17.4 Procedures

Representation number 1 (Reported transactions)

• All financial transactions of the reporting organization must have been accurately reported to the Deputy Receiver General for recording in the accounts of Canada on forms CC‑1 through CC‑8 and CC‑10 (and other plates in accordance with the Receiver General Manual (RGM) Chapter 15, "Public Accounts Instructions", if applicable), as stated in RGM Chapter 18, "Reporting instructions for Crown corporations and other reporting entities".

  It is the responsibility of Crown corporations and other reporting entities to report details of transactions on CC forms (and other plates if applicable), in a timely and accurate manner for reporting in the Public Accounts of Canada. This includes the assets, liabilities, revenues and expenses of the reporting organization, as well as supplementary schedules or notes which are combined with the Government's balances (or supplementary information) in the accounts of Canada and the Public Accounts of Canada.

  Example

  All financial transactions of the reporting organization have been accurately reported to the Deputy Receiver General for recording in the accounts of Canada on forms CC‑1 through CC‑8 and CC‑10 (and other plates in accordance with the RGM Chapter 15, "Public Accounts Instructions"), as per RGM Chapter 18, "Reporting instructions for Crown corporations and other reporting entities", except as follows:

  Revenues for the year of $64,900,000 could not be accurately split between transactions with the Government and outside sources. It is believed that most of this revenue is generated from the marketplace; however, some Federal department transactions have occurred and are not identifiable or estimable due to the reporting organization's accounting system.

Representation number 2 (Books of accounts and records)

• The reporting organization must have maintained complete, proper, and accurate books of accounts and records, from which complete and accurate financial statements and supplementary reports, and CC forms (and other plates if applicable) required for the Public Accounts of Canada, have been prepared. There are no material transactions during the year that have not been properly reflected in the accounts. All amounts recorded in subsidiary accounts in the reporting organization's accounting system must have been reconciled to the corporation's general ledger. In the case of Crown corporations which have been delegated payment authority under Section 33 of the FAA, they further declare that all transactions recorded in the accounts of Canada are reflected correctly and have been reconciled to those of the reporting organization.

  Section 131 of the Financial Administration Act requires Crown corporations to keep books, records and management control systems to enable the preparation of accurate financial statements. Any exceptions must be disclosed and detailed including amounts, as described in the following paragraph:

  Example

  The reporting organization has maintained complete, proper, and accurate books of accounts and records, from which complete and accurate financial statements and supplementary reports and CC forms (and other plates if applicable) required for the Public Accounts of Canada, have been prepared. There are no material transactions during the year that have not been properly reflected in the accounts. We have appropriately reconciled our books and records (e.g. general ledger accounts) underlying the financial results to their related supporting information (e.g. sub ledger or third party data), except as follows:

  The accounts receivable sub-ledger does not reconcile with the General Ledger accounts receivable of the organization by $45,000. The difference is being investigated by officers of the organization.

Representation number 3 (Disclosure controls and procedures)

• The reporting organization must maintain disclosure controls and procedures to provide reasonable assurance that material information relating to the reporting organization, including its consolidated subsidiaries, is made known to them by others within those entities.

  Example

  The reporting organization has maintained disclosure controls and procedures to provide reasonable assurance that material information relating to the reporting organization, including its consolidated subsidiaries, is made known to us by others within those entities.

Representation number 4 (Internal control over financial reporting)

• The reporting organization must have designed, implemented and maintained internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial information for inclusion in the Public Accounts of Canada and in the audited consolidated financial statements of the Government of Canada. In addition, management must have designed controls and procedures to provide reasonable assurance that material information relating to the reporting organization included in the CC forms is complete and accurate. Management must have disclosed all deficiencies in the operations of disclosure controls and procedures and internal control over financial reporting that they are aware of as of March 31, 2017.

  Example

  The reporting organization has designed, implemented and maintained internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial information for inclusion in the Public Accounts of Canada and in the audited consolidated financial statements of the Government of Canada. In addition, management has designed controls and procedures to provide reasonable assurance that material information relating to the reporting organization included in the CC forms is complete and accurate. We have disclosed to you all deficiencies in the operations of disclosure controls and procedures and internal control over financial reporting that we are aware of as of March 31, 2017.

Representation number 5 (Recording and reporting of financial information)

• The reporting organization must have complied with all relevant Receiver General and Treasury Board requirements, the Financial Administration Act (if applicable), and all legislation affecting the recording and reporting of financial information to be included in the accounts of Canada and reflected in the Public Accounts of Canada or other interim Government financial reports.

  All Crown corporations must comply with any and all requirements of the Receiver General, the Treasury Board and any relevant legislation, regarding the recording and reporting of their financial transactions. Subsection 131(4) of the FAA explains how Treasury Board regulations may be developed to augment the corporation's use of Canadian generally accepted accounting principles (GAAP). Subsection 89(1) of the Financial Administration Act requires the Crown corporation to implement any and all directives from Order in Council.

