2010-11 Financial Statements Changes Information Session for School Boards and External Auditors Financial Analysis and Accountability Branch Fall 2011

2010-11 Financial

Statements Changes

Information Session for School Boards and External AuditorsFinancial Analysis and Accountability BranchFall 2011

2007-08 Grants for Student Needs 2

Agenda

Legislative Changes

Government Transfers Standard

Deferred Capital Contributions

Accumulated Surplus/(Deficit)

Prior Period Restatements

Proceeds of Disposition

Assets Held for Sale

Asset Upload File

Notes to the Financial Statements

Form Changes


Legislative Changes


Purpose

The Ministry of Education (EDU) has introduced legislative changes to the accountability framework for the School Board Sector.

Ministry proposals were shared at previous information sessions.

Highlights changes most of which are effective September 1, 2010.


Education Act – S231 The Ministry has amended legislation to update the budget requirements to:

Better align the financial accountability provisions with accounting policies of the province.

Establish new financial accountability controls on accumulated surpluses. Establish new provisions related to multi-year deficit management strategies

and recovery plans. Section 231 of the Act has been amended to provide a new definition of balanced

budget. The new model measures budget compliance by measuring the amount that a

board’s expenses exceed its revenues against the “1% threshold”. The 1% threshold is the lesser of:

1) 1% of the board’s operating revenue for the school board fiscal year, and2) the board’s accumulated surplus for the immediately preceding fiscal

year. The board’s deficit may be greater than the criteria above if the board has prior

approval from the Minister. The above provisions have been implemented starting with the 2010-11 estimates

of school boards and are compliance requirements for estimates, revised estimates and financial statements.


Education Act – Recovery Plans The Ministry has amended legislation to permit multi-year deficit

management strategies and recovery plans. A new division C.1 called Financial Recovery Plans has been

added. The section gives the Minister the power to trigger a recovery plan

at any point a board’s expenses exceed its revenues for the fiscal year by an amount greater than the 1% threshold referred to in the previous slide.

A recovery plan would not be triggered if the board had prior approval from the Minister.

The board would be required to submit a recovery plan within a specified time period, after which the Minister could approve or change the plan as necessary to address the deficit.

The board would be required to comply with the recovery plan until the board eliminated its in-year and accumulated deficits.


Regulations – Surpluses and Deficits Reserves concepts have been replaced with

accumulated surplus or deficit.

Education Act amended to allow regulations prescribing exclusions/inclusions etc. in the determination of accumulated surplus/deficit and in-year surplus/deficit.

Ontario Regulation 488/10, Determination of Board Surpluses and Deficits, has been introduced.

Schedule 5 of the Financial Statements implements the provisions of this regulation.


Regulations – Restricted Purpose Revenues

Reserves concepts that have external restrictions are reported as deferred revenues.

Reserves regulation has been replaced with Ontario Regulation 193/10, Restricted Purpose Revenues.

Enveloping provisions on GSN revenues e.g. Special Education, Internal Audit that were previously in the GSN Regulation have been moved to this regulation.


Regulations – Restricted Purpose Revenues

Addresses restrictions on School Renewal, including the school renewal portion of the Pupil Accommodation Reserve as of August 31, 2010.

Includes a provision allowing the school renewal allocation to be applied against the amortization/DCC gap related to school renewal capital spending.

Restrictions related to School Condition Improvement, a new funding source provided starting in 2011/12 are addressed. It is similar to renewal except that expenditures must meet Code of Accounts and TCA Guide criteria.


Regulations – 2010-11 GSN

To implement amended section 231 of the Act, operating revenue is defined in section 12 of the GSN regulation (Reg 196/10).

New provision introduced, section 57 – Required spending, minor tangible capital assets. Requires boards to use 2.5% of funding allocations

against minor TCA first before using residual for other purposes.

This was implemented to be able to include funding spent on minor TCA in DCC.





In February 2011, PSAB released the revised Government Transfers standard (PS 3410).

This standard explains how to report transfers from a government.

Where a board has a liability due to a capital transfer received to acquire or develop a TCA to be used to provide services for a defined number of years, the liability would be reduced and an equivalent amount of revenue would be recognized as the liability is settled (PS 3410, paragraphs 23 and 25).

This liability is referred to as deferred capital contributions (DCC) in the following training material and EFIS worksheets.


DCC and Non-Depreciable Assets (ex. Land)

The treatment of non-depreciable assets (ex. land) in PS 3410 is different that what was implemented in the 2010-11 Revised Estimates.

Per the updated standard, capital transfers relating to non-depreciable assets would be recognized in revenue once the asset is acquired (PS 3410, paragraph 27).

The 2010-11 Financial Statement forms have been updated to exclude non-depreciable assets from DCC.

