the new psab (2009) financial statements

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The New PSAB (2009) Financial Statements

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SESSION 1

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Agenda – Session 1 PSA GAAP (PS1150)

PSA Financial Statement Concepts (PS1000) Qualitative characteristics Define Accrual Accounting Review the PSA “Framework” and apply it

PSA Financial Statement Presentation (PS1200) Review of the 4 Statements and identify key components

and message(s) In-depth Review Statement of Net Financial Assets/Net

Debt

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Agenda – Session 1 TCA Disclosure Requirements in Notes and Schedules

TCA Continuity Schedule TCA Significant Accounting Policy Notes TCA Information Note TCA Budget - Different Scope or Basis Note Prior Period Adjustment Note

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Agenda – Session 2

General Ledger Impacts TCA J/E’s – Full Accrual (PS) and LG Traditional Model G/L New Accounts & Other Considerations G/L Conclusions

Is it the end of Fund Accounting? Is it the end of the Capital Fund? Will LG move to a Full Accrual (PS) (only) G/L Model?

New Budget Model & Optional “Legislative Compliance Note”

2008 Restatement

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PSA GAAP (PS1150)

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If the Public Sector Financial Statement Concepts and Principles (PS1000 to PS1300) were part of a house, what part would they be?

PSA GAAP (PS1150)

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PSA GAAP (PS1150) Generally accepted accounting principles (GAAP) encompass broad principles and conventions of general application, as well as rules and procedures that determine accepted accounting practices at a particular time

Primary sources of GAAP are, in descending order of authority: (i) standards in Sections PS 1200-PS 3800; (ii) Public Sector Guidelines; and (iii) appendices and illustrative material of those pronouncements described in (i)-(ii) above.

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PSA GAAP (PS1150) When the primary sources of GAAP do not deal with the accounting and reporting in financial statements of transactions or events encountered by the public sector reporting entity, or additional guidance is needed to apply a primary source to specific circumstances, the selection of an appropriate accounting policy requires the exercise of professional judgment. In these circumstances, a public sector reporting entity should adopt accounting policies and disclosures that are consistent with:

(a) the primary sources of GAAP; and (b) the application of the concepts described in FINANCIAL STATEMENT CONCEPTS, Section

PS 1000. [i.e PSA Framework]

PSA “Framework”

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PSA GAAP (PS1150)

Sometimes, a practice has been established that does not result from written material. The relevance of such a practice is demonstrated by its compliance with paragraph PS 1150.05 [Primary Sources of GAAP or consistency with PS and Framework] and not by its general use. PS (1100.24)

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Financial Statement ConceptsPS1000

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Financial Statement Concepts – PS1000

Statements designed to meet the common information needs of external users

The financial position as measured in the financial statements is only one factor in determining the financial condition of a government.

Unique characteristics of government are a primary consideration in setting the government reporting model (PS1000, Appendix A)

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Financial Statement Concepts – PS1000

Qualitative Characteristics Relevant – predictive value, feedback and

accountability value, timely

Reliable – representational faithfulness, completeness, neutrality, conservatism, verifiability

Comparability – consistency in presentation and accounting policies and methods

Understandability and clear presentation

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Financial Statement Concepts – PS1000 Accrual Accounting

59 Items recognized in government financial statements are accounted for in accordance with the accrual basis of accounting.

The accrual basis of accounting recognizes the effect of transactions and events in the period in which the transactions and events occur, regardless of whether there has been a receipt or payment of cash or its equivalent.

Accrual accounting recognizes a liability until the obligation or condition(s) underlying the liability is partly or wholly satisfied.

Accrual accounting recognizes an asset until the future economic benefit underlying the asset is partly or wholly used or lost.

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Financial Statement Concepts – PS1000The Framework in Two WordsIt’s all about Economic Resources Baby!!!

Economic resources are scarce means that are useful for carrying out economic activities, such as consumption, production and exchange. (PS1100.22)

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Financial Statement Concepts – PS1000F/S Elements

Elements are the basic categories of items in the F/S

Two types: Those that describe the economic resources, obligations and

accumulated surplus at a point in time Those that describe the changes in the economic resources over a

period of time

Four Elements: Assets (financial and non financial) Liabilities Revenues Expenses

Revenue and Expenses (and therefore operating results for an accounting period), result ONLY from changes in assets and liabilities (economic resources)

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Financial Statement Concepts – PS1000F/S Elements - Assets

Why are employee education (training and education fees) and health care costs (benefit premiums) not treated as assets?

.35 Assets are economic resources controlled by a government as a result of past transactions or events and from which future economic benefits are expected to be obtained.

