requirement to get it off the books via a budgetary vote. Authority rationale: Same as Scenario A, entry 2). inventory) is unchanged during the period. To ensure there is There is no impact tangible assets carried by departments for many years. Consequently, they will be considered separately. Contribution vote or B11A - Program Vote. on or before the accounting date. At this point the Department is being charged In this way, the charge to the appropriation is the net cost of the asset. Departments should review the cost-sharing and joint project agreements to determine which accounting treatment best They are used principally where the activities are similar in nature to departmental activities The outside party requests a refund prior to the Department performing the required service or providing the required To achieve this effect on authorities both the debit by the department and others are recorded centrally by Treasury Board Secretariat. However, depending on the department and the asset purchased, the following authority Authority Coding Rationale: The salaries expense of $100,000 for the current year were charged to B11A(*). The equipment and related accumulated amortization must be written either D218 and E218 be used in this transaction and that the authority code used to set up the revenue transaction not since it falls above the $10,000 threshold. There is no impact on the authority side for the accounts payable but as the system requires that a code be used, 3) April 21, 2003 - record the liability (purchase and receipt of vehicles). ($150,000 - $15,000) i.e. be charged to the Departmental appropriation. The amounts transferred between departments should be gross, that is the cost is recorded as an interdepartmental receivable. but for which eligibility and entitlement may be verified or for which the recipient may need to meet pre-conditions (Transfer Expenditures vote depending if a department has a separate vote or not. In this case, B11A(*) was used however other authorities including B12A or B14A (if the salary costs Non-financial Assets are assets that have economic lives that may extend beyond the accounting period and are intended To record the ($7,601.84 / 12mths x 3mths) interest owing. Object Rationale: "6299- Net Increase or Decrease to Other Liability accounts" should be used to indicate and "3717 - Recoveries of expenditures/costs within a department" is used on the credit side of the transaction. decides to do a major renovation that will increase the amount of usable space. in Financial Reporting Accounts in the 312XX range and consist primarily of consolidated specified purpose accounts. Exchange gains or losses arising on translation or settlement of a foreign currency denominated monetary item All RG interface Control For appropriation purposes repayable contributions are charged to either a Grants and Contribution vote or a Program They have not paid for the goods at this point. However, there economic object is used depending on the nature of the purchase. All other assets and liabilities" is used here for both sides of the entry. used depending on the nature of the good or service in question. Authority Rationale: Since the amount of the advance was previously charged to departmental appropriations, D/E(*) Depending on which type of revenue at the object level. In entry 2a) the new year appropriation is being credited for the same amount (due to reversal requirements) Department exchanges research equipment plus cash for a service (consulting services) with an outside party. Authority Coding Rationale: In this example the salaries are charged to the B11A(*) - Program Vote but A third party donates $11,000 to a Department. as well. Object coding rationale: "6299-Net Increase or Decrease to Other Liability Accounts" is used to indicate or a specified purpose account etc. when the goods and/or services have been rendered and expenses should be matched to program delivery outputs of services There are two alternatives for accounting for the funds advanced under a cost-sharing or joint project agreement. Object coding rationale: Economic object 1261 is used in this example since the purchase was a motor that a code be used. "6299- Net Increase or Decrease to Other Liability accounts" is used to indicate the reduction of budget control and to ensure that overspending does not occur. It should be noted that the main focus of the "cash" component would be that of a typical department's day-to-day handling Object Rationale: The Department records the cash as being received by the RG resulting in the offset compensation elements. Assets are economic resources controlled by a government as a result of past transactions or events and from which future FRA Coding Rationale: Once the goods are received the department must record an expense $20,000 and recover this amount from Canada Customs and Revenue Agency (CCRA) they should record it as an asset in "13392 GST/HST Refundable within a department". Note: The entries for the settlement of GST payable can be found in the section related to Sales Tax Section. a donated asset has no effect on authorities. to be charged. Loans receivable should be disclosed net of unamortized discount and allowance for bad loans under the heading Financial depending on how departments choose to use the funds related to A131 - Spending of amounts equivalent to proceeds from disposal 2b) To move the equivalent of the resources consumed from the Deferred Revenue account into revenue. Authority coding rationale: There is no impact on authorities with respect to receivables, R300 is used. The authority code is different than the code used to record the endowment Moneys received are credited to revenue not through the used: Object coding rationale: To record the object for GST payable and PST payable "6299-Net Increase or As such, departments must ensure that transactions and events affecting their entity are the appropriations was charged when the inventory was purchased in journal entry 1). is used. Salvage value is normally negligible. advance by the funding department and an OGD payable is created. Scenario D, Journal entry 1) - FRA coding change from 16122 to 16129, Respendable versus Non Respendable Revenue. and is ready for use. term of the lease is the difference between the present value of the lease payments ($100,000) and the actual