Regulations were updated to include revenues received for land in Accumulated Surplus - Unavailable for Compliance.


ICAO Technical Committee

On July 7, 2011, the Ministry of Education met with an Institute of Chartered Accountants of Ontario (ICAO) Technical Committee to discuss the implementation Government Transfers in the school board sector.

Memorandum 2011:B8 (Implementation of the revised government transfers accounting standard) includes the slides that were shared at the meeting, plus a description of one of the issues encountered.


Government Transfers Implementation

The majority of the Ministry’s implementation plan clearly conforms to the Government Transfers standard. Boards have a liability with respect to past and future

capital transfers for buildings and minor tangible capital assets (TCA). Therefore, PS 3410 can be applied and DCC recorded.

However, the treatment of property tax revenues that were used to fund the construction of depreciable assets (i.e. buildings and building additions) was inconclusive.

The implementation plan was the focus of the training sessions with the boards’ external auditors in early September 2011.

The following slides describe the issue of property tax revenues and provide a solution.


Capital funded through property taxes

Prior to 1998, some boards used property tax revenues to fund the construction of depreciable assets.

Generally, PS 3510 (Tax Revenues) would be used to determine how to account for property tax revenues.

The Province and school boards have a unique set of circumstances whereby the Ministry believes it is appropriate to include these amounts in DCC.

These circumstances were described in detail in memorandum 2011:B8.

The control structure changed significantly such that even pre-1998 assets became the responsibility of the Province.

The financial statements should reflect this.


Capital funded through property taxes (con’t)

From a cost-benefit perspective, it is not reasonable, nor necessarily possible, to calculate capital contributions received through property tax revenue, thus it is not possible to exclude this amount from the opening DCC balance.

In such instances, the standard would generally be applied prospectively; however, the Ministry instructed boards to implement the provisions of PS 3410 retroactively. This was:

To ensure that the Financial Statements are relevant, understandable to the user, and comparable over periods, consistent with PS 1000.24.

To be consistent with the implementation of TCA. Boards have not had taxing power since 1998, so this is a transition issue

only.

In consideration of the above, the Ministry believes it is appropriate to include the opening balance related to property tax revenue contributions in DCC.


Audit Report and Accounting Policy Note

The boards’ 2010-11 Financial Statements will be prepared under a special purpose fair presentation framework.

See sample audit report provided. The financial statements will be prepared in

accordance with the basis of accounting described in Note 1 to financial statements.

See sample Note 1 provided.


Deferred Capital Contributions


Agenda DCC Recap

What goes into DCC? What does not go into DCC?

Opening Balance Adjustment

Sinking Fund Interest

Third Party Contributions

Information Tracking


DCC Recap: What goes into DCC?

Government or non-government capital transfers that are to be used for depreciable assets will be recorded in DCC.

Rationale for government transfers was discussed earlier in the session. Rationale for non-government transfers is explained in the slide deck attached to

Memorandum 2011:B8 (Government Transfers: Implementation Discussion).− These are donations, which are generally non-material amounts.

The funding sources that go into DCC are shown on Schedule 3 (Capital Expenditure Budget. They are:

NPP & GPL Other

GPL Renewal

FDK

Temporary Accommodation

Energy Efficient Schools-Capital

Renewable Energy-Capital

School Renewal

Minor TCA

School Generated Funds


Other


DCC Recap: What goes into DCC (continued)?

The “Other” category includes capital transfers that were not specified on Schedule 3. These amounts come from Schedule 5.1 (Deferred Revenue). They are:

Other Ministry of Education Grants

Other Provincial Grants

Federal Government Grants

Other Third Party Deferred Revenue


DCC Recap: What does not go into DCC?

“Unsupported capital spending” is spending on depreciable TCA that has not been supported with capital contributions.

It equals to the value of the depreciable TCA less the DCC balance.

Examples of unsupported capital spending:

Accumulated surplus used to fund a depreciable capital project Operating grants that are spent on depreciable capital

(Note that the school renewal grant, up to 2.5% of total operating allocation that is used for minor tangible capital assets, and any capitalized interest costs are designated as capital grants.)

Sinking fund interest The resulting shortfall in DCC revenue is managed through a

compliance adjustment.


DCC: Opening Balance Adjustment

The 2010-11 Estimate forms were based on the third Government Transfers Re-exposure Draft.

Between the 2010-11 Estimates and 2010-11 Financial Statements, there were some changes and corrections to the forms because of the release of the Government Transfers standard.

Due to these changes, the unsupported capital spending for September 1, 2010 calculated on the Capital Wrap-Up Template (CWT) was revised.

Boards received a draft revised CWT in mid-May 2011 detailing these changes, and will have received a final version in by the end of the training sessions.

For most boards, this will not impact the receivable from the Province significantly; however, for some boards, it may.


