, the details of guarantees and indemnities issued and approved by the Lieutenant Governor in Council or the Treasury Board during the preceding fiscal year. Ministries are to make a listing of the guarantees and indemnities issued during the fiscal year as a part of the ministry FYE package (government access only). Those indemnities that have been registered with the Risk Management Branch, Ministry of Finance, do not need to be included as this information will be obtained directly from them.

Procedures – Guaranteed Debts

Each debt should be listed individually on the Statement Detail Form – Statement of Contingent Losses – Guaranteed Debt (government access only). The total outstanding guarantee column should show the actual debt for which government is contingently liable at March 31. Where the debt is recorded and controlled through the Loan Administration Branch, Provincial Treasury, do not include it in the detailed listing, as this information will be obtained directly from them.

A provision should be established for the probable losses on loan guarantees issued by each ministry. The amount of the provision may be determined by the loss experience of the guarantee program and sufficient to meet the expected payout for the guarantee to the lender. The provision should be recorded as an expense in the year the guarantee is issued and adjusted as necessary to cover the expected payout for the guarantee. The balance in the provision STOB 3240 must equal the total of the provision for probable loss reported on the Statement of Contingent Loss – Guaranteed Debt.The expense should be set up in a separate service line with a reference to section 74 of the Financial Administration Act.

The expenditure STOB is:

8510 – Allowance for Probable Losses on Guaranteed Debts

The account payable STOB is:

3240 – Provision for Guaranteed Debt Payout

Procedures – Indemnities

Outstanding indemnities at year-end are to be summarized on the Statement Detail Form – Statement of Contingent Losses – Indemnities (government access only) for consideration by the Financial Reporting and Advisory Services Branch. CPPM 9.2 and 9.3.2 defines government policy on indemnities.

Amount reported on the Statement Detail Form – Statement of Contingent Losses – Indemnities should be the total amount that the government would be obliged to pay upon the default of other parties to agreements as of March 31. Where an exact amount can not be estimated, a "worst situation" should be included.

Comments should include information such as insurance coverage or collateral held.

Procedures – Guaranteed Debt and Indemnities Paid Out

Ministries must report amounts paid out due to default of the borrower on debt guaranteed or indemnified by the government on a Statement Detail Form – Statement of Amounts Paid Out for Defaulted Guaranteed Debt and Payments to Honour Indemnities (government access only).

Reporting Requirements for Write-offs, Extinguishments, Remissions and Valuation Allowances of Debts and Other Obligations to Government

Sec 17, 18 and 19 of the Financial Administration Act requires the reporting of the reduction/deterioration in the value of assets. Any related revenue offset (contra revenue account) has to be recorded when a valuation allowance is made to adjust for uncollectible accounts receivable. The use of the revenue offset can only be made for revenue generated accounts and does not include uncollectible non-revenue generated accounts receivable, loans, investments, mortgages or any other asset requiring a valuation adjustment.

The Statement Detail Form – Analysis of Valuation Allowance and Expenses (government access only) provides the information required to meet Public Account and FAA requirements. The Financial Administration Act (FAA) reporting requirement is for FAA write-offs only. Write-offs authorized by other acts are not to be included in the final report. This is why the FYE form distinguishes between FAA and Non-FAA.

Examples of write-off entries are:

Ministries are also required to provide additional information for section 18 and 19 of the Financial Administration Act on the Statement Detail Form – Statement of Amounts Forgiven (Including Remissions) (government access only).

Note: Do not include refunds/remissions/write-offs or amounts forgiven pursuant to any authority other than the FAA on this statement.

Payments Based on Contributions (FAA section 25)

CPPM 4.3.15 provides government policy and direction on Payments Based on Contributions.

An accrual should be made for any unpaid amount on goods or services received prior to April 1. Any balances remaining in this statutory expense account must be closed out as follows:

Net Debit Expense Balance –

Debit STOB 1313 Accounts Receivable – Payments Based on Contributions    Credit expense recoveries

Net Credit Expense Balance –

Debit expense recoveries    Credit STOB 3520 Deferred Revenue

Submit details of expenditures for the fiscal year on a Statement Detail Form – Payments on Contributions (FAA sec. 25) (government access only). Amounts shown on the form should be the amounts actually paid out for the sec. 25 during the fiscal year.

Full Time Equivalent (FTE) Employment

Ministries are to report staff utilization based on all employees appointed under the Public Service Act. If government reorganization occurs, the number of FTEs transferred out along with the name of the receiving ministry are to be reported.

FTEs for Crown Corporations and Agencies are to be reported separately.

This information is to be reported by ministries on the Statement Detail Form – FTE Employment (government access only).

Crown Corporations and Government Entities

A reconciliation of transactions made between a ministry and a Crown corporation, government agency or SUCH (Schools, Universities, Colleges, Hospitals) entity is required. Balances owing to and/or from these entities must be verified with that entity to ensure an accurate and complete consolidation for summary reporting.

Information on inter-entity balances is to be reported by ministries on the Reconciliation of Crown Corporations and Government Entities (government access only). Since supplier detail is not available for accrual entries in the General Ledger, the reconciliation begins with the balance at the end of MAR-0x, and separately requests the accrual amount for each Crown corporation.