• The reporting organization must have complied with its financial reporting framework in the preparation of its financial statements except for accounts maintained in the CRF for which all relevant significant accounting policies of the Government of Canada have been applied.

  The reporting organization must comply with Canadian GAAP as detailed in the Chartered Professional Accountants of Canada Handbook (except for those accounts maintained in the CRF for which the Government's significant accounting policies must apply). Details of non-compliance with Canadian GAAP must be disclosed and detailed in this paragraph. An example of such an exception might be the write-off of major capital assets to expense at the time of purchase.

  Crown corporations exercising authority under Section 33 of the FAA must comply with the accounting policies related to the financial transactions recorded in the accounts of Canada and the financial information reported to the Deputy Receiver General. Exceptions must be disclosed and detailed in this paragraph. Examples of such exceptions might be: unrecorded payables at year end, reporting of accrued liabilities as contingent liabilities, recording of contingent liabilities as payables, foreign currency transactions recorded at the time of payment in foreign currency and translated only at year end.

• The consolidated Crown corporations and other entities which have adopted International Financial Reporting Standards (IFRS) must present the information on the CC forms (and other plates, if applicable) in accordance with Canadian Public Sector Accounting Standards (PSAS) with the exception of those accounts and balances specifically excluded from this requirement as noted in RGM Chapter 18 "Reporting instructions for Crown corporations and other reporting entities".

  This latter representation applies only to those other government organizations, as defined within Public Sector Accounting Standards that have chosen to adopt International Financial Reporting Standards for their external reporting. In accordance with RGM Chapter 18 "Reporting instructions for Crown corporations and other reporting entities", these reporting organizations are required to prepare and submit their CC forms in accordance with Public Sector Accounting Standards. There are current exceptions to this requirement and these exceptions are detailed in RGM Chapter 18. Currently, this representation only applies 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.

  Example

  In the recording and reporting of financial information to be included in the accounts of Canada, the Public Accounts of Canada and other monthly and quarterly consolidated financial statements, the reporting organization has complied with:

  1. RGM Chapter 18, significant accounting policies of the Government of Canada, if appropriate, as well as any other Treasury Board requirements (i.e. directives, circulars and regulations)
  2. the Financial Administration Act
  3. all other legislation affecting the reporting organization (and accounts in the CRF)

  In addition,

  • the reporting organization's financial statements have been prepared in accordance with [include your reporting organization's financial reporting framework] on a basis consistent with that of the preceding year (except for, [state exceptions, if any] (except for those accounts maintained in the CRF, for which all relevant accounting policies of the Government of Canada have been applied))
  • the consolidated Crown corporations and other entities that have adopted IFRS, have presented the information on the CC forms (and other plates, if applicable) in accordance with PSAS with the exception of those accounts and balances specifically excluded from this requirement as noted in RGM Chapter 18

Representation number 6 (Contractual arrangements)

• The reporting organization must have disclosed all contractual arrangements entered into with third parties. Crown corporations and other reporting entities must have complied with all aspects of contractual agreements that could have a material effect on the financial information in the event of non-compliance.

  Example

  All contractual arrangements entered into by the reporting organization with third parties have been properly reflected in the accounting records or/and, where material (or potentially material) to the financial information for inclusion in the Public Accounts of Canada and in the audited consolidated financial statements of the Government of Canada, have been disclosed to you. We have complied with all aspects of contractual agreements that could have a material effect on the financial information in the event of non-compliance.

Representation number 7 (Environmental liabilities)

• Liabilities for remediation of contaminated sites were recognized and disclosed in accordance with [include your reporting organization's financial reporting framework]. Such estimates are reasonable based on the available information. Remediation liabilities have been adequately reported as required by RGM Chapter 18, subsection 18.4.2.1.

  Obligations associated with future asset restoration have been estimated and recorded.

  All Crown corporations and other reporting entities are required to report on contaminated sites in accordance with RGM Chapter 18, "Reporting instructions for Crown corporations and other reporting entities". Environmental liabilities should be reported on form CC‑2, while related contingent liabilities should be reported on form CC‑6a for enterprise Crown corporations and other government business enterprises and on form CC‑6b for consolidated Crown corporations and other entities.

  Liabilities for remediation of contaminated sites were recognized and disclosed in accordance with [include your reporting organization's financial reporting framework]. We believe that such estimates are reasonable based on the available information. Remediation liabilities have been adequately reported as required by RGM Chapter 18, subsection 18.4.2.1.

  Obligations associated with future asset restoration have been estimated and recorded.

Representation number 8 (Contingent liabilities)

• All contingent liabilities must have been reported to the Deputy Receiver General for disclosure in the Public Accounts of Canada.

  Crown corporations and other reporting entities are required to report contingent liabilities in accordance with RGM Chapter 18, "Reporting instructions for Crown corporations and other reporting entities". Crown corporations administering accounts for the Government should use Plates I‑11 and I‑12 and consult RGM Chapter 15, "Public Accounts Instructions", subsection 15.3.4, for instructions on how to report contingent liabilities for administered accounts. Contingent liabilities can include guarantees, lawsuits, tax claims, contaminated sites (refer to Representation number 7 above) and pending and threatened litigation.