DCC: Opening Balance Adjustment (continued)

Changes/corrections made for the September 1, 2010 unsupported

capital spending calculation:

Excluded from DCC - Sinking fund interest expected to be earned during the life of the sinking funds per the sinking fund agreement.

Excluded from DCC – Capital contributions recognized for the purchase of land.

Excluded from DCC - Amounts committed from accumulated surplus in 2009-10 for capital that were to be spent on TCA by August 31, 2010.

Included in DCC – NPF related to supported capital spending using FDK and $120M Capital funding sources that was mistakenly excluded from DCC in the CWT.


Sinking Fund Interest

The Ministry reviewed the 2010-11 Estimates approach on sinking funds, and determined that the accounting treatment was not in line with PS 3100.13.

Interest earned on sinking funds should be recognized in revenue when earned.

The 2010-11 Financial Statement forms (and 2011-12 Estimates) have been changed to exclude sinking fund interest from DCC.

Interest earnings on the sinking funds will be included in accumulated surplus as internally appropriated.


Sinking Fund Interest (continued)

The compliance shortfall due to the exclusion of sinking fund interest from DCC will be managed from the interest earned by the sinking funds (Schedule 5.5). Sinking fund interest earned in the early years of contributions may not

be enough to cover the compliance shortfall, causing a in year compliance deficit

In later years, the interest earning will exceed the compliance shortfall, causing a in year compliance surplus

Deficits in the early years and surpluses in later years are just timing differences.

As most of the sinking funds have shorter life than that of the assets supported by the sinking funds, at maturity of the sinking fund, there is usually an accumulated surplus attributable to SF interest

This accumulated surplus will be used to cover the compliance shortfall after the sinking fund maturity

Any excess sinking fund earnings can be used for other operating purposes once the requirements to repay the sinking funds are met (on an aggregate basis).


Compliance and PSAB Impact

($)

(years)0

(2.5)

2.5

1.5

Amortization

40

Note: Total contributions of $60 put into DCC, then amortized over 40 years. Yearly SF interest earned recognized in income over 25 years.

25

DCC

SF Interest


DCC: Third Party Contributions

Two new lines were added to determine the portion of the DCC balance that relates to third party (Schedule 5.3, item 2.4) and non-third party capital contributions (Schedule 5.3, item 2.5). Required for Ministry consolidation purposes

Third party amounts are: federal government school generated funds for capital board level donations for capital other third parties amounts specified by the

board


DCC: Information Tracking

If DCC information for assets purchased pre-September 1, 2010 is available on an asset-by-asset basis, boards are encouraged to track the information on an asset-by-asset basis.

Starting September 1, 2010, board are required to track DCC additions, disposals and amortization on an asset-by-asset basis (including third party and non-third party capital contributions).


Accumulated Surplus/(Deficit)


Overview of Changes

CPP and EI Restatement has been removed

New line item 2.8.1, Committed Sinking Fund Interest, has been added

Committed Capital Projects moved from Unavailable for Compliance to Internally Appropriated

New Line 4.7 Revenue Recognized for Land

Line 4.9 from 2009-10 Financial Statements, Portion of Proceeds of Disposition Related to Net Book Value of Disposed Assets,” has been removed


Opening Balance Column

The September 1, 2010 opening balance column will be input based on the 2009-10 Schedule 5 closing balances except for the changes.


Summary of Changes CPP & EI Restatement line has been removed

Transfer to 1.1 total operating accumulated surplus

Committed Sinking Fund Interest Earned New line 2.8.1 Data for this line comes from Schedule 5.5, List of Committed Capital Amounts

Funded by Accumulated Surplus Represents earning on sinking fund assets that will be used to pay off the

associated debt as well as revenues earned to offset the amortization of the unsupported portion of the assets related to the sinking fund debentures.

Committed Capital Projects In 2009-10 was included under Unavailable for Compliance item 4.10 This year amount is line 2.8.2 under internally appropriated Data for this line comes from Schedule 5.5 also The amount is the committed accumulated surplus to support the unsupported

portion of the project and to offset the amortization of the unsupported portion of the asset.