.36 Assets have three essential characteristics: (a) they embody a future benefit that involves a capacity, singly or in combination with other assets,

to provide future net cash flows, or to provide goods and services; (b) the government can control access to the benefit; and (c) the transaction or event giving rise to the government's control of the benefit has already

occurred. .37 An item is not an asset of a government if it lacks one or more of the essential characteristics listed in

the preceding paragraph.

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Financial Statement Concepts – PS1000F/S Elements - Financial Assets

.39 Financial assets are assets that could be used to discharge existing liabilities or finance future operations and are not for consumption in the normal course of operations.

.40 A financial asset is any asset that is: (a) cash; (b) a realizable asset that is convertible to cash; (c) a contractual right to receive cash or another financial asset from another party; (d) a temporary or portfolio investment; (e) an investment in a government business enterprise or government business partnership; (f) a financial claim on an outside organization or individual; or (g) an inventory or item for sale that meets the criteria in FINANCIAL STATEMENT

PRESENTATION, paragraph PS 1200.051.

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Financial Statement Concepts – PS1000F/S Elements – Non-Financial Assets

.42 Non-financial assets are acquired, constructed or developed assets that do not normally provide resources to discharge existing liabilities, but instead: (a) are normally employed to deliver government services; (b) may be consumed in the normal course of operations; and (c) are not for sale in the normal course of operations.

.41 Non-financial assets include tangible capital assets, and other assets such as prepaid expenses and inventories of supplies.

.43 Tangible capital assets are non-financial assets having physical substance that: (a) are held for use in the production or supply of goods and services, for rental to others, for

administrative purposes or for the development, construction, maintenance or repair of other tangible capital assets;

(b) have useful economic lives extending beyond an accounting period; (c) are to be used on a continuing basis; and (d) are not for sale in the ordinary course of operations.

For-Profit Organizations F/S do not break their assets into Financial and Non-Financial. Why does the PSA model require this to be done for Gov’t? Why is this distinction not relevant for For-Profit Organizations?

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Financial Statement Concepts – PS1000F/S Elements - Liabilities

44 Liabilities are present obligations of a government to others arising from past transactions or events, the settlement of which is expected to result in the future sacrifice of economic benefits.

.45 Liabilities have three essential characteristics: (a) they embody a duty or responsibility to others, leaving a government little or no discretion to

avoid settlement of the obligation; (b) the duty or responsibility to others entails settlement by future transfer or use of assets,

provision of goods or services, or other form of economic settlement at a specified or determinable date, on occurrence of a specified event, or on demand; and

(c) the transactions or events obligating the government have already occurred.

Is the annual Audit Fee accrual a Liability under the PS Model?

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Financial Statement Concepts – PS1000F/S Elements - Revenues

Explain why the following are PSA Revenues: Taxation Revenues, Debt Forgiveness, Gain on Sale of TCAExplain why the following are NOT PSA Revenues: Debt Proceeds, Transfers from Reserve Funds

.46 Revenues, including gains, are increases in economic resources, either by way of increases of assets or decreases of liabilities, resulting from the operations, transactions and events of the accounting period.

.47 Revenues, other than gains, can arise from: taxation; the sale of goods; the rendering of services; the use by others of government economic resources yielding rent, interest, royalties or dividends; or receiving contributions such as grants, donations and bequests. Revenues do not include borrowings, such as proceeds from debt issues or transfers from other governmental units in the government reporting entity or amounts collected on behalf of others.

.48 Gains can arise from peripheral or incidental transactions and events affecting a government. Such transactions and events include the disposition of assets purchased for use and not for resale, and the liquidation or refinancing of debt.

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Financial Statement Concepts – PS1000 F/S Elements - Expenses

Explain Why the following are PSA Expenses: TCA Amortization, Inventory consumed, Debt interest repaymentExplain Why the following are NOT PSA Expenses: Debt Principle RepaymentExplain the difference b/w Expenses and Expenditures

49 Expenses, including losses, are decreases in economic resources, either by way of decreases in assets or increases in liabilities, resulting from the operations, transactions and events of the accounting period.

.50 Expenses include the cost of economic resources consumed in and identifiable with the operations of the accounting period. For example, the cost of tangible capital assets is amortized to expenses as the assets are used in delivering government programs (see TANGIBLE CAPITAL ASSETS, Section PS 3150). Expenses do not include debt repayments or transfers to other governmental units in the government reporting entity.

.51 Losses can arise from peripheral or incidental transactions and events affecting a government. Such transactions and events include the disposition of assets purchased for use and not for resale, and the liquidation or refinancing of debt.

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Expenses Cost of goods and services consumed in

the accounting period

Expenditures Cost of goods and services acquired in

the period

Financial Statement Concepts – PS1000 Expenses vs. Expenditures

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Statement of Financial PositionRecognition

.52 Recognition is the process of including an item in the financial statements of an entity.