  Example

  All known actual or possible litigation and claims, which existed at the (consolidated) statement of financial position date or exist now, have been disclosed or have been reported to the Deputy Receiver General on the appropriate CC forms (and plates I‑11 and I‑12, if applicable) for disclosure in the Public Accounts of Canada. We believe that the amounts recorded reflect management's best estimates and that they will likely result in a liability that can be reasonably estimated.

  The reporting organization has no knowledge of any other lawsuits, tax claims or pending litigation, including possible claims, of any consequence or of any other contingent liabilities of whatever nature, except as follows:

  • The reporting organization has guaranteed loans totaling $9 million. It did not include this amount on its CC forms as the loans were jointly guaranteed by another corporation. Had this amount been included, our contingent liabilities would have increased accordingly.

Representation number 9 (Letters of comfort)

• Letters of comfort must not have been issued nor been in force at any time during the year or subsequent to the period up to June 14, 2017

  A letter of comfort is a guarantee by a Crown corporation or other reporting entity to a financial institution on behalf of another corporation, enterprise, person, association or other entity for a loan that may be issued in the future. The appropriate Government minister may issue a similar letter on behalf of a Crown corporation or other reporting entities.

  Example

  Letters of comfort to financial institutions from the reporting organization have not been issued nor, to the best of our knowledge and belief, has the Minister for the reporting organization issued such letters. Nor have any such letters been in force at any time during the year or during the period to June 14, 2017 with the exception of a $200,000 letter of comfort issued on behalf of the Provincial Fishermen's Association to XY Bank on April 14, 2017.

Representation number 10 (Obligations related to capital leases, contractual obligations and details of borrowing transactions)

• All obligations related to capital leases and contractual obligations must have been reported to the Deputy Receiver General for disclosure in the Public Accounts of Canada in accordance with RGM Chapter 18, "Reporting instructions for Crown corporations and other reporting entities".

  Information regarding capital lease obligations and contractual obligations is required for disclosure in the Public Accounts of Canada. All Crown corporations and other reporting entities must comply with the requirements of RGM Chapter 18 "Reporting instructions for Crown corporations and other reporting entities" and report such amounts for disclosure in various notes to the audited consolidated financial statements of the Government. Cases of non-compliance must be reported and detailed.

  All Crown corporations and other reporting entities are also required to submit details of borrowing transactions on form CC‑6 during the year. Cases of non-compliance must be reported and detailed as per example below:

  Example

  All obligations related to capital leases and contractual obligations as well as details of borrowing transactions have been reported to the Deputy Receiver General on the appropriate CC forms for disclosure in the Public Accounts of Canada in accordance with RGM Chapter 18 except as follows:

  (List any cases of non-compliance giving a description of the item(s) and the outstanding amounts, in dollars.)

Representation number 11 (Insurance programs administered by agent Crown corporations)

• All financial transactions pertaining to insurance funds/provisions administered by Crown corporations and other reporting entities in accordance with RGM Chapter 18, "Reporting instructions for Crown corporations and other reporting entities" must have been reported on form CC‑10 to the Deputy Receiver General.

  Crown corporations and other reporting entities operating insurance programs are required to report, on form CC‑10, to the Deputy Receiver General, underwriting statistics (i.e. the amount of insurance in force, the amount of net claims paid in the year, average net claims for the past 60 months (five years) and the revenues, expenses and net income or loss for the fund/provision). In addition, all facts that provide an assessment of the accuracy of the fund/provision, plus other factors that have a material effect on the fund/provision should be described in notes to the above data.

  Example

  The reporting organization has submitted to the Deputy Receiver General details of the insurance funds/provisions, including all underwriting statistics, results of operations and supplementary information as required, on form CC‑10. All information is complete except as follows:

  The bankruptcy of ABC Trustco could result in claims of up to $125.5 million. At March 31, 2017, an amount of $100 million had been provided. The balance has not been reflected on the CC forms.

Representation number 12 (Financial records/Minute books)

• Crown corporations and other reporting entities must have made all financial records and related data, summations of meetings, and minute books available to the organization's external auditor.

  Canadian Auditing Standards (CAS) include the practice of reviewing the formal minutes, informal notes or summaries of the meetings of management level committees. The requirement to produce minutes of the management-type committee meetings could provide the corporation's auditor with information that could have an effect on their opinion regarding the financial statements. In terms of Crown corporations, Subsection 144(1) of the Financial Administration Act details the access to corporation records by the external auditor.

  Example

  The reporting organization has made available to the external auditor:

  All financial records and related data, summations of meetings, and minute books which contain complete and authentic minutes of all meetings of the management committee and internal audit committee applicable to the period April 1, 2016 to June 14, 2017. The most recent meetings of these committees for the said period were held on June 2, 2017 and June 8, 2017 respectively.