Summary of Changes - Continued

Revenues Recognized for Land

New line 4.7, Revenues Recognized for Land Comes from Schedule 5.6A, Continuity of Revenues Recognized for the

Purchase of Land Schedule 5.6 was added due to a PSAB Government Transfers

Standard (PS3410) The standard allows for DCC relating to the purchase or acquisition of

depreciable assets, this is not the case for non depreciable assets such as land

Prior to this Ministry included land revenues in DCC, however due to the release of the new standard, revenues received in the purchase of land will be excluded from DCC

The opening balance is adjusted to exclude land revenues and this amount is moved into accumulated surplus for compliance on line 4.7 in Schedule 5




Line 4.9, Portion of Proceeds of Disposition Related to Net Book Value of the Disposed Assets) will be transferred to Schedule 5.1, deferred revenue, item 2.25 (School building), item 2.26 (prohibitive to repair) or item 2.27 (other)

Due to the implementation of DCC in 2010-11, the treatment of proceeds of disposition will be different

In 2009-10, only the gain on sale was transferred to deferred revenue on disposal of real property

In 2010-11, the gain and prior capital contributions will be transferred to deferred revenue on disposal of real property

For the restatement of the September 1, 2010 accumulated surplus balance, boards will transfer this amount out of accumulated surplus and into deferred revenue

The assumption under this transaction is that prior disposals were fully contributed (i.e. the DCC balance would have equaled the TCA balance)



Line 4.6 (Debt), 4.7 (Not Permanently Financed Amounts), and 4.8 (Receivable from Province) from 2009-10 are no longer on the schedule, the total of these amounts represents the unsupported debts in the old DCC calculation before the adjustments required to exclude land and sinking fund interest earned from DCC.

This amount is now split into 3 components, under four lines: The adjusted DCC amount – line 4.5 (Net TCA less land)

from Schedule 3C on TCA and line 4.6 (Unsupported Debt at August 31, 2010) from the approved CWT

Line 2.8.1 (Committed Sinking Fund Interest Earned) from Schedule 5.5

Line 4.7 (Revenue Recognize from Land) from Schedule 5.6A


Schedule 5.5 The name of this schedule has been changed to List of Committed Capital Amounts

Funded by Accumulated Surplus.

It is used to track:

Depreciable committed capital projects (same as previous forms) Interest earned on sinking funds (new).

Sinking fund interest earned:

Recognized as revenues, not in DCC

Schedule 5.5 brings the sinking fund interest (earned and to be earned under the debentures agreement) into Available for Compliance over the average remaining service life (RSL) of depreciable TCA as at August 31, 2010

The amount is to cover the amortization of the unsupported portion of the related assets (i.e. the difference between the assets amount and the total sinking fund contributions under the by-laws/debenture agreement)

Boards can modify the average RSL to reflect the RSL of the assets that are supported by the sinking funds.

Once the board meets their contractual sinking fund interest requirements, the excess earnings are unrestricted and made available for compliance.

This is calculated on an aggregate basis for all sinking funds held by the board.


Schedule 5.6A – Land revenues This is a new schedule that tracks details of land revenues

reported in Schedule 5.

These amounts were previously included in DCC (Schedule 5.3), but are now shown in Accumulated Surplus Unavailable for compliance on Schedule 5 at item 4.7.

In-year revenues for current year land expenditures is populated from Schedule 3. Boards need to report the in-year revenues for unsupported past spending on land

Once disposed, the revenues recognized for the disposed asset is removed from this line.

Boards can also commit a portion of its accumulated surplus for land purchase which will increase this line.


Schedule 5.6B – Land deficit

This is a new schedule that tracks the capital deficit on land.

The difference between the book value of land (under TCA and Financial assets, if applicable) and the revenues recognized in Schedule 5.6A equals to the land deficit

This amount will be used in the Capital Analysis Template.


Prior Period Restatements


Prior Year DCC Restatement Prior period comparative numbers are required for the

Statement of Financial Position, Statement of Operations, Statement of Cash Flow and Statement of Change in Net Debt.

With the implementation of DCC as at September 1, 2010, boards will have the prior period comparative DCC figure for the Statement of Financial Position.

For the other three schedules, the 2009-10 DCC amortization (or DCC revenue) is required to restate the comparative numbers.

As this amount was not required for 2009-10 Financial Statements, it will be calculated based on a reasonable assumption to facilitate the required comparative reporting.


Statement of Financial Position: DCC

The 2009-10 column on the Statement of Financial Position will be restated to show the DCC balance at August 31, 2010.

Boards did not have DCC in their 2009-10 Financial Statements, but boards do know the DCC value at September 1, 2010.

To make the restatement at August 31, 2010, boards will move an amount from accumulated surplus to DCC.

For example, assume a board’s DCC balance at August 31/September 1, 2010 is $50M.

$50M will be moved from the A/S to DCC in the 2009-10 column.


Statement of Financial Position: Deferred Revenue

The 2009-10 column on the Statement of Financial Position will be restated to show the deferred revenue (DR) balance at August 31, 2010.

In the 2009-10 Financial Statements, when a board sold real property, only the gain on sale went into deferred revenue.

With the implementation of DCC, the prior capital contributions also go into DR (journal entries shown elsewhere in the slide deck).

In 2009-10, boards recorded this amount in accumulated surplus (A/S) on Schedule 5, item 4.9 (Portion of proceeds of disposition related to the net book value of disposed assets).