.53 Recognition means inclusion of an item within one or more individual statements and does not mean disclosure in the notes to the financial statements. Notes either provide further details about items recognized in the financial statements, or provide information about items that do not meet the criteria for recognition and thus are not recognized in the financial statements.

.55 The recognition criteria are as follows: (a) the item has an appropriate basis of measurement, and a reasonable estimate can be made

of the amount involved; and (b) for an item that involves obtaining or giving up future economic benefits, it is expected that

such benefits will be obtained or given up.

"Expected" is used with its usual general meaning and refers to that which can reasonably be anticipated, contemplated or believed on the basis of available evidence or logic but is neither certain nor proved.

.58 In the absence of appropriate public sector recognition and measurement criteria for intangibles, all intangibles, including those that have been purchased, developed, constructed or inherited in right of the Crown, are not recognized as assets in government financial statements.

Intangible may meet definition of an asset, but since no appropriate basis of measurement… if paid for, are expensed.

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Financial StatementsSummary of Changes & Requirements

& Key Messages

27Statement of Financial Position

"New" Statement of Financial Position2009 2008

Financial AssetsCash and cash equivalents 1,985 2,540Investments 4,000 3,000Receivables 800 700

6,785 6,240LiabilitiesPayables -300 -400 Deferred Revenue -1,500 -1,000 Long term debt -2,000 -1,800

-3,800 -3,200

Net Financial Assets 2,985 3,040

Non-Financial AssetsTangible Capital Assets 9,070 8,000Inventory 75 125Prepaids 90 60

9,235 8,185

Accumulated Surplus -12,220 -11,225

"Old" Statement of Financial Position (OF)2009 2008

AssetsCash and cash equivalents 1,985 2,540Investments 4,000 3,000Receivables 800 700Property and equipment 13,900 12,000Inventory 75 125Prepaids 90 60

20,850 18,425

LiabilitiesPayables -300 -400 Deferred Revenue -1,500 -1,000 Long term debt -2,000 -1,800

-3,800 -3,200 Municipal Position Inv in prop and equip -12,065 -10,385 Financial equity Operating Surplus -910 -890 Reserves -4,075 -3,950

-4,985 -4,840 -17,050 -15,225

Liabilities & Municipal Position -20,850 -18,425

Restricted Surplus Unrestricted Surplus

28Statement of Financial Position

"New" Statement of Financial Position2009 2008


6,785 6,240LiabilitiesPayables -300 -400 Deferred Revenue -1,500 -1,000 Long term debt -2,000 -1,800

-3,800 -3,200


Non-Financial AssetsTangible Capital Assets 9,070 8,000Inventory 75 125Prepaids 90 60

9,235 8,185

Accumulated Surplus -12,220 -11,225

"New" Statement of Financial Position (NF)2009 2008


6,785 6,240LiabilitiesPayables -300 -400 Deferred Revenue -1,500 -1,000

Long term debt -2,000 -1,800 -3,800 -3,200


Non-Financial AssetsProperty and equipment 13,900 12,000Inventory 75 125Prepaids 90 60

14,065 12,185

Municipal Position Inv in prop and equip -12,065 -10,385

Financial equity Operating Surplus -910 -890

Reserves -4,075 -3,950 -4,985 -4,840

-17,050 -15,225

Restricted Surplus Unrestricted Surplus

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Statement of Financial PositionKey Information

The statement of financial position highlights four key figures that describe the financial position of the government at the financial statement date. (a) The cash resources of the government are its cash and cash equivalents. (b) The net debt position of the government is calculated as the difference between its liabilities and

financial assets. (c) The non-financial assets of the government are assets that are, by nature, normally for use in service

provision and include purchased, constructed, contributed, developed or leased tangible capital assets, inventories of supplies, and prepaid expenses.

(d) The accumulated surplus or deficit of the government is calculated as the sum of the net debt of the government and its non-financial assets. This indicator represents the net assets of the government.

PS(1200.032)

-The other three Statements explain changes in key figure (a),(b) and (d)

-Required continuity schedule for TCA explains change in vast majority of (c)

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Statement of Financial PositionKey Statement & Disclosure Requirements Financial Assets, Non-Financial Assets and Liabilities –

segregate by main classification and disclose nature and terms

Non-Financial Assets – specifically disclose nature of as “assets that are normally employed to provide future services”

TCA continuity schedule

Disclose that all intangibles and items inherited by right of Crown, not recognized in F/S

Assets Held for Sale – must meet stringent PS1200.051 test to go from FA to NFA

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Net Debt or Net Financial Assets Financial Assets less Liabilities Bears directly on a Govt’s future revenue requirements

and on its ability to finance its activities Net Debt

A measure of the future revenues required to pay for past transactions and events