Trust Funds

Trust funds are reported on the accrual basis in accordance with the accounting policies established by Treasury Board.

Cash and negotiable securities held in trust must be recorded in the Corporate Accounting System and reconciled to ministry records. Differences found between the general ledger and the ministry trust records after close off are to be reported to the Financial Reporting and Advisory Services Branch in writing. Insurance bonds, letters of credit, receipts and agreements and other non-negotiable instruments need not be recorded in the corporate general ledger, but adequate ministry control records of these instruments are to be kept.

Transactions for trust funds will be processed for old fiscal year if entered into the Corporate Accounting System before the close of ADJ1-0x. There is no supplementary period for processing old year trust fund payments.

Trust funds use the same STOBs as the Consolidated Revenue Fund. For funds held in trust by the Province there must be a fund balance (equity) STOB with offsetting assets. For cash held in the CRF bank account, a liability has already been established in the ministry. The corresponding asset in the trust ministry is accounts receivable STOB 3502 Year End Inter-ministry – Trust Fund/General Account. This is adjusted annually by OCG and no action is required of the trust ministry. Balances should be reconciled to the ministry records on a monthly basis to ensure accurate and complete balances at fiscal year-end. Similar assets may be grouped in the same STOB if subsidiary records are maintained by the ministry.

A trial balance for each trust fund held by the trust ministry must be prepared for the fiscal year end and submitted to the Financial Reporting and Advisory Services Branch, OCG. The trial balance is also a reconciliation report of the ministry records to the CAS balances. Any adjusting journal entry to be processed as a post closing adjustment must accompany this report. The trial balance report is submitted on the Statement Detail Form – Trust Funds – Trial Balance (government access only).

Measurement Uncertainty Each year ministries are required to provide information on the uncertainty surrounding any estimates that have been made in their accounts. This information in required under generally accepted accounting principles and is submitted with the fiscal year-end package. Ministries use the Statement Detail Form – Measurement Uncertainty (government access only) to provide these details.

Contractual Obligations Each year ministries are required to provide information on any contractual obligations that are outstanding at March 31 that continue into any future fiscal year. These contracts obligate government to purchase goods or services from the proponent. Ministries are requested to report contractual obligations that are greater than $50 million. This materiality limit applies to single contracts, as well as like contracts. This information in required under generally accepted accounting principles and is submitted with the fiscal year-end package. Ministries use the Statement Detail Form - Contractual Obligations (government acess only) to provide these details. Details on disclosure requirements can be found at http://www.min.fin.gov.bc.ca/ocg/reports_ocg.stm#fye (government access only).

Sale-Leaseback Transactions Each year ministries are required to provide information on any sale transactions where government leased back the assets sold. This information in required under generally accepted accounting principles and is submitted with the fiscal year-end package. Ministries use the Statement Detail Form – Sale-Leaseback Transactions (government access only) to provide these details.

Subsequent Events

Any events of material financial consequence that occur subsequent to the year-end (March 31) and prior to completion of the Public Accounts (approximately mid-May) must be communicated to the Financial Reporting and Advisory Services Branch of the Office of the Comptroller General.

Examples of events to report as subsequent events might be extraordinary revenue or expenditure ($25 million or more), large contractual obligations occurring in the new year and sales or purchases of government assets of significant dollar value. These events should be reported as they take place and should also be included in the ministry's representation letter.

Management Representation Letter

Each ministry is required to supply the Comptroller General with a management representation letter (government access only) after each year end, no later than mid-May. The purpose of this letter is as follows:

1. To provide the auditor with an opportunity to learn from senior officials any information affecting the financial statements of which only they may be aware; To ensure that senior management has given adequate consideration to the policies and practices reflected in the financial statements; To ensure the ministry has an internal controls system in place that assures the integrity of data supplied to the corporate accounts and that ongoing processes to review, evaluate, and report to ministry management on the adequacy of the controls as well as performance and compliance to established controls. To emphasize the responsibility of management for the fair presentation of the financial statements; To ensure that management has given due thought to the valuation and disclosure of assets and liabilities, and the completeness of information supplied to the Comptroller General and the auditor; and
2. To ensure all trust funds are examined annually to determine whether there are any monies unclaimed as defined by the Unclaimed Property Act. This should be completed by March 31 of each year. The Financial Reporting and Advisory Services Branch, OCG is to be advised of any monies that must be transferred to the Consolidated Revenue Fund.

H.2 Fiscal Month-End

Introduction

Financial statements are prepared each month-end for Treasury Board on the accrual basis of accounting in accordance with government accounting policy (CPPM 3.4.3).

Balances in the Data Warehouse are used to produce the government's month-end report. Year-to-date balances extracted from the Data Warehouse after month-end close for the general ledger should reflect the cost of goods and services received and revenue earned by month-end.

Accounts payable should be recorded as soon as invoices are received through the accounts payable process. Receivables should be recorded in CAS as revenues are identified. Regular monthly expenses not requiring cheques such as amortization expense and prepaid capital expense amortization should be recorded on a monthly basis, so that at year-end only minor adjustments to the totals already expensed will be needed.