It will be assumed that these disposals were depreciable and fully supported by capital contributions*.

This amount will be moved from the A/S to DR in the 2009-10 column.

* Sector-wide, this is a reasonable assumption. Please call the Ministry for guidance if this is a materially different case for your board.


Statement of Financial Position: Deferred Revenue

For example, assume amount on Schedule 5, item 4.9 in 2009-10 equalled $3M.

$3M will be moved from the A/S to DR in the 2009-10 column.

Consolidated Statement of Financial Position (simplified)

(restated for DCC and Deferred revenue)

2010-11 2009-10 2009-10

Restated Prior to Restatement

Financial Assets $x $52,000,000 $52,000,000

DCC $x $50,000,000 $0

Deferred Revenue $x $7,000,000 $4,000,000

Other Liabilities $x $3,000,000 $3,000,000

Non-Financial Assets

$x $52,000,000 $52,000,000

Accumulated Surplus

$x $44,000,000 $97,000,000


Prior Year DCC Restatement Calculation

The DCC continuity is as follows:

DCC at Sept. 1, 2009

+ Revenue from Capital Wrap-Up (Note 1)

- Disposals during 2009-10

- DCC revenue during 2009-10

= DCC at Aug. 31, 2010

Note 1: Since the capital wrap-up happened at August 31, 2010, this amount should not be included in the September 1, 2009 balance. It includes the additions made during 2009-10.


Calculation of Prior Period DCC Revenues

For 2009-10, boards know their TCA amortization. Boards can also estimate the portion of the TCA that was supported by capital

contributions (DCC) in 2009-10. To do this, the board would divide the September 1, 2010 DCC balance by the

September 1, 2010 non-land TCA balance. The board would then multiply this percentage by the 2009-10 TCA amortization to

estimate the 2009-10 DCC amortization.

For example, assume the following information for a board: 2009-10 TCA amortization = $2,062,000 September 1, 2010 TCA balance (excluding land) = $51,500,000 September 1, 2010 DCC balance = $50,000,000

The percentage of TCA supported by DCC is calculated as $50,000,000/$51,500,000 = 97%.

The estimated DCC amortization for 2009-10 is calculated as $2,062,000 x 97% = $2,000,000. This revenue will be included in the restated Statement of Operations.


Calculation of Prior Period DCC Revenues

Assume this additional information: Revenue from Capital Wrap-Up in 2009-10 = $25,000,000 Disposals in 2009-10 = $3,000,000

The amount received for the Capital Wrap-Up in 2009-10 was a capital contribution representing current and prior period contributions; therefore, the amount was an addition to DCC in year of $25M. This revenue will be restated as an exclusion from the Statement of

Operations since it will be in DCC. Depreciable real property disposed during the year totalled $3M, and it will

be assumed that these disposals were fully supported by DCC*. That means that the board disposed of $3M of DCC in the year. The $3M DCC reduction caused an increase of $3M to deferred

revenue. (The increase to DR has been explained on slide 44.)

* Sector-wide, this is a reasonable assumption. Please call the Ministry for guidance if this is a materially different case for your board.


Prior Year DCC Restatement Calculation

Using the example in the previous slides, one can extrapolate the opening DCC balance at September 1, 2009:

DCC at Sept. 1, 2009

= DCC at Aug. 31, 2010

- Revenue from Capital Wrap-Up (assume $25M)

+ Disposals during 2009-10

+ DCC revenue during 2009-10

= $50M - $25M + $3M+ $2M

= $30M

Therefore, the change in DCC from Sept. 1, 2009 to Aug. 31, 2010 is $20M. This will be used in the Statement of Cash Flow.


Statement of Operations Comparatives The 2009-10 column on the Statement of Operations will be restated to

include the DCC revenue during 2009-10, and to exclude the revenues that were recognized for depreciable capital contributions.

To make the restatement at August 31, 2010, boards will increase their DCC revenues, as calculated on the previous slide (ex. $2M).

Boards will decrease their Provincial grants by the amount of their 2009-10 capital contributions (ex. $25M).

Consolidated Statement of Operations (simplified)

2010-11 2009-10 2009-10


DCC Revenues $x $2,000,000 $0

Provincial Grants $x $175,000,000 $200,000,000

Other Revenues $x $10,000,000 $10,000,000

Expenses $x $209,000,000 $209,000,000

Annual Surplus/(Deficit) $x ($22,000,000) $1,000,000


Statement of Cash Flow Comparatives

The 2009-10 column on the Statement of Cash Flow will be restated.

To make the restatement at August 31, 2010, boards will:

Adjust annual surplus/deficit as calculated previously. Increase the DCC line by the Capital Wrap-Up revenue ($25M), and decrease the

DCC line by the disposals ($3M) and DCC revenue ($2M), for a net increase of $20M.