Representation number 13 (Cash)

• The books and records must properly reflect and record all transactions affecting cash funds, and bank accounts of the reporting organization.

  Example

  The books and records properly reflect and record all transactions affecting cash funds, and bank accounts of the reporting organization.

Representation number 14 (Receivables)

• Crown corporations and other reporting entities must maintain receivable records and establish rules and procedures to record an appropriate allowance to reflect amounts where collection is in doubt.

  Receivables represent valid claims against debtors and exceptions must be disclosed and detailed in this paragraph. In addition, an appropriate allowance is recorded to reflect amounts where collection is in doubt and deletions of receivables have been properly authorized.

  Example

  Receivables represent valid claims against debtors for transactions arising on or before March 31, 2017 and have been appropriately reduced to their estimated net realizable value. All uncollectible accounts have been properly disclosed and deletions properly authorized with the exception of the deletion of $23,432 which was not authorized by a responsible officer. The reporting organization has taken appropriate action to collect all monies owed to the organization (and Her Majesty in Right of Canada in which latter case, monies collected have been promptly deposited to the credit of the Receiver General for Canada).

Representation number 15 (Loans receivable)

• Loans receivable represent valid claims against debtors and these loans are usually subject to the ordinary terms of credit of the reporting organization.

  Example

  Loans receivable represent bona fide claims against debtors as at March 31, 2017. These loans are subject to the ordinary terms of credit of the reporting organization. An allowance for credit losses has been made where appropriate.

Representation number 16 (Inventories, tangible capital assets and prepayments)

• Crown corporations and other reporting entities must have legal title to these assets, maintain essential records and establish rules and procedures to safeguard and control these assets.
  Example

  The reporting organization (and Her Majesty in Right of Canada) has satisfactory title to all recorded assets; essential records have been properly maintained and the rules and procedures applied are sufficient to safeguard and control them. In particular:

  1. inventories are valued at cost and cost has been determined on a basis consistent with the prior year. Inventories which are slow moving, obsolete, or unusable, or which otherwise no longer have service potential, are valued at the lower of cost or net realizable value. Items for which the costs are not readily available have been valued using management's best estimate of original cost based on available information;
  2. records respecting tangible capital assets for which the reporting organization is responsible are accurate and complete, and all acquisitions and disposals of tangible capital assets during the year have been properly authorized;
  3. all charges to tangible capital assets and additions under capital leases during the year represent actual additions and no expenditures of a capital nature have been charged to expense during the year;
  4. tangible capital assets are appropriately recorded at cost, based on the best information available;
  5. book values of significant tangible capital assets sold, destroyed, abandoned, or otherwise disposed of, have been eliminated from the accounts;
  6. RChoose one of the following:

     [There have been no events or changes in circumstances that indicate that the carrying values of tangible capital assets are not recoverable]
     or
     [During the year, we noted conditions indicating that a tangible capital asset no longer contributed to [Entity]’s ability to provide goods and services, or that the value of the future economic benefits associated with the tangible capital asset was less than its net book value. Accordingly, the cost of the tangible capital asset was reduced by $[amount] to reflect the decline in the asset’s value, and the resulting write-down has been recorded as an expense in the year, in accordance with PSAS.]

  7. tangible capital assets with a limited life are being amortized over management's estimation of their useful lives in a systematic and rational manner or otherwise written off as a charge to expense;
  8. amortization methods and estimates of useful lives of the remaining unamortized portion of tangible capital assets have been reviewed on a regular basis and revised as appropriate;
  9. prepaid expenses represent amounts paid for services to be rendered in future periods.

Representation number 17 (Inventory quantities)

• Inventory quantities at March 31, 2017 must be determined from the reporting organization's perpetual inventory records, which have been adjusted on the basis of physical inventories taken by competent employees at various times during the year. The inventory balances should not include goods on consignment from others.

  Example

  Inventory quantities at March 31, 2017 were determined from the reporting organization's perpetual inventory records, which have been adjusted on the basis of physical inventories taken by competent employees at various times during the year. The inventory balances do not include goods on consignment from others.

Representation number 18 (Liens and encumbrances)

• There were no liens or encumbrances on the reporting entity's assets or assets pledged as collateral.

  Example

  There were no liens or encumbrances on the reporting entity's assets or assets pledged as collateral.

Representation number 19 (Liabilities and provisions)

• The reporting organization must have recorded or disclosed, as appropriate, all liabilities and provisions on the appropriate CC forms.

  Example

  We have recorded or disclosed, as appropriate, all liabilities and provisions on the appropriate CC forms.

Representation number 20 (Pension and other employee future benefits)

• Pension and other employee future benefit costs and obligations and the related assets have been measured, accounted for and disclosed on the appropriate CC forms in accordance with RGM Chapter 18 and represent management's best estimate of the respective liabilities and expenses of the pension and other employee future benefits.

