18.1 Introduction

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The information requested from Crown corporations (CC) is a result of a recommendation included in the 1963 third Report of the Public Accounts Committee. The Treasury Board Secretariat has expanded this recommendation to include other reporting entities that are also considered part of the Government reporting entity. Information obtained is used to prepare annual financial statements and tables in the Public Accounts of Canada, for disclosure in prospectuses of the Government of Canada and Crown corporations and for analysis purposes.

The reporting entity of the Government of Canada includes all departments, agencies, corporations, organizations and funds which are controlled by the Government. For financial reporting purposes, control is defined as the power to govern the financial and operating policies of an organization with benefits from the organization's activities being expected, or the risk of loss being assumed by the Government.

A Crown corporation is a government organization that operates following a private sector model but usually has a mixture of commercial and public policy objectives. A Crown corporation means a parent Crown corporation or a wholly-owned subsidiary. A parent Crown corporation is wholly-owned directly by the Government and is established through legislation, letters patent or articles of incorporation under the Canada Business Corporations Act. A wholly-owned subsidiary is wholly-owned by one or more parent Crown corporations, directly or indirectly through any number of subsidiaries. Wholly-owned subsidiaries report to their parent Crown corporations, except those that have been directed by the Government to report as a parent Crown corporation.

There are a number of corporations that are not considered Crown corporations within the meaning of the Financial Administration Act (FAA), but which are controlled by the Government and in most cases accountable to Parliament through a Minister of the Crown for the conduct of their affairs.

In addition, there are a number of not-for-profit organizations, such as foundations, that meet the definition of control for financial reporting purposes and that are included in the reporting entity of the Government.

Consolidated Crown corporations and other entities are those that rely on Government funding as their principal source of revenue. Consolidation involves the combination of the accounts of these Crown corporations and other entities on a line-by-line and uniform basis of accounting and elimination of inter-organizational balances and transactions. Before these balances and transactions can be eliminated, the consolidated Crown corporations' and other entities' accounts must be adjusted to the Government's basis of accounting.

Therefore, a detailed breakdown of assets, liabilities, revenues and expenses, and information on accounting policy changes is required in order to facilitate the conversion of the consolidated Crown corporations' and other entities' account balances and transactions to the Government's accounting basis. This information is required for the preparation of the Government of Canada consolidated financial statements.

Other Crown corporations and reporting entities are able to raise substantial portions of their revenues through commercial business activities outside of the Government reporting entity and are self-sustaining. These other Crown corporations and reporting entities are classified as either enterprise Crown corporations or other government business enterprises.

The investments in enterprise Crown corporations and other government business enterprises are recorded under the modified equity method of accounting whereby the corporations' accounts are not adjusted to the Government's basis of accounting. Investments of this nature are recorded at cost and adjusted annually to recognize the investees' profits and losses, after elimination adjustments of unrealized inter-organizational gains or losses, and dividends received. Other comprehensive income or loss of enterprise Crown corporations and other government business enterprises is recorded directly to the Government's accumulated deficit and net debt. The corporations' assets and liabilities are not included in these financial statements, except for borrowings which are not expected to be repaid directly by the corporations. These are recorded as part of the allowance on guarantees by the Government.

Insurance programs operated by agent enterprise Crown corporations are disclosed in a note to the consolidated financial statements of the Government of Canada and relevant details are provided in Volume 1 of the Public Accounts of Canada.

Summary financial position and results of enterprise Crown corporations and other government business enterprises are also included in a note to the consolidated financial statements of the Government of Canada. Additional summary information is presented for all consolidated Crown corporations and other entities, as well as enterprise Crown corporations and other government business enterprises in Volume I of the Public Accounts of Canada. Therefore, submission of accurate, complete and timely information by all organizations that are part of the Government reporting entity is essential to the timely preparation of the Public Accounts of Canada.

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18.1.1 Purpose and Scope

The purpose of this chapter is to advise officials of Crown corporations and other reporting entities of the financial information required at the end of each calendar quarter, in order to report the financial position, results of operations, contingent liabilities, contractual obligations, particulars of insurance programs and guarantee funds of all Crown corporations and other reporting entities in the Public Accounts of Canada, in prospectuses of the Government of Canada and Crown corporations and for analysis purposes.

18.1.2 Authority

In order to fulfill the responsibilities in accordance with section 63 of the FAA and section 64 of the FAA, the Receiver General requests financial information on a quarterly basis.

18.1.3 Application

R This Receiver General Manual (RGM) chapter applies to the Crown corporations listed in Schedule III, Parts I and II of the FAA, to other Crown corporations and entities listed in Appendix A attached hereto, and to any Crown corporation or other reporting entity coming into existence after March 31, 2012, which is controlled by the Government, and is therefore part of the Government reporting entity.

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18.1.4 Instruction

Crown corporations and other reporting entities are required to report all account balances, transactions, contingent liabilities, contractual obligations and particulars of insurance programs and guarantee funds in accordance with the procedures and the timetable set forth in section 18.4.

R Enterprise Crown corporations and other government business enterprises reporting under International Financial Reporting Standards (IFRS) must report their financial information on the CC Forms using the same accounting framework. Consolidated Crown corporations and other entities which have adopted IFRS must report their financial information on the CC Forms based upon Public Sector Accounting Standards (PSAS) for the values of balances and transactions for the year ended March 31, 2013 and subsequent quarters following the Government of Canada fiscal year (from April 1st to March 31st). A quarterly reconciliation between IFRS and PSAS must be detailed on Form CC-8 (Reconciliation between IFRS and PSAS). The amount of the impact on the financial statements must be presented by financial statement item listed on the applicable CC Form (Assets, Liabilities, Equity, Revenues, Expenses and Contingent Liabilities). This requirement applies only to: Atomic Energy of Canada Limited, Canadian Air Transport Security Authority, Canadian Broadcasting Corporation, Canadian Commercial Corporation, Canadian Dairy Commission, Defence Construction (1951) Limited, International Development Research Centre and Via Rail Canada Inc.

All other consolidated Crown corporations and other entities which have adopted PSAS as their basis of accounting must identify and describe any change in their accounting policies on Form CC-7 (Change in accounting policies or unusual transactions). These changes must also include any early PSAS adopted along with the amount of the impact on the financial statement components.

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