4. Financial Reporting Accounts - 2013-2014

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4.1 Introduction

This chapter provides an explanation of the Financial Reporting Account (FRA) classification structure and contents, which for government-wide reporting purposes, identifies the relevant asset, liability, net assets/equity, revenue and expense accounts that are required for financial reporting (maintaining accounts in the General Ledger) and for preparing the consolidated financial statements for the Government of Canada.

The basis for coding the FRA classification is accrual accounting which requires transactions to be recorded in the period when they occur (and not only when cash or its equivalent is received or paid). Therefore, the transactions and events are recorded in the accounting records and recognized in the financial statements of the periods to which they relate. The elements recognized under accrual accounting are assets, liabilities, net assets/equity, revenue and expenses.

4.1.1 Accounting Manual

The Treasury Board Secretariat Financial Information Strategy (FIS) Accounting Manual, provides general information and guidance on accrual accounting. The Manual provides an overview of accrual accounting in the government and specifies that departments must follow Generally Accepted Accounting Principles (GAAP) as defined in the Canadian Institute of Chartered Accountants (CICA) Public Sector (PS) Accounting Handbook. The PS Accounting Handbook is the authoritative reference manual; and where appropriate, may be subject to modification or interpretations through the issuing of Treasury Board Accounting Standards (TBAS).

The Accounting Manual also gives examples of most routine transactions and many complex ones that are unique to government and highlight differences between reporting on an accrual accounting basis, accounting for authorities, and reporting by objects. The Receiver General Manual (RGM), Chapter 10 "Accounting Entries"  provides additional examples of accounting entries and serve to supplement the FIS Accounting Manual.

4.1.2 Financial Reporting Account Utilization

The Financial Reporting Accounts (FRAs) included in departmental Central Financial Management Reporting System (CFMRS) monthly trial balances contain the data needed by the Receiver General (RG) to prepare the financial statements on a monthly and annual basis. Monthly government-wide financial statements are included in the Monthly Statement of Financial Operations (MSFO), which is used by the Department of Finance Canada to produce the results issued in the Monthly Fiscal Monitor. The government's annual financial statements are audited by the Auditor General and are included in the Public Accounts of Canada that are tabled, each fall, in Parliament. These statements are also included on a consolidated basis in the Annual Financial Report of the Government of Canada, which is published by the Minister of Finance.

4.1.3 Structure for the Financial Reporting Accounts

The Financial Reporting Account (FRA) structure is designed to identify accounting transactions as follows:

Assets are economic resources controlled by an entity as a result of past transactions or events and from which future economic benefits may be obtained. The assets are classified as being either financial assets (cash, accounts receivable, and loans, investments and advances, etc.) and non-financial assets (inventories, buildings, machinery and equipment, capital leases and work in progress, etc.).

Liabilities are financial obligations to outside organizations and individuals as a result of transactions and events on or before the accounting date. Liabilities are the result of contracts, agreements and legislation in force at the accounting date that require the government to repay borrowings or to pay for goods and services acquired or provided prior to the accounting date. The liabilities generally consist of accounts payable, accrued interest payable, accrued salaries and wages, superannuation, public debt, etc.

Net Assets/Liabilities represent the difference between total assets and liabilities. When the total assets exceed total liabilities, the resulting amount represents Net Assets. When total liabilities exceed total assets, the resulting amount represents Net Liabilities. The Net Assets/Liabilities consists of two categories; Unrestricted Net Assets/Liabilities and Restricted Net Assets/Liabilities. Following the end of each fiscal year, the net balances from the revenues, expenses and departmental payment, payroll, Interdepartmental Settlement (IS), Departmental Bank Accounts (DBA), and deposit control accounts, as well as 35ddd Organization Transfer Out/In and 36ddd Opening Balance Adjustments accounts are converted as appropriate into the new year opening balance of the Unrestricted Net Assets/Liabilities or the Restricted Net Assets/Liabilities account(s).

Revenues are increases in economic resources, either by way of inflows or enhancements of assets or reductions of liabilities, resulting from the ordinary activities of a department. They can result from activities such as tax revenue, the sale of goods or services, gain on sales of assets, interest and penalties earned on tax and non-tax revenue, and return on investments.

Expenses are the cost of resources consumed in and identifiable with the operations of the accounting period. Examples of expenses include operating expenses, grants and contributions, salaries, etc.

Cash Reconciliation Control accounts are similar to a bank account. However, since the cash accounts are restricted to the Receiver General (i.e., consolidated revenue fund), departments are required to use the cash reconciliation control accounts. The major difference between the control accounts and bank accounts is that control accounts are closed into Net Assets/Liabilities at year end after all other closings have been done.

4.2 List of Financial Reporting Accounts

In this section you are given a choice of two versions for the list of Financial Reporting Accounts (FRAs): a Summary version that gives you the list of codes number and name; and, a Detailed version that, in addition to the code number and name, include the description, the restriction to specific departments and the note(s) that apply to an account. Departments should review the descriptions to ensure that their departmental codes are aligned to the correct FRA and are being used for the intended purpose. At this time, a description is not available for all FRAs.

Table Summary

The table presents a choice of two versions for the list of Financial Reporting Accounts (FRAs). The table consists of 3 columns: Account; Summary Version and Detailed Version.

Account	Summary Version	Detailed Version
1	2013-2014 Assets - Summary	2013-2014 Assets - Detailed
2	2013-2014 Liabilities - Summary	2013-2014 Liabilities - Detailed
3	2013-2014 Equity / Deficit - Summary	2013-2014 Equity / Deficit - Detailed
4	2013-2014 Revenue - Summary	2013-2014 Revenue - Detailed
5	2013-2014 Expenses - Summary	2013-2014 Expenses - Detailed
6	2013-2014 Cash Reconciliation Control Accounts - Summary	2013-2014 Cash Reconciliation Control Accounts - Detailed

Appendix A - Release Notes

• Release Notes by Date Order - Financial Reporting Accounts - 2013-2014
• Release Notes by Code Order - Financial Reporting Accounts - 2013-2014