Increase the deferred revenue line by the disposals ($3M). Note that the restated change in cash remains the same.

Consolidated Statement of Cash Flow (simplified)

2010-11 2009-10 2009-10


Annual Surplus (Deficit) $x ($22,000,000) $1,000,000

DCC $x $20,000,000 $0

Deferred Revenue $x $6,000,000 $3,000,000

All Other Categories $x ($5,000,000) ($5,000,000)

Change in Cash $x ($1,000,000) ($1,000,000)


Statement of Change in Net Debt The 2009-10 column on the Statement of Change in Net Debt will be

restated.

To make the restatement at August 31, 2010, boards will:

Adjust annual surplus/deficit as calculated previously.

Consolidated Statement of Change in Net Debt (simplified)

2010-11 2009-10 2009-10


Annual Surplus (Deficit) $x ($22,000,000) $1,000,000

TCA Activity $x ($30,000,000) ($30,000,000)

Other Non-Financial Asset Activity

$x $0 $0

(Increase) Decrease in Net Debt

$x ($52,000,000) ($29,000,000)




Proceeds of Disposition (POD) Due to the inclusion of DCC in the 2010-11 Financial Statements, the treatment of

proceeds of disposition of tangible capital assets will change.

In 2009-10, portion of the capital contribution related to the net book value of the asset disposed is already recognized and included in the accumulated surplus; Only the gain on sale was recognized in year as revenue or transferred to deferred revenue

In 2010-11, portion of the capital contribution related to the net book value of the asset disposed was restated and reported as deferred revenue. For all disposals after September 1, 2010 both the gain and net book value of asset disposed will be recognized as revenue or transferred to deferred revenue

The treatment will depend on whether the DCC information is available for the asset being disposed.

Assets purchased before September 1, 2010 may not have asset-specific DCC information available, since DCC prior to this date was calculated on an aggregate basis.

Assets purchased on or after September 1, 2010 will have asset-specific DCC information available, since boards are required to track this information starting in 2010-11.


POD Journal Entries - Overview The following slides will present the respective proceeds

of disposition journal entries for:

Unrestricted assets (mTCA) – pooled Unrestricted assets (mTCA) – non-pooled Restricted depreciable assets (building) Restricted non-depreciable assets (land)

Each scenario will be presented based on DCC information availability (purchased before or after September 1, 2010) and sold at a gain or loss


POD: mTCA mTCA are assets that are not real property (land and buildings), and

generally include pooled and non-pooled assets.

The proceeds of disposition from disposal of mTCA are not restricted by regulation and will be recognized as in year revenue.

Pooled Assets

Examples include Equipment 5 and 10 yrs, computers, furniture.

Pooled assets have a deemed disposal at the end of their useful life

Individual disposals are not generally recorded.

If disposed of before the asset has reached the end of its useful life, the proceeds (if any) are to be recorded as revenue.

The entry would be:

Dr: Cash X

Cr: Revenue X


POD: mTCA Non-Pooled Assets

Equipment 15 years and vehicles are recorded on an asset by asset basis

The journal entries for non-pooled mTCA assets are shown on the following pages.

Non-pooled mTCA purchased post-Sept. 1, 2010 (Gain) Non-pooled mTCA purchased post-Sept. 1, 2010 (Loss) Non-pooled mTCA purchased pre-Sept. 1, 2010 (Gain) Non-pooled mTCA purchased pre-Sept. 1, 2010 (Loss)


Non-pooled mTCA purchased post-Sept. 1, 2010 (Gain)

Boards are required to track DCC information after September 1, 2010 on an asset by asset basis. As a result, boards should have DCC information related to each individual asset.

Assume that mTCA was purchased after September 1, 2010, and is now being sold at a later date. At the date of disposition, the following information is available. NBV = 8 / DCC = 6 / POD = 9

JE 1: To remove the NBV of the asset from the books.

Dr: Cash 9

Cr: NBV 8

Cr: Gain 1

The revenue is increased by the gain of $1.

JE 2: To remove the DCC from the books.

Dr: DCC 6

Cr: Revenue 6 The net impact to accumulated surplus is an increase of $7. This includes $6

revenue from prior capital contributions plus the gain of $1. The difference ($2) between the net impact to accumulated surplus ($7) and the

actual cash from the disposal ($9) is the unsupported capital spending for the asset which equals to the NBV less the DCC.


Non-pooled mTCA purchased post-Sept. 1, 2010 (Loss)

Assume that mTCA mentioned above is now sold at a loss.

NBV = 8 / DCC = 6 / POD = 7JE 1: To remove the NBV of the asset from the books.