Think of as a “lien” against service potential Net Financial Assets

A measure of the net financial assets on hand that can be used to finance future operations

Think of as “prepaid service potential” Highlights the financial affordability of future Gov’t service

provision (ie net debt means future $ have to go towards debt repayment instead of service provision… less “room”)

Statement of Financial PositionNet Debt or Net Financial Assets

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Statement of Financial Position Accumulated Surplus

Statement of Financial PositionCash 1,985Investments 4,000Receivables 800Payables -300 Deferred revenue -1,500 Long term debt -2,000

2,985TCA 9,070Prepaids 75Inventory 90

9,235Accum. Surplus -12,220

Key Message Accumulated Surplus IS

nothing more than the sum of its parts.

The Best Introduction... “Accumulated Surplus as Represented by…”

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Statement of Financial PositionAccumulated Surplus – PSA View of

The “old” PS Framework sections used to refer to a break-down of Accumulated Surplus (Operating Fund, Capital Fund, Reserve Fund)

The “new” PS Framework does not discuss this topic at all, other than in PSG-4

PSAB views Accumulated Surplus as a SINGLE number Thee (Accumulated) “Operating Surplus”… the sum of all

operating surpluses and deficits since the LG came into existance The “residual” value in net assets The sum of Financial Assets/Net Debt and Non-Financial Assets

When a government chooses to provide information about any funds or reserves, it does so only in the notes and schedules and not on the statement of financial position. (PSG-4 para 7)

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Statement of Financial Position Accumulated Surplus – LG View of

Typical break-downs By Fund/Function ex. General, Water, Sewer etc.

By “Nature” BC - Operating Fund, Capital Fund, (Statutory) Reserve Fund,

Equity in TCA (NBV TCA-related debt) Alberta – Unrestricted, Restricted (all “reserves”), Equity in

TCA (NBV TCA-related debt)

Combinations of above Fund + Nature

Reality…currently, LG break-out in a variety of different ways…

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Ministry Recommended

Comments: Restricted

Is any funds that are designated or restricted in use

Unrestricted The balance

Statement of Financial PositionCash 1,985Investments 4,000Receivables 800Payables -300 Deferred revenue -1,500 Long term debt -2,000

2,985TCA 9,070Prepaids 75Inventory 90

9,235Accum. Surplus -12,220

Equity in TCA = 9,070TCA-2000debtRestricted=4,125Cash/InvestmentsUnrestricted=Remainder

Common - AlbertaRestricted -4,125 Unrestricted -1,025 Equity in TCA -7,070

-12,220


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Additional Disclosures in Notes or Schedules to F/S? In Notes to F/S

Comparison of opening & closing balances Additional b/down by Fund Verbal explanation

In a Schedule to F/S (ie continuity schedule) Only where makes sense to do so (likely just for Restricted)

Consider

Qualitative

Characteristics!


Common - AlbertaRestricted -4,125 Unrestricted -1,025 Equity in TCA -7,070

-12,220

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"Old" Statement of Financial Activities2009

RevenueTax revenue -6,300 Grants -200 Developer Contributions -300 Proceeds from Sale of Assets -250 Other revenues -875

-7,925 ExpendituresOperating expenses 5,985Prepaid expenditures 70Inventory expenditures 25Capital expenditures 1,900

7,980

Net Expenditures 55

Debt issued -500 Debt repaid 300Increase in financial equity -145 Financial equity, beginning -4,840 Financial equity, end -4,985

"New" Statement of Operations2009

Budget2009

Actual2008

ActualRevenueTax revenue -6,355 -6,300 -6,275 Proceeds from Sale of Assets 0 0 0Developer Contributions -700 -400 -700 Grants -200 -200 -300 Other revenues -900 -875 -900

-8,155 -7,775 -8,175 ExpendituresOperating expenses 6,085 5,985 6,035Prepaid expenses 40 40 40Inventory expenses 75 75 75Amortization expense 500 500 450Write-down of TCA 0 30 0Loss on disposal of TCA 0 150 0

6,700 6,780 6,600

Surplus -1,455 -995 -1,575

Accumulated surplus, beginning -11,225 -11,225 -9,650 Accumulated surplus, end -12,680 -12,220 -11,225

Expenses

Statement of Operations

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Statement of Operations Alberta Ministry(‘09 Sampleford Statements)

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Statement of OperationsKey Information

The statement of operations reports the surplus or deficit from operations in the accounting period. The statement displays the cost of government services provided in the period, the revenues recognized in the period and the difference between them. It measures, in monetary terms, the extent to which a government has maintained its net assets in the period. PS(1200.033)

Key information

Measures extent to which revenues of the period where sufficient to offset the costs of goods and services consumed (expenses) in the period