At month-end each ministry must ensure that the amounts recorded in CAS accurately reflect their year-to-date revenues and expenses and that general ledger balance sheet STOBs have been adjusted to reflect correct current balances. Ministries have five working days after month-end to review their CAS month-end balances and make necessary adjusting entries.

Amounts not entered into CAS identified after the general ledger close should be brought to the attention of Financial Reporting and Advisory Services, Office of the Comptroller General. Post-closing adjustments will be processed on a case-by-case basis and are not necessarily accepted due to time constraints in producing the government month-end report. A complete journal voucher is required to support any adjustment. This Journal Voucher will not be posted by FRAS into CAS-Oracle.

Timetable for Month-End

Month-End Accruals – Procedures

The level of accuracy expected for month-end reporting needs to be balanced against the need for timely reporting. The general principle should be to ensure that year-to-date revenues and expenses after accruals approximate the actual results of each program to the Estimates level of detail.

The question of the extent of accruals is a professional judgement and should be based on all the facts of the circumstance. Government accounting policy and the financial impact on the program and government as a whole needs to be considered. Where a unique or highly questionable situation arises, the matter should be discussed with the ministry senior financial officer, who may wish to contact FRAS for advice.

Expense entries need identification only to the appropriation, STOB group and client for CAS reports. At its own discretion, a ministry may wish to record at the responsibility level of detail. Accrual STOBs within the STOB group permit an accrual without providing the detail that will be used upon payment.

Revenue accruals should be at least equal to the level of detail provided in the month-end RMS report. If the current chart structure does not permit entry at this level, FRAS should be contacted to discuss options.

All month-end accruals must be reversed in the next month and where necessary, replaced with entries at the following month end.

Expenses/Accounts Payable

Expenses are accrued for goods received and/or services rendered before the month-end, even if invoices have not been received. If actual amounts are not readily available, a reasonable estimate should be made.

Grants are recorded as expenses when disbursement of the funds has been authorized. Forgivable loan advances and conditional grants are accrued when the goods or services have been received and/or when contract conditions have been fulfilled.

Interim accrual liability codes are:

Expense Recoveries/Accounts Receivable

Recoveries of expense may be permitted as a credit to the appropriate expenditure/recovery service line when all of the following conditions apply:

1. Recoveries can be specifically identified with the expenditure transactions and payment has actually been made from an appropriation; Provision for them has been approved through the Estimates or by Treasury Board; and
2. The expense to which they relate was incurred in the same fiscal year.

Recoveries of expense that should have been received before month-end should be credited to the appropriate expense recovery account, if significant, and set up as accounts receivable.

Inter-ministry chargebacks may not be accrued to a receivable STOB, however a journal voucher may be processed to transfer the charge using an estimate of the recovery and be reversed at the beginning of the next month.

Interim accrual asset STOB is 1279 Accounts Receivable – Interim Accrual.

Payroll Expenses

The biweekly payroll system necessitates the calculation of unpaid salary earned, from the last pay period date to the current month-end and the accrual of this amount by vote and sub-vote (STOB 5095).

If the ministry internal system can accurately provide this information, then that source should be used. If this is not possible, an estimate may be used based on the previous payroll, with the following suggested formula being applied:

(Working day means the number of regular workdays and includes statutory holidays.)

If some or all of ministry employees work on a shift basis, causing the number of working days to vary, separate calculations for each area may be made. If preferred, a formulated percentage for the group of areas may be determined in order to do the calculation. The main requirement is that a reasonable estimate be made using a consistently applied formula. Payroll accruals must be reversed after month-end cut-off.

Revenue/Accounts Receivable

Revenue accruals for outstanding and unbooked receivables should be recorded in CAS at month-end. The interim accrual receivable STOB is 1279 Accounts Receivable – Interim Accrual.

Other Items

Other items such as Revenue Refunds Payable, Prepaid Program Costs and Deferred Revenues should be set up at month-end if the amounts are significant; if in doubt, consult with FRAS. Clearing STOBs should be cleared at month-end to the appropriate STOB.

Fiscal Month-End Cut-off

These procedures apply to all entries in the Corporate Accounting System including cheque requisitions, travel vouchers, journal vouchers, Deposit Forms and all automatically interfaced input entries.

Cut-off Date

The month-end cut-off is scheduled for the evening of the final working day of the month. On occasion, exceptional circumstances may necessitate a change to the cut-off date. Ministries are to be notified of all such changes.

During the first five working days of the new month, no AP to GL data are to be posted. Posting will commence on the sixth working day and will include the postings from day one (1) to day five (5).

Monthly Reconciliation

Ministries must check the accuracy of financial management reports produced by CAS in accordance with CPPM 3.3(c)4. For each month-end, reconciliations are to be completed comparing ministry accounting system balances to the CAS balances responsibility code, service line and STOB.

H.3 Internal Reporting

There are no reports produced centrally for ministries at year-end or month-end. Ministries are responsible for producing their own reports from Oracle, the Data Warehouse or the ministries own reporting tools