Dr: Cash 7

Dr: Loss on disposal 1

Cr: NBV 8

A loss of $1 is recognized in the Statement of Operations.


Dr: DCC 6

Cr: Revenue 6

The net impact to accumulated surplus is $5, which includes $6 revenue from prior capital contributions less the loss of $1.

The difference ($2) between the net impact on accumulated surplus ($5) and the actual cash from the disposal ($7) is the unsupported portion of the asset which equals to the NBV less the DCC.


Non-pooled mTCA purchased pre-Sept. 1, 2010 (Gain)

DCC balance for assets purchased before September 1, 2010 is set up on an aggregate basis

Assume unsupported capital spending as of September 1, 2010 is associated only with buildings and land. As a result, all the mTCA purchased pre-September 1, 2010 is fully supported.

Assume an mTCA asset purchased pre-September 1, 2010 was disposed in 2010-11 and the information available is

NBV = 3 / DCC=NBV=3 / POD = 4


The entries for the disposition of asset 1 would be


Dr: Cash 4

Cr: NBV 3

Cr: Gain 1

A gain of $1 is recognized in the Statement of Operations.


Dr: DCC 3

Cr: Revenue 3

The net impact to accumulated surplus is now $4 This includes $3 revenue from prior capital contributions plus the gain of $1 There is no difference between the net impact to accumulated surplus and

the actual POD as DCC is assumed to be the same as NBV disposed, which means there is no unsupported spending for asset 1

Non-pooled mTCA purchased pre-Sept. 1, 2010 (Gain)


Non-pooled mTCA purchased pre-Sept. 1, 2010 (Loss)

Assume the asset is now sold at a loss. Information available is:

NBV = 3 / DCC=NBV=3 / POD = 2

The entries for the disposition of asset 1 would be


Dr: Cash 2

Dr: Loss 1

Cr: NBV 3



Dr: DCC 3

Cr: Revenue 3 The net impact to accumulated surplus is now $2. This includes $3 revenue from prior capital contributions less the loss of $1. There is no difference between the net impact to accumulated surplus and the actual

POD as DCC is assumed to be the same as NBV disposed, which means there is no unsupported spending for asset 1.


Restricted Depreciable Assets (buildings) - Overview

Proceeds of dispositions (POD) from building disposal are restricted under O. Reg. 193/10. All proceeds including gain and the portion related to net book value disposed need to be deferred for future capital use.

If a building is disposed of at a loss, the loss on disposal would be recognized as an in-year expense in the period in which they occur.

The same amount of the loss needs to be recognized as DCC transferred to revenue instead of deferred revenue.

The rationale is that the amount to be spent on a future asset purchase should take into account the loss incurred, otherwise this amount would be inflated.

The net impact on Statement of Operations is zero as the loss equals to the revenue recognized from DCC disposed.


Building purchased post-Sept. 1, 2010 (Sold at gain)

For building assets purchased after September 1, 2010, boards are required to track the DCC asset by asset; boards should have specific DCC information related to individual asset

Assume that a building was purchased after September 1, 2010, and is now being sold at a later date. The following information is available. NBV = 25 / DCC = 24 / POD = 35


Dr: Cash 35

Cr: NBV 25

Cr: Deferred revenue 10

The deferred revenue is increased by the gain of $10.


Dr: DCC 24

Cr: Deferred revenue 24 The net impact to deferred revenue is $34. This includes $24 from prior capital contributions and

the gain of $10. On a future asset purchase, $34 will be available as a capital contribution (i.e. to transfer to DCC). The difference ($1) between the net impact to deferred revenue ($34) and the actual cash from the

disposal ($35) is the unsupported capital spending ($1 = NBV $25 less DCC $24) for the asset. If the unsupported capital spending was funded by the unsupported debt, the $1 would be available

to pay down that debt. If the unsupported capital spending was funded by the associated A/S in committed capital, it would

be released to ‘available for compliance’.


Building purchased post-Sept. 1, 2010 (Sold at loss) Assume the building mentioned above is now sold at a loss.

NBV = 25 / DCC = 24 / POD = 18JE 1: To remove the NBV of the asset from the books.

Dr: Cash 18


Cr: NBV 25


JE2: To recognize revenue from DCC for the same amount of loss incurred.

Dr. DCC 7

Cr: Revenue 7

JE 3: To remove the remaining DCC balance from the books.

Dr: DCC 17


The net impact to deferred revenue is $17. This is the prior capital contribution of $24 less the loss of $7.

On a future asset purchase, $17 will be available as a capital contribution (i.e. to transfer to DCC).

The difference ($1) between the net impact to deferred revenue ($17) and the actual cash from the disposal ($18) is the unsupported capital spending ($1 = NBV $25 less DCC $24) for the asset.