cash disbursed, and remove the tower at the end of the ten-year term. Object Rationale: In this example, the transfer payment is made to an individual, therefore 2041 is payment. inventory system (see below). Since GST is not to be charged to a departmental appropriation, it is set up books, and the cash that will be paid out will be set up as a payable to reflect the amount owing. The entries for the settlement for GST payable can be found in the section related to Sales Tax. Object Rationale: "6099 - Net Increases or Decreases in Other SPAs" or "6089 -Other adjustments" would This section does not include receivables for tax revenue, as tax revenue transactions are not covered in Since the employee paid GST on his purchases, this amount should be record the 2) To record disbursement of the second instalment, $9,000 to the individual, 3) To record disbursement of the third instalment, $9,000 to the individual. expenses and then transferred to the work in process account. The accumulated amortization is $27,000 and is calculated as follows ($32,000-2,000 = $30,000) ($30,000/60 mths = $500/mth) The factor used in this part of the calculation would be for accounts payable. that do receive services without charge must disclose the nature of these services in note to the financial statements. A third party donates land with a fair market value of $12,000 provided that it be used to build a monument. Control accounts are zero filled for object purposes. Since the equipment has already been amortized for 5 years, the Authority Coding Rationale: H/G* Regular loan receivables are charged to non-budgetary appropriations. If SPA funds are used to pay for a significant amount of employee salaries or other internal costs, previous year ($400,000). added to Scenario B, Journal Entry 1 and the FRA Coding Rationale was modified. ), 1) Department has delivered information products to an outside party for $500. and book value of the equipment $7,000 = ($49,000 - ($64,000-$22,000)). It is later decided that the amount of the standing advance is excessive and is result from such matters as pending or threatened litigation, guarantees of the indebtedness of others, indemnities and Departments which have both unrestricted and restricted Net Asset/Liabilities accounts will be required to include a Economic objects are 3) Once all work complete, (assume final costs were $75,000): FRA coding rationale: Once all renovation work has been completed,the costs are transferred from a work ($6,250/yrx20yrs = 125,000) ($250,000-$125,000 = $125,000). This is done by using authority code H181. Revision (minor) - "ECON" heading (all journal entries) changed to "OBJ". for accumulated vacation pay are not charged to an appropriation. Alternatively, "F999 - Non-appropriated amounts" could be used on both sides of the entry as See Scenario A. the basis of initial valuation on the statement of financial position; the policy with respect to valuation allowances, write-offs and recoveries; and, the policy for the recognition of interest revenue. for resale" for the credit entry and "51324 - Cost of goods sold" for the debit entry. Authority Coding Rationale: N5/P5*, the trust funds in this case are credited to the authority specific Note: In the journal entry 2) above no portion of of the future site restoration costs would have no impact economic objects as these are recorded on an expenditure basis; GST/HST Refundable advance accounts". FRA Coding Rationale: Externally restricted inflows are recognized as revenue in the period in which FRA Coding Rationale: $20,000 of salaries and wages that relate directly to the computer hardware will there should be no cash shown in the Department's Statement of Financial Position as at 31 March (TBAS 1.2). into Receivables. of certain accounts where enabling legislation requires that revenues be earmarked, and that related payments and expenses "0472 - Information Technology consultants" on authorities, the same authority code is used for all debits and credits. Object rationale: There is no effect on objects. Conditional Repayable Contributions - See Conditional Repayable Contributions Section. In the new year, pays out $25,000 for an employee transaction. will record a central provision based on the information reported on plates I-11 and I-12 by departments and agencies. 1) Repairs for the heating system are completed. its share of expenses to be incurred under a scientific research project. CICA Handbook Sections 1520.04, 3030.05-.06, 3030.09-.10. are held for use in the production or supply of goods, the delivery of services or to produce program outputs; have a useful life extending beyond one fiscal year and are intended to be used on a continuing basis; and. "4731- Repayment of Recoverable Items/ Contribution recoveries" is used to capture the revenue associated with on a cash basis). settlement of the claim will discharge the liability. A grant is a transfer payment made to an individual or organization which is not subject to being accounted for or audited All of the Scenario s in this section will refer to the accounts listed here. the asset. Interest revenue from loans will be recorded in E500. of surplus Crown assets. related to this area. to indicate this. However depending on who the recipient Addition - Compensation - various examples of compensation related accruals have been added. been spent on goods and services so the advance must be reduced by that amount. in the financial statements. "6299-Net Increase or Decrease to Other Liability Accounts" is used to in the contribution agreement come into being, e.g. The balance is removed from the books by debiting Allowance for Doubtful Accounts and crediting Accounts receivable - non-tax Revision - Accountable Advances Scenario B, Journal Entry 2b, CR Accountable Advances changed to $1 000.00. At this point the Department is being charged GST on the vehicle, and must pay it to the vendor. 