  Example

  Pension and other employee future benefit costs and obligations and the related assets have been measured, accounted for and disclosed on the appropriate CC forms in accordance with RGM Chapter 18 and represent management's best estimate of the respective liabilities and expenses of the pension and other employee future benefits.

  More specifically:

  1. all pension and other employee future benefits of the reporting organization and the provisions of each plan have been fully disclosed to you and have been actuarially valued or estimated as applicable;

  2. we have adequately considered the qualifications of the actuary. We did not give or cause any instructions to be given to the actuary with respect to the values or amounts derived in an attempt to bias their work, and we are not otherwise aware of any matters that have had an impact on the independence or objectivity of the actuary;

  3. the detail of all plan amendments up to March 31, 2017 have also been identified;

  4. the source data used in the preparation of the actuarial present value of accrued pension benefits attributed to services rendered up to March 31, 2017 is complete and accurate;

  5. choose representation that applies to your organization:

     For enterprise Crown corporations: The actuarial obligations for pension and other future benefits at March 31, 2017 have been determined in accordance with IFRS.

     For consolidated Crown corporations and other entities that adopted PSAS: The actuarial obligations for pension and other future benefits at March 31, 2017 have been determined in accordance with PSAS.

     For consolidated Crown corporations and other entities that adopted IFRS: The actuarial obligations for funded pension plans reported in the CC forms at March 31, 2017 have been determined in accordance with PSAS.

     The actuarial obligations for unfunded pension plans and other employee future benefits reported in the CC Forms at March 31, 2017 have been determined in accordance with [include the appropriate financial reporting framework].

  6. all assumptions used in the determination of the actuarial present value of accrued pension benefits attributed to services rendered up to March 31, 2017 are our best estimate of the most likely set of conditions affecting future events. These assumptions are appropriate, internally consistent, and are consistent with the asset valuation method;

  7. the assumptions included in the actuarial valuation are those that management instructed [name actuary] to use in computing amounts to be used by management in determining benefits costs and obligations and in making required disclosures in the [consolidated] financial statements, in accordance with RGM Chapter 18;

  8. the actuarial valuations for accounting purposes incorporate management's best estimates. The actuarial assumptions and methods used to measure obligations and costs for pensions and other employee future benefits are appropriate in the circumstances;

  9. in arriving at these assumptions, management has obtained the advice of [consulting actuaries who assisted in reaching best estimates], but has retained the final responsibility for them;

  10. the extrapolation of the actuarial present value of accrued pension benefits to March 31, 2017 from the date of the most recent actuarial valuations at March 31, 20XX has been properly prepared using source data which is complete and accurate. All assumptions used in the preparation of such valuations, and events occurring in the extrapolation period that materially affect the actuarial present value of accrued pension benefits attributed to services rendered up to March 31, 2017 have been properly reflected in the determination of those accrued benefits;

  11. no events have occurred subsequent to March 31, 2017 that materially affect the amount of the actuarial present value of accrued pension benefits attributed to services rendered up to March 31, 2017;

  12. all plan assets have been disclosed on the appropriate CC forms;

  13. the reporting organization has good title to such assets;

  14. the pension plan assets are valued in accordance with [include the appropriate financial reporting framework];

  15. choose representation that applies to your organization:

      For enterprise Crown corporations: Adjustments arising from changes in assumptions and experience gains and losses and adjustments arising from plan amendments have been recognized in accordance with IFRS.

      For consolidated Crown corporations and other entities that adopted PSAS: Adjustments arising from changes in assumptions and experience gains and losses and adjustments arising from plan amendments have been recognized in accordance with PSAS.

      For consolidated Crown corporations and other entities that adopted IFRS: Adjustments arising from changes in assumptions and experience gains and losses and adjustments arising from plan amendments have been recognized in accordance with PSAS or the requirements of RGM Chapter 18.

Representation number 21 (Deferred revenue)

• All material amounts of deferred revenue must meet the definition of a liability and be appropriately recorded in the books and records.

  Example

  All material amounts of deferred revenue meet the definition of a liability and were appropriately recorded in the books and records.

Representation number 22 (Plans and intentions)

• There are no plans or intentions that may materially alter the carrying value or classification of assets and liabilities reported on the CC forms (e.g. to dispose of the business or to cease operations).

  Example

  We have no plans or intentions that may materially alter the carrying value or classification of assets and liabilities reported on the CC forms (e.g. to dispose of the business or to cease operations).

Representation number 23 (Income earned on investment)

• All income earned for the year on investments must be recorded in the accounts.

  Example

  All income earned for the year on investments has been recorded in the accounts.

Representation number 24 (Expenses)

• All expenses for the year must be recorded in the accounts.

  Example

  All expenses for the year have been recorded in the accounts.

Representation number 25 (Non-monetary transactions)

• All non-monetary transactions have been reported and disclosed in the financial information in accordance with [include the appropriate financial reporting framework].

  Example

  All non-monetary transactions have been recorded and disclosed in the financial information in accordance with [include the appropriate financial reporting framework].

