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PUT TITLE HEREThe New Reporting Model

and Sample Forms

OASBO Finance Committee WorkshopTransfer Payments & Financial Reporting BranchMarch 2008

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Financial Reporting Model?? – What is it??Financial Reporting Model?? – What is it??

Sets out the Sets out the rulesrules, , parametersparameters and and content content requirementrequirement that prescribe what must be that prescribe what must be presented in the financial statementspresented in the financial statements– the NUMBER, TYPE and FORMAT of the FS;– WHAT is to be reported;– WHEN it should be reported and– the NOTES that are required with the financial

statements

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Why do I care?Why do I care?

Implementation… Implementation…

2008-09 DSB Financial Statements (Nov 09)2008-09 DSB Financial Statements (Nov 09)

2009-10 DSB Estimates (Jun 09)2009-10 DSB Estimates (Jun 09)

Therefore -- NEWTherefore -- NEW– NUMBER, TYPE and FORMAT of the FS;– WHAT is to be reported;– WHEN it should be reported and– the NOTES that are required with the financial

statements

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So What’s New?So What’s New?

Full accrual accountingFull accrual accounting– capitalization and amortization of capital assets

Statement of Financial Position – new formatStatement of Financial Position – new format– “Net Debt” and– “Accumulated Surplus/Deficit”

Statement of Operations shows Statement of Operations shows – replaces Stmt of Fin. Activities – a new calculation of annual surplus/deficit incl. amortization

New Statement of Changes in Net DebtNew Statement of Changes in Net Debt– Capital expenditures

New Statement of Cash Flow New Statement of Cash Flow – replaces Stmt of Changes in Financial Position

Requires boards to report budget numbers on Requires boards to report budget numbers on both:both:– Statement of Operations (annual surplus/deficit)– Statement of Change in Net Debt (mostly capital expenditures)

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Key Features of New ModelKey Features of New Model

5 “Messages” about DSB finances5 “Messages” about DSB finances

Indicators of Financial Position

1. Net Debt2. Accumulated surplus/deficit

Indicators of Changes in Financial Position

1. Annual surplus/deficit2. Change in net debt3. Cash Flows

Moves away from a one-dimensional focus on Moves away from a one-dimensional focus on surplus/deficit.surplus/deficit.

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Net DebtNet Debt

Financial assets minus LiabilitiesFinancial assets minus Liabilities

Often call “Future revenue requirements”Often call “Future revenue requirements”

Focus of the Old financial reporting modelFocus of the Old financial reporting model

““Change in Net Debt” is what we used to call the Change in Net Debt” is what we used to call the “PSAB Surplus/Deficit”“PSAB Surplus/Deficit”

Example: Example: Board builds a school for $30M and finances it.Net debt increases by $30M (loan liability)

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Accumulated Surplus/Deficit - NEWAccumulated Surplus/Deficit - NEW

Used to have only “Net Debt” (Fin. Assets less Liabilities)Used to have only “Net Debt” (Fin. Assets less Liabilities)

Add the non-financial assets (mostly – Capital Assets)Add the non-financial assets (mostly – Capital Assets)

= “Net Economic Resources”= “Net Economic Resources”(Resources available to provide future services

net of liabilities owed)

An An accumulated surplusaccumulated surplus - financial and physical resources - financial and physical resources to provide future services.to provide future services.

An An accumulated deficitaccumulated deficit - annual operating deficits have - annual operating deficits have been financed by borrowing.been financed by borrowing.

Previous Example: Where net debt increases when a school is built – Previous Example: Where net debt increases when a school is built – Accumulated Surplus/Deficit does not change.Accumulated Surplus/Deficit does not change.

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Annual Surplus/DeficitAnnual Surplus/Deficit

Answers the question - Do revenues cover the costs of services Answers the question - Do revenues cover the costs of services provided in the year?provided in the year?

Complicated Number….Complicated Number….

Revenues – mostly from gov’t funding – cash flow basedRevenues – mostly from gov’t funding – cash flow based

Expenses - includes the annual cost of providing services.Expenses - includes the annual cost of providing services. - - notnot cash flow based cash flow based - amortization, actuarial expense for benefits- amortization, actuarial expense for benefits

A surplus does not necessarily mean the school board has money to A surplus does not necessarily mean the school board has money to spend or vice-versaspend or vice-versa

““Balanced Budget” discussions ongoing.Balanced Budget” discussions ongoing.

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Detail of Accumulated Surplus/(Deficit)- Sch 1.2Detail of Accumulated Surplus/(Deficit)- Sch 1.2

New schedule – not a required form per GAAPNew schedule – not a required form per GAAP

Somewhat replaces our old “FUNDS” reportingSomewhat replaces our old “FUNDS” reporting

Explains what the Accumulated Surplus/Deficit is Explains what the Accumulated Surplus/Deficit is composed ofcomposed of

Explains pieces of the Annual Surplus/DeficitExplains pieces of the Annual Surplus/Deficit

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Change in Net DebtChange in Net Debt

Explains the difference between the Annual Surplus/Deficit and the Explains the difference between the Annual Surplus/Deficit and the Net DebtNet Debt

Major item – Investment in Capital AssetsMajor item – Investment in Capital Assets

– Calculation of the Annual surplus/deficit uses amortization or the cost of capital assets over their useful lives

– Calculation of Change in Net Debt uses the whole cost of the asset when purchased.

Note: Note: Budget numbers are required.Budget numbers are required.

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Consolidated Statement of Cash FlowsConsolidated Statement of Cash Flows

Where the cash has come from?Where the cash has come from?

What has been done with it?What has been done with it?

Starts from Annual Surplus/(Deficit)Starts from Annual Surplus/(Deficit)

SectionsSections OPERATING CAPITAL (NEW) INVESTING FINANCING

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Useful Reference DocumentUseful Reference Document

20 Questions about Government Financial 20 Questions about Government Financial ReportingReporting

http://www.psab-ccsp.ca/index.cfm/ci_id/18658/la_id/1 http://www.psab-ccsp.ca/index.cfm/ci_id/18658/la_id/1

Published in 2003 Published in 2003

Refers to Senior Levels of Government but still applicableRefers to Senior Levels of Government but still applicable

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Other FormsOther Forms

Sch 5.1Sch 5.1 Deferred Revenue Statement of ContinuityDeferred Revenue Statement of Continuity

Sch 7 Sch 7 Detail of Consolidated Statement of Detail of Consolidated Statement of Financial Financial PositionPosition

Sch 8Sch 8 Tangible Capital Asset Continuity ScheduleTangible Capital Asset Continuity Schedule

Sch 8ASch 8A Inter-entity Tangible Capital Asset ActivitiesInter-entity Tangible Capital Asset Activities

Sch 9Sch 9 RevenuesRevenues

Sch 10Sch 10 ExpensesExpenses