2) Once the land is purchased the contribution is no longer restricted. Where appropriate, amortization of any deferred charge or prepaid expense will be charged as an expense on a systematic See section on Sale Tax for rules on sale tax with respect to sales in other Scholarships)" is used on both sides of the entry. /pubs_pol/dcgpubs/materielmanage/siglist_eng.asp). Object coding rationale: The acquisition of a vehicle will affect the economic objects at this point. B11A - Program Vote, B12A Operating Vote, or A131 Spending of amounts equivalent to proceeds from disposal of surplus Crown For the time being, TBS will be recording the provision for losses on loan guarantees based on information provided by there is GST on the purchases, the GST must be reflected by using "8171 - Payment of GST on purchases". They are not intended for consumption in the normal course of operations. Consolidated SPAs include: budgetary insurance accounts, fees and levies imposed by statute and Furthermore, it is considered to be one of the essential characteristics of a good cost accounting system. been paid when a transaction is processed by the Interdepartmental Settlement functionality of the Standard Payment System the remaining $45,000 ($100,000-$40,000- $15,000) that was not spent by the Spending Department must be reduced from the Department uses a perpetual system, purchases & issues are recorded directly in the inventory account as they occur. rest of the entry therefore the applicable F codes are used, as well as R300 for the accounts payable set up. Economic objects apply to expenditures only and measure the impact of government transactions on the economy. considered to be a public debt charge. Authority Coding Rationale: In this example the salaries are charged to the B11A(*) - Program Vote but site restoration is allocated over the life of the asset (110,000/10 years). site restoration takes place. Deferred Revenue is defined as the inflow of cash, receivables or other consideration arising in the course Note: The entries for the settlement for GST payable can be found in the section related to Sales Tax. Examples of of Canada. In this case, "F999 - Other F Codes" will be both leases or by donations, etc. With respect Anything charged to a budgetary vote can be written off under ministerial authority except those debts identified in Departments are not to record on the SPA "6081-Deposits received" would be used or "6099 -Net Increases or Decreases in Other SPAs" would be used if there Object rationale: To record the net impact on Cash Accounts, 5299 would be used. FRA coding rationale: Once the land is used for the purpose specified, there is no longer a restriction This Financial Information Strategy (FIS) Accounting Manual is under review and is being replaced by the new, Agence des douanes et du revenu du Canada, Institut canadien des compagnies immobilires publiques, Ministre des Affaires trangres et du Commerce international, Loi sur la gestion des finances publiques, Les principes comptables gnralement reconnus, Travaux publics et Services gouvernementaux Canada, /pubs_pol/dcgpubs/materielmanage/siglist_eng.asp, FY 2001-02 FIS Transition Period -Transition Protocol and Accounting Therefore the same object is debited and credited for are received in advance from the external parties to the agreement. the entry. of the revenues. the accounting for these pension accounts. Historical Development of Government Accounting | IntechOpen the purpose for which they are established is similar in nature to departmental activities. Contingent recoveries risk of loss. used. in process asset account to a capital asset account. and "1221-Voice communication equipment" is used for the lease payment. (XYZ) would be charged to the same appropriation as if the transaction was monetary. (CICA 3065.03), Expenditure: Expenditures are the cost of goods and services acquired in the period whether or not payment Expenses are the cost of resources consumed in and identifiable with the operations of the accounting period. Is the lease term greater than or equal to 75% of the asset's economic life? code used in entry 1. Scenario A, Journal Entry 2b), Authority Coding was changed from F999 on both sides of the transaction to B14A on a budgetary appropriation since it has already been charged to the budgetary appropriation. Receivable" is used. Object Coding Rationale: The objects are affected when the transaction is made, so "0511 of expenditures/costs within a department" should be used throughout the transaction. and associated costs of legal services provided by Department of Justice; audit services provided by the Office of the Auditor This loan is considered uncollectible and is written off. the hands of the department awaiting deposit to the RG. the system requires that a code be used, in this case it would be "R300- All other assets and liabilities". for consumption in the normal course of operations. The cost incurred in the maintenance of the receivable due to a payment by a customer is coded to 5399-"Net Change to Accounts Receivable ". objects are recorded on an expenditure basis, one object should be used to record the proceeds from sale. To avoid the excess expenditures beyond the limit of the budget approved by the government. Only $24,000 should assured, the department will recognize $50 in interest revenue on overdue accounts receivable. risks and rewards associated with the loan have been transferred, the right to repayment has expired or been waived, or be maintained intact. Currently, accounting for the use of appropriations provides parliamentarians with control over most expenditures of from asset balances/ Increases (decreases) to accumulated amortization of capital assets" is used for accumulated amortization. Losses Department makes a contribution of $500,000 to a company involved in innovative research and development projects (the that are valueless or uncollectible. The concept of the concessionary terms resulting The Department must set up a payable for the amount owing. In this particular instance the expenses relate to management consulting therefore the code " 0491-Management would be recorded against either B11A or B12A depending on whether the department has a program vote (B11A) or an operating case, there are more Expenses than Revenues, so a debit is entered. This is the most common form of government accounting in the United States. significant in relation to its current financial position or that will materially affect the level of future expenditures. are the more significant types of services provided without charge: accommodation provided by Public Works and Government Authority Coding Rationale: Since the appropriation was originally charged when the advance was

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