Exception to strict application of term “consumed” – intangibles + transfer payments made were no value rec’d in return (capital or cash grants/transfer)

Shows types of revenues

Shows expense components (functions)

Explains the change in net economic resources in the period, being the change in Accumulated Surplus

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Statement of OperationsKey Statement & Disclosure Requirements

Revenues segregate by significant types on Statement

Expenses segregate by function on Statement disclose by object (notes/schedule)

Disclose Gross revenues and expenses TCA disposals – Net or Gross Accounting option Optional Alberta Ministry presentation for contributed

assets

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Statement ofCash Flows

"Old" Statement of Cash Flows2009

Operating ActivitiesIncrease in Financial Equity 145Change in non-cash operating items Receivables -100 Payables -100 Deferred Revenue 500 445

Financing ActivitiesNone

Investing ActivitiesProceeds from investments 1,000Investments -2,000

-1,000

Decrease in cash and equivalents -555 Cash, beginning 2,540Cash, end 1,985

"New" Statement of Cash Flows2009 Actual

2008 Actual

Operating transactionsAnnual surplus 995 1,575Adjust for non-cash items (in surplus): -Amortization expense 500 450 -Developer TCA Contribution -100 -400 -Writedown of TCA 30 0 -Loss on disposal of TCA 150 0Change in non-cash operating items 320 245Cash provided by operating activities 1,895 1,870

Capital transactionsCash used to acquire TCA -1,900 -1,500 Proceeds from sale of TCA 250 0Cash applied to capital transactions -1,650 -1,500

Financing transactionsProceeds from debt issues 500 0Debt repayment -300 -300 Cash provided by financing transactions 200 -300

Investing transactions Proceeds from investments 1,000 800Investments made -2,000 -900 Cash applied to investing transactions -1,000 -100

(Decrease) in cash and equivalents -555 -30 Cash, beginning 2,540 2,570Cash, end 1,985 2,540

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Statement of Cash Flow The statement of cash flow reports the change in cash and cash equivalents in the accounting period, and how a government financed its activities in the period and met its cash requirements. PS(1200.033)

Key information

Explains what happened on a cash flow basis

Identifies cash flows from operations, capital, investing and financing activities

Shows Debt transactions

Identifies TCA donated/contributed and purchased/built separately

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Statement of Cash FlowsKey Statement & Disclosure Requirements Cash equivalents – short term, liquid investments with

maturities typically less than 3 months

Breakout: Operating, Capital, Financing & Investing Activities

Non-cash item adjustments – always in Operating Activities

Do not net cash flows, exceptions: Cash flows to/from external parties when the cash flow reflects

activities of external party Cash flows of receipts and payments when turnover rapid,

maturities short & amounts large

Use Direct or Indirect Method Direct Method encouraged If use Indirect Method and significant difference b/w interest

revenue and expense recognized and actual receipts and payments, must disclose fact and reasons

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Statement of Change in Net Financial Assets or Net Debt

"New" Statement of Change in Net Financial Assets2009 Budget 2009 Actual 2008 Actual

Annual surplus 1,455 995 1,575

Amortization expense 500 500 450Loss on sale of TCA 0 150 0Acquisition of tangible capital assets -2,300 -2,000 -1,900 Write-down of TCA 0 30 0

Proceeds from sale TCA 0 250 0

Acquisition of prepaid expense -70 -70 -70 Use of prepaid expense 40 40 40

Acquisition of inventory -25 -25 -25 Consumption of inventory 75 75 75

(Decrease)/Increase in financial assets -325 -55 145

Net financial assets, beginning 3,040 3,040 2,895Net financial assets, ending 2,715 2,985 3,040

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Statement of Change in Net Debt / FAKey Information

The statement of change in net debt reports the extent to which the expenditures of the accounting period are offset by the revenues recognized in the period. This measure is displayed by reporting the items that explain the difference between the surplus or deficit from operations and the change in net debt for the period. PS(1200.033)

Key information

Measures extent to which revenues of the period where sufficient to offset the costs of goods and services acquired/incurred (expenditures) in the period

Explains the change in Net Debt/Financial Assets

Explains why could have a surplus, but still have an increase in net debt

Shows capital expenditures of the period

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Statement of Change in Net Debt / FA Key Statement & Disclosure Requirements

Must start Statement with Operating Surplus/Deficit

Must clearly report amount of TCA expenditures (purchased/built/donated/contributed) Optional presentation to break-out donated and

contributed values

Desirable to group explanatory items (ie for TCA and for Other items) on Statement

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Approach in the same manner as doing the Statement of Cash Flows…

Steps: Identify all accounts on the B/S that are NOT included in the Net

Debt/Net Financial Asset calculation Non – Financial Assets – TCA, prepaids, inventory Accumulated Surplus