Representation number 26 (Subsequent events)

• No events, new or amended legislation, regulations or directives have come into effect since the fiscal year end other than those described in this representation, which should be reflected or disclosed in the audited consolidated financial statements of the Government of Canada or supplementary reports of the Government of Canada.

  Crown corporations and other reporting entities must disclose known events, legislation, regulations or directives, which have come into effect between the fiscal year end and the effective date (June 14) of the representations. Subsequent events are defined as events providing further evidence of financial conditions which existed at March 31 or events which are indicative of conditions which arose subsequent to March 31. Exceptions must be disclosed and detailed in this paragraph. Examples of exceptions might be: Royal Assent given to legislation since March 31, final payment in respect of breach of contract which was reported as threatened litigation at March 31.

  Events of substance ($50 million or more) identified after June 14, 2017, which have a bearing on the fiscal year ending March 31, 2017, should be referred to the Treasury Board Secretariat (TBS) for guidance on how to process and to the Deputy Receiver General for submitting an updated Letter of representation.

  Example

  Since March 31, 2017 to the date of this letter, there have not been any events, new or amended legislation, regulations or directives, other than those reflected in the financial statements or notes thereto, which should be reflected or disclosed in the audited consolidated financial statements of the Government of Canada or supplementary reports of the Government of Canada, except as follows:

  On June 6, 2017, legislation was introduced in the House of Commons to sell off a portion of the corporation's operations. Bill C-XX details the intentions of the Government on this matter.

  In addition, we acknowledge our responsibility to refer any subsequent events of substance identified after the date of this letter to Treasury Board Secretariat for guidance and to the Receiver General for submitting an updated Letter of representation until the completion of the consolidated financial statements of the Government of Canada expected to occur on September 6, 2017 as well as up to the date they are tabled in the House of Commons.

Representation number 27 (Consolidated financial statements of the Government of Canada)

• All known information that could have an effect on the Auditor General's opinion on the consolidated financial statements of the Government of Canada must be disclosed in the Letter of representation.

  Any information pertaining to a subject not specifically covered in a paragraph of the Letter of representation, which could affect the consolidated financial statements of the Government of Canada, must be disclosed. Known information that has an effect on the financial information submitted by a Crown corporation or other reporting entity is considered as having an effect on the consolidated financial statements of the Government of Canada.

  If there are any exceptions, the following details are required:

  1. clear and concise description of the item or items
  2. particulars, including dollar amounts, which may materially affect the consolidated financial statements of the Government of Canada
  Example

  The reporting organization is not aware of any information that was not disclosed to the Deputy Receiver General and to the external auditor, which could affect the consolidated financial statements of the Government of Canada or the Auditor General's opinion on them.

Representation number 28 (Internal controls)

• RThe reporting organization must assess the risk of misstatement due to fraud or error as low, moderate or high. In addition, it must provide representations related to known or suspected fraud as well as any allegations of fraud or suspected fraud.

  All significant facts relating to any frauds or suspected frauds must be disclosed to the Receiver General and Office of the Auditor General. Internal controls must be in place and properly followed to prevent and detect any fraud and error.

  If there are any exceptions, the following details are required:

  1. clear and concise details of non-compliance of internal controls
  2. clear and concise description of any frauds or suspected frauds
  3. particulars, including dollar amounts, which may materially affect the consolidated financial statements of the Government of Canada
  Example

  The reporting organization understands that the prevention and detection of error and fraud are primarily its responsibility and may not necessarily be detected by the external auditor, even if they are material in amount.

  The reporting organization also acknowledges its responsibility to design, implement and maintain internal controls that are designed to prevent and detect fraud and error.

  Furthermore, we have disclosed to the Deputy Receiver General and to the Auditor General the results of our assessment of the risk that the financial records may be materially misstated as a result of fraud, and have determined such risk to be (low, moderate, high).

  RChoose one of the following:

  [The reporting organization has disclosed to you all information of which we are aware relating to fraud or suspected fraud and involving management, employees who have significant roles in internal control or others, where the fraud could have a significant effect on the financial information of the reporting organization.]
  or
  [The reporting organization has no knowledge of any frauds or suspected frauds involving management, employees who have significant roles in internal control or others where the fraud could have a non-trivial effect on the financial records of the organization.]
  
  RChoose one of the following:
  
  [The reporting organization has also disclosed to you all information relating to any allegations of fraud or suspected fraud affecting the financial records that was communicated by employees, former employees, analysts, regulators or others.]
  or
  [The reporting organization has no knowledge of any allegations of fraud or suspected fraud affecting the financial records that was communicated by employees, former employees, analysts, regulators or others.]

  (List any cases of non-compliance giving a description of the item(s) and the dollar amounts outstanding.)

Representation number 29 (Compliance with laws and regulations)

• The reporting organization must disclose to the Receiver General and to the Auditor General all known instances of non-compliance or suspected non-compliance with laws and regulations when preparing financial information.