Calculate the change in these accounts, current over prior year

For Non-Financial Assets, break-out the components of the change (do a continuity schedule)

Start the reconciliation with the Change in Accumulated Surplus [Surplus = increase; Deficit = decrease]

For each change in the Non-Financial assets identified in the continuity schedules, identify related recording J/E and impact on Net FA/Net Debt and add to reconciliation accordingly

Statement of Change in Net FA/Net DebtHow to – “Mechanical” Approach

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St. of Financial Position (part of)

"New" Statement of Change in Net Financial Assets2009 Actual

Annual surplus 995

Amortization expense 500Loss on sale of TCA 150Acquisition of tangible capital assets -2,000 Write-down of TCA 30Proceeds from sale TCA 250

Acquisition of prepaid expense -70 Use of prepaid expense 40

Acquisition of inventory -25 Consumption of inventory 75(Decrease) in financial assets -55

Net financial assets, beginning 3,040Net financial assets, ending 2,985

2009 2008 ChangeNet Financial Assets 2,985 3,040 -55

Non-Financial AssetsTangible Capital Assets 9,070 8,000 1,070Inventory 75 125 -50 Prepaids 90 60 30

9,235 8,185

Accumulated Surplus -12,220 -11,225 -995

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Expensed Acquired Disposal * Write-downTCA NBV -500 2,000 -400 -30 Inventory -75 25 n/a n/aPrepaids -40 70 n/a n/a*composed of: -250 cash proceeds & -150 loss

Non-Financial Assets Changes

Statement of Change in Net FA/Net DebtHow to – “Mechanical” Approach

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"New" Statement of Change in Net Financial Assets2009 Actual

Annual surplus 995

Amortization expense 500Loss on sale of TCA 150Acquisition of tangible capital assets -2,000 Write-down of TCA 30Proceeds from sale TCA 250

Acquisition of prepaid expense -70 Use of prepaid expense 40

Acquisition of inventory -25 Consumption of inventory 75(Decrease) in financial assets -55

Net financial assets, beginning 3,040Net financial assets, ending 2,985

What about Contributed Revenue? In this example, there was $100 of Contributed Revenue – Where is it?

This is potentially a Statement of the Change in Net Debt. Why are there no entries regarding debt on this Statement?

Statement of Change in Net FA/Net DebtOther

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TCA Disclosure Requirements in Notes and Schedules

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TCA Disclosure Requirements

The financial statements should disclose, for each major category of tangible capital assets and in total: (a) cost at the beginning and end of the period; (b) additions in the period; (c) disposals in the period; (d) the amount of any write-downs in the period; (e) the amount of amortization of the costs of tangible capital assets for the period; (f) accumulated amortization at the beginning and end of the period; and (g) net carrying amount at the beginning and end of the period. (PS3150.40) Major categories of tangible capital assets would be determined by type of asset, such as land, buildings, equipment, roads, water and other utility systems, and bridges. (PS3150.41)

Financial statements should also disclose the following information about tangible capital assets: (a) the amortization method used, including the amortization period or rate for each major category of

tangible capital asset; (b) the net book value of tangible capital assets not being amortized because they are under construction

or development or have been removed from service; (c) the nature and amount of contributed tangible capital assets received in the period and recognized in

the financial statements; (d) the nature and use of tangible capital assets recognized at nominal value; (e) the nature of the works of art and historical treasures held by the government; and (f) the amount of interest capitalized in the period. (PS3150.42)

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TCA Disclosure Requirements Continuity Schedule

Alberta Ministry(‘09 Sampleford Statements)

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Non-Financial Assets Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of goods and services. They have useful lives extending beyond the current year and are not intended for sale in the ordinary course of operations.

i) Tangible Capital Assets Capital Assets are recorded at cost, net of capital asset disposals, write-downs and amortization. The useful life is applied on a straight line basis to calculate amortization.

Major Asset Category Useful Life Range

(years)

Land n/a

Land Improvements 15 - 40

Building 50 - 70

Equipment, Furniture & Vehicles 10 -15

Engineering Structures

Water etc. 80 - 100

Carrying costs directly attributable to the acquisition, construction or development activity, excluding interest costs, are capitalized to the point in time the asset is substantially complete and ready for use. Assets under construction are not amortized until the asset is in use.

Contributions of tangible capital assets are recorded at fair value at the date of contribution.

ii) Leases – See City of Winnipeg iii) Inventories – See City of Winnipeg

TCA Disclosure RequirementsSignificant Accounting Policy Note

Say No!!

To “Non-GAAP” Disclosures

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TCA Disclosure RequirementsSignificant Accounting Policy Note

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported revenue and expenditures during the reporting period. Significant areas requiring the use of management estimates relate to the determination of employee benefit plans, allowance for doubtful accounts receivable, provision for contingencies and prior years tangible capital asset historical costs and related amortization. Actual results could differ from management’s best estimates as additional information becomes available. Adjustments, if any, will be reflected in the financial statements in the period that the change in estimate is made, as well as in the period of settlement if the amount is different.

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New Disclosure RequirementsTCA Details Note

Note X: Tangible Capital Assets (see Schedule X for further details)

2009 2008 Tangible Capital Assets consist of the following: Land $ $ Land Improvements Buildings Equipment, Furniture & Vehicles Engineering Structures Water etc…

$ $

The net book value of capital assets not being amortized and under construction is <<$ >> (2008 - <<$ >>).

Contributed capital assets received and recognized in the year from developers, for various infrastructure works and related land and parks, and recorded on the financial statements is <<$ >> (2008 - <<$ >>).

All capital assets acquired prior to 1940 are recorded at a nominal value of $1. These assets include some land and infrastructure assets (primarily water and sewer linear infrastructure).

Interest capitalized in the year is <<$ >> (2008 - <<$ >>).

Art and historic treasures are held by the local government in its museum and arts centre. Due to the subjective nature of the assets they are not included in the values shown on the financial statements. The facilities have a combined floor display space of << >> feet and storage space of << >> square feet.

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New Disclosure RequirementsTCA Budget - Different Scope or Basis NoteIf a government's budget or appropriations are prepared on a different basis or for a different scope than its financial statements, the government needs to provide a link with the financial statements so that the legislature or council understands how the government's results for the period compare to the results it planned and the amounts authorized to accomplish those plans. In either circumstance, or when neither the budgeted scope nor basis is consistent with that used for reporting actual results, the financial statements will need to provide a reconciliation of the planned information included in the financial statements with that originally budgeted. (PS1100.66)

57 New Disclosure RequirementsTCA Budget - Different Basis Note

LG Budget is NOT Full Accrual = Different Basis of Accounting

PS GAAP Budget Comparables in F/S

Should be the actual budget values as adopted/approved by Council, being the budget that was adopted prior to setting the annual tax rates

The budget comparables in the statements are NOT restated Notes to F/S

If the impact of excluding the TCA/Full Accrual impacts is material, should explain the different basis and the impacts

Identify the impact on key 2009 actual numbers in the statements, being those in the Statement of Operations (Revenue, Expenses, Surplus/Deficit) and the Statement of Net Financial Assets/Debt

Non-GAAP Approach for 2009 only?

58

New Disclosure RequirementsTCA Budget - Different Basis Note - 2009

Note: would also do a table for the Statement of Net Debt/FA

OPT 1 – Budget on Modified Accrual Basis & NO Adjustment to F/S Budget Values Note X: 2009 Budget

The budget amounts presented throughout these financial statements are based upon the Budget approved by Council on X, 2009.

As set out in Note X, the municipality has adopted the new PSAB Tangible Capital Asset accounting rules in the current year. At the time of budget preparation the tangible capital asset related budgets could not reasonably be budgeted for as the municipality was in the process of completing its tangible capital asset inventory and valuation. The tangible capital asset related budgets include budget estimates for amortization, developer contributions for tangible capital assets and gains and losses on tangible capital asset disposals.

The table below compares the 2009 budget with the 2009 actual values after removing the actual values for the tangible capital asset related items (amortization, developer contributions for tangible capital assets and gains and losses on tangible capital asset disposals) that were not included in the 2008 budget.

2009 Actuals, Financial

Statements

Tangible Capital Asset

Related Adjustments

2009 Actuals,

after Adjustments

2009 Budget

Statement of Operations Revenues -105 7 -98 -100 Expenses 80 -10 70 65

Surplus -25 -3 -28 -35

59

New Disclosure RequirementsTCA Budget - Different Basis Note - 2009

Non-GAAP Approach Acceptable for 2009 only?

Note: Would also do a table for the Statement of Net Debt/FA

Alberta Ministry

Preference for 2009

OPT 2 – Budget on Modified Accrual Basis & Adjustment IS MADE to F/S Budget Values Note X: 2009 Budget

The budget amounts presented throughout these financial statements are based upon the Budget approved by Council on X, 2009, except in regard to budget amounts for amortization, developer contributions for tangible capital assets and gains and losses on tangible capital asset disposals (collectively referred to as the “tangible capital asset related budgets”).

As set out in Note X, the municipality has adopted the new PSAB Tangible Capital Asset accounting rules in the current year. At the time of budget preparation the tangible capital asset related budgets could not reasonably be budgeted for as the municipality was in the process of completing its tangible capital asset inventory and valuation.