  Example

  The reporting organization has disclosed to the Deputy Receiver General and to the Auditor General all known instances of non-compliance or suspected non-compliance with laws and regulations whose effect should be considered when preparing financial information.

Representation number 30 (Legality of transactions)

• The reporting organization must declare that it is aware of any illegal acts, violations to laws, regulations and contractual agreements, of any conflicts of interest involving (name of organization) or any other actions where it has, directly or indirectly entered into a transaction with a person that has a direct or indirect interest.
  Example

  The reporting organization is not aware of one or more of the following:

  1. any illegal or possibly illegal acts, including those committed by directors, officers or employees acting on the reporting organization's behalf. (We have identified and disclosed to you all facts related to illegal or possibly illegal acts.)
  2. any conflicts of interest involving (name of organization) where it has, directly or indirectly, entered into any purchase, sale or any other transaction with a member of Parliament, a member of the Board, a member of senior management, a manager, or with an organization in which one of these persons had a direct or indirect interest
  3. bribes, or improper benefits rendered or accepted
  4. influences applied improperly
  5. business inconsistent with the Corporation's charter
  6. loss of money or property as a result of defalcation, fraudulent acts or omission of corporate officer
  7. any irregularities involving management or employees who have significant roles in the system of internal accounting controls or any irregularities involving other employees that could have a material effect on the financial statements
  8. any communications from regulatory agencies concerning non-compliance with laws or regulations which could have a material effect on the information for inclusion in the Public Accounts of Canada

Representation number 31 (Transactions with related parties)

• All known related party transactions outside the reporting organization's normal course of business must be properly recorded for inclusion in the Public Accounts of Canada.
  Example

  There have been no related party transactions outside the reporting organization's normal course of business.

Representation number 32 (Guarantees)

• All guarantees potentially having a material impact on the financial statements must be recorded and disclosed on the appropriate CC forms.

  Example

  No guarantees have been made by the reporting organization nor have any guarantees been in force at any time during the year or subsequently.

The following representations, numbered 33, 34 and 35, apply only to those Crown corporations exercising authority under Section 33 of the Financial Administration Act (FAA) (refer to Appendix B of RGM Chapter 17).

Representation number 33 (Appropriation Acts and other governing statutes)

• All financial transactions must be in accordance with legislative requirements, including those pertaining to accounts payable at year end and must have been recorded in accordance with, and as appropriate, within the authorized limits of Appropriation Acts and other governing statutes.

  Reporting Crown corporations exercising Section 33 of the FAA authority must comply with the FAA, the Interpretation Act and the Criminal Code of Canada. They must specifically comply with the Treasury Board Policies, Treasury Board Secretariat publications and the Receiver General Manual and directives. Reporting organizations must specifically comply with the RGM Chapter 15, "Public Accounts Instructions", subsection 15.4.2, in order to disclose overexpended amounts in the manuscript "Form A Summary of Source and Disposition of Authorities". Overexpended balances as at fiscal year-end, relating to budgetary and non-budgetary appropriations, must be disclosed and detailed in this paragraph by all reporting organizations.

  Example

  The reporting organization has adhered to all legislative requirements respecting the entering into of financial transactions, including those pertaining to accounts payable at year end, and all such transactions have been accurately recorded in accordance with, and as appropriate, within the authorized limits of Appropriation Acts and other governing statutes, except as follows:

  As reported in the 2016–2017 statement "Form A Summary of Source and Disposition of Authorities", there has been an over-use of Vote 10, in an account maintained in the CRF by the reporting Crown corporation amounting to $5,000,000.

Representation number 34 (Specified purpose accounts, other liabilities and unmatured debt)

• All specified purpose accounts, other liabilities and unmatured debt must have originated under the authority of appropriate legislation.

  Those Crown corporations exercising authority under Section 33 of the FAA must make representations for the transactions which are recorded as the Government's liabilities in the accounts of Canada. They must also make representations for the financial information submitted to the Deputy Receiver General, not just for the amounts disclosed in their respective financial statements or records. Exceptions must be disclosed and detailed in this paragraph. An exception would be the reporting as payables, of explicit guarantees which are contingent liabilities.

• All specified purpose accounts, other liabilities and unmatured debt must represent financial obligations to organizations and individuals outside the Government of Canada as an accounting entity.

  Government reporting entities must report the relevant financial information for disclosure in the "Statement of Financial Position" according to the above requirement and to the requirements of RGM Chapter 15, subsection 15.3.2. Exceptions must be disclosed and detailed in this paragraph.

  Example

  All specified purpose accounts, other liabilities and unmatured debt:

  1. originated under the authority of appropriate legislation
  2. represent financial obligations to organizations and individuals outside the Government of Canada as an accounting entity

Representation number 35 (Accounts payable)

• All unpaid accounts relating to annually lapsing and non-lapsing budgetary appropriations and annually lapsing non-budgetary appropriations on which Parliament has imposed an annual ceiling have been recorded as payables.

  Crown corporations exercising authority under Section 33 of the FAA must disclose payables as required by Subsection 37.1(1) of the Financial Administration Act and by the Treasury Board's "Directive on Year-End Recording of Payables (PAYE)". They must charge against their appropriations those liabilities which meet the criteria established in the policy. They must also comply with the procedures described in RGM Chapter 14 "Year End Timetable and Procedures", Appendix 1 "Old Year Departmental Financial Management and Materiel System (DFMS) Accrual Entries, Adjusting Entries and Closing of Old Year Accounts" and the disclosure instructions of RGM Chapter 15, subsection 15.4.1.

  Furthermore, the Canada Mortgage and Housing Corporation administers programs for the Government, which, at least in part, allow use of the CRF. Therefore, it is required to record its liabilities at year end in accordance with the criteria established above. Exceptions must be disclosed and detailed in this paragraph. Examples of exceptions would be: consultant fees owing but not recorded as accounts payable; amount owing to a Crown corporation pursuant to a contractual agreement not recorded at fiscal year-end.

  Example

  All unpaid accounts relating to annually lapsing and non-lapsing budgetary appropriations and annually lapsing non-budgetary appropriations on which Parliament has imposed an annual ceiling have been recorded as payables, except as follows:

  An accounts payable of $280,000 under the XYZ Program, Vote 18, representing goods received prior to the year end, has not been recorded as a liability. This does not comply with the requirements of Subsection 37.1(1) of the FAA, with those of the Treasury Board's "Directive on Year-End Recording of Payables", nor with those of RGM Chapter 14, Appendix 1 "Old Year DFMS Accrual Entries, Adjusting Entries and Closing of Old Year Accounts". Had this amount been included, the accounts payable and the expenditures (acquisition of machinery and equipment) would each have been increased by that amount.

Representation number 36 (Derivative financial instruments)

• The reporting organization must report all activities involving derivative financial instruments.

  Example

  The reporting organization has engaged in activities involving derivative financial instruments during the year. Management's objectives with respect to derivative financial instruments are: [list management objectives here]. The financial records reflect all transactions involving derivative financial instruments, all embedded derivative financial instruments have been identified and the assumptions and methodologies used in the valuation models applied to derivative financial instruments are reasonable. The terms of transactions involving derivative financial instruments includes: [list terms here]. All transactions involving derivative financial instruments have been conducted at arm's length and at fair values. The reporting organization has not entered into any side agreements associated with any derivative financial instruments. The reporting organization has not entered into any written options. The reporting organization has complied with the documentation requirements required under [include the appropriate financial reporting framework] for hedge accounting, if applicable.

Representation number 37 (Significant assumptions)

• Significant assumptions used by the reporting organization in making accounting estimates, including fair value accounting estimates, must be reasonable and consistently applied.

  Example

  The reporting organization is responsible for significant estimates and judgments related to the financial information for inclusion in the Public Accounts of Canada and in the audited consolidated financial statements of the Government of Canada. Significant estimates and judgments and their underlying assumptions, methods, procedures and the source and reliability of supporting data are reasonable, based on applicable requirements of [include the appropriate financial reporting framework] and appropriately disclosed in the CC Forms. The procedures and methods used in developing assumptions, estimates and judgments are appropriate and have been consistently applied in the periods presented.

Representation number 38 (Fair value measurement)

• For recorded or disclosed amounts in the financial information that incorporate fair value measurements, measurement methods should be appropriate and consistently applied; significant assumptions used in determining fair value measurements must represent your best estimates, be reasonable and be consistently applied; no subsequent event requiring adjustment to the accounting estimates and disclosures should be included in the financial information; and significant assumptions used in determining fair value measurements must be consistent with the reporting organization's planned courses of action. There should be no plans or intentions that have not been disclosed to us, which may materially affect the recorded or disclosed fair values of assets or liabilities; and disclosures of significant assumptions should be complete and appropriate under the stated accounting policies of the reporting organization. Significant estimates and measurement uncertainties known to management must be appropriately disclosed.

  Example

  For recorded or disclosed amounts in the financial information that incorporate fair value measurements, we confirm that:

  1. the measurement methods are appropriate and consistently applied
  2. the significant assumptions used in determining fair value measurements represent our best estimates, are reasonable and have been consistently applied
  3. no subsequent event requires adjustment to the accounting estimates and disclosures included in the financial information
  4. the significant assumptions used in determining fair value measurement are consistent with the reporting organization's planned courses of action. We have no plans or intentions that have not been disclosed to you, which may materially affect the recorded or disclosed fair values of assets or liabilities
  5. disclosures of significant assumptions are complete and appropriate under the stated accounting policies of the reporting organization. Significant estimates and measurement uncertainties known to management have been appropriately disclosed

Representation number 39 (Disclosing fair values)

• The reporting organization must disclose the measurement methods related to determining fair values.

  Example

  Complete and appropriate disclosures required related to fair values have been reported to the Deputy Receiver General on the appropriate CC forms.