The budget amounts presented throughout these financial statements for the tangible capital asset related budgets are the actual values determined at the completion of the municipalities tangible capital asset accounting process. These values have been added to the May X, 2009 budget approved by Council in order to improve the comparability of the 2009 budget and actual values in the Financial Statements.

The table below shows the adjustments to the X, 2009 budget approved by Council after adjusting the budgetl values by the actual revenues and expenses incurred for tangible capital asset related items (amortization, developer contributions for tangible capital assets and gains and losses on tangible capital asset disposals) that were not included in the approved 2008 budget.

2009 Budget, Council

Approved

Tangible Capital Asset

Related Adjustments

2009 Budget,

Financial Statements

Statement of Operations Revenues -100 -7 -107 Expenses 65 10 75

Surplus -35 3 -32

60

Prior Period Adjustment Note (PS2120)

.16 When there has been a change in an accounting policy, a description of the nature of the change as well as its effect on the current and prior periods assists in understanding the significance of the change and its impact on the financial statements. Depending on the nature of the change, it may be appropriate to disclose its effect on significant items such as operating results.

.18 For each change in an accounting policy in the current period, the following information should be disclosed: (a) a description of the change; (b) the effect of the change on the financial statements of the current period; and (c) the reason for the change. [SEPT. 1997]

61Note X Prior Period Restatement

The change in reporting has resulted in the following changes to the 2008 comparative values:

Statement of OperationsReported in 2009

for 2008 Reported in 2008

for 2008 Change

Impact on Revenues: -Proceeds from Sale of TCA 0 -700 700 -Developer Contributions for TCA -400 0 -400 -Gain on Sale of TCA -500 0 -500 Subtotal -900 -700 -200 Impact on Expenses: -Capital Expenditures 0 1,500 -1,500 -Inventory Expenditures 0 25 -25 -Prepaid Expenditures 0 70 -70 -Operating Expenses 6,535 6,035 500 -Amortization 600 0 600 -Inventory Expenses 75 0 75 -Prepaid Expenses 40 0 40 -Loss on Sale of TCA 0 0 0 -Write-down of TCA 0 0 0 Subtotal 7,250 7,630 -380 In total the changes in the Statement of Operations increased Surplus by: -580 Surplus -1,425 -845 -580

Statement of Financial PositionReported in 2009

for 2008Reported in 2008

for 2008 Change

Tangible Capital Assets 15,600 12,000 3,600 Inventory of Supplies 125 125 0 Prepaid Expenses 60 60 0 The changes in the Statement of Financial Position decreased Accumulated Surplus by: 3,600 Accumulated Surplus -19,525 -15,925 -3,600

The opening balance for Accumulated Surplus changed as follows:Accumulated Surplus, Jan/1/2008, previously reported -15,925 -Change in accounting for TCA -3,600 -Change in accounting for inventory 0 -Change in accounting for prepaids 0Accumulated Surplus, Jan/1/2008, restated -19,525

Effective January 1, 2009, the local government changed its method of recording tangible capital assets, inventory of supplies and prepayment ofexpenses to accept the recommendations of the CICA Public Sector Accounting Handbook. The handbook requires accrual of these assets that werepreviously expensed. These assets are now on the statement of financial position as non-financial assets. The change has been applied retroactively.

62

Adjustments to 2008 Opening Accumulated Surplus: Accumulated Surplus, as previously reported -15,925 - Change in accounting for TCA -3,600 Accumulated Surplus, restated -19,525

Adjustments to 2008 Annual Surplus: Annual Surplus, as previously reported -845 Add: Contributed Revenue -400 Gain on Sale of TCA -500 TCA previously recorded but expensed -1,500 Inventory previously recorded but expensed -25 Prepaids previously recorded but expensed -70 Less: Proceeds on Sale of TCA 700 Operating expenses previously capitalized 500 Amortization on TCA 600 Inventory expenses 75 Prepaid expenses 40 Annual Surplus, restated -1,425

Adjustment to 2008 Tangible Capital Assets TCA, as previously restated 12,000 Adjustment to historical cost of TCA 8,200 Accumulated amortization on TCA -4,600 TCA, restated 15,600

Note X Prior Period Restatement

Effective January 1, 2009, the local government changed its method of recording tangible capital assets, inventory of supplies and prepayment ofexpenses to accept the recommendations of the CICA Public Sector Accounting Handbook. The handbook requires accrual of these assets that werepreviously expensed. These assets are now on the statement of financial position as non-financial assets. The change has been applied retroactively.

63

End of Presentation

the new psab (2009) financial statements

Documents

assets financial

financial statementssession

financial condition

accounting period

accrual ps

economic resources baby

end of fund accounting

session questionscomments