Building purchased pre-Sept. 1, 2010 - overview

DCC opening balance for September 1, 2010 will be set up on an aggregate basis.

If a board has DCC information for specific assets purchased before September 1, 2010 (for example, admin buildings likely have $0 DCC), the board should use that amount when recording the asset disposal.

The journal entries will be the same for assets purchased after September 1, 2010.

If a board does not have this information, the board will assume that the DCC of the buildings sold first equal to the net book value disposed until the aggregate DCC balance is depleted.

Approach assumes that buildings sold first are fully supported, and last buildings sold would be partially unsupported assets when disposed.


Building purchased pre-Sept. 1, 2010 Does not create a material misrepresentation. The reasons include:

Sector wide DCC has been reported as 97% of the TCA value. Thus, very small unsupported TCA.

Boards can use POD deferred revenue to reduce or even close the TCA-DCC gap. Boards will need ministry approval to do so. The journal entries will be Dr: POD Deferred Revenue xx

Cr: DCC xx The sale of last buildings in sector not likely to happen anytime in the

foreseeable future, as this would require all or most of the 5000 schools as of September 1, 2010 to have been disposed.

Many of the buildings in the sector have been around since the early part of the last century. These buildings are likely to have been fully depreciated before disposal, thus eliminating the issue altogether.

Any betterments on these buildings after September 1, 2010 will be tracked; therefore, this portion of the DCC will be known.


Building purchased pre-Sept. 1, 2010 (Sold at gain) Assume that building 1 was purchased before September 1, 2010, and is now being sold during 2010-11 for $45. The following information is available.

Based on the approach discussed, the journal entries will be:


Dr: Cash 45

Cr: NBV 30




Dr: DCC 30

Cr: Deferred revenue 30 The net impact to deferred revenue is $45. This includes $30 from prior capital

contributions plus the gain of $15. On a future asset purchase, $45 will be available as a capital contribution (i.e. to

transfer to DCC). The net impact to deferred revenue is the same as the actual proceeds of disposition

as it is assumed that the asset is fully supported

Building 1 Building 2 TotalNBV 30 70 100DCC n/a n/a 97


Building purchased pre-Sept. 1, 2010 (Sold at loss) Assume now the building 1 was sold at a loss for $25.

Building 1 Building 2 TotalNBV 30 70 100DCC n/a n/a 97

The journal entries will be


Dr: Cash 25


Cr: NBV 30


JE2: To recognize revenue from DCC for the same amount of loss incurred.

Dr. DCC 5

Cr: Revenue 5

JE 3: To remove the remaining DCC balance from the books

Dr: DCC 25

Cr: Deferred revenue 25 The net impact to deferred revenue is $25. This includes $30 from prior capital contributions less

the loss of $5. On a future asset purchase, this $25 will be available as a capital contribution (i.e. to transfer to

DCC). There is no difference between impact to deferred revenue and actual cash proceeds as it is

assumed there is no unsupported capital spending for this asset.


POD: Land – Revenue Recovery Similar to buildings, proceeds on the sale of land are restricted under O. Reg. 193/10.

All proceeds including gain and the portion related to net book value disposed need to be deferred for future capital use

Unlike building, capital contributions for the purchase of land are not put into DCC as per PS 3410. Instead, they were recognized as revenue in prior years and included in the accumulated surplus: This amount is referred to as “revenues recognized for land purchase”. It represents the book value of the land less the unsupported capital spending. It is tracked in accumulated surplus - unavailable for compliance Boards generally have asset-by-asset information on the revenues recognized for

each land purchase To allow for the proceeds on sale to flow back to deferred revenue, boards will record

a revenue recovery to reverse the revenue recognized and defer for future use:

Dr: Revenue recovery xx

Cr: Deferred revenue xx If the land purchase was funded by Education Development Charges (EDC), the

deferred revenue will be EDC deferred revenue If the land purchase was funded by other source (provincial grant or third party

revenue), the deferred revenue will be POD deferred revenue This revenue recovery will generate an in-year PSAB deficit. However, it will be

excluded from compliance


Land (EDC) sold at gain Assume the following information on a land disposal.

BV = 50 Revenues recognized for land purchase (EDC) = 49 POD = 55

JE 1: To remove the BV of the asset from the books.

Dr: Cash 55

Cr: BV 50

Cr: Deferred revenue (POD) 5


JE 2: To recover the revenue recognized previously.

Dr: Revenue recovery 49

Cr: Deferred revenue (EDC) 49 The net impact to deferred revenue is $54. This includes $49 from prior capital contributions plus the gain of $5. On a future EDC asset purchase, this $54 will be available. The difference ($1) between the impact to deferred revenue ($54) and the actual POD

($55) is the unsupported capital spending, which equals to net book value ($50) less the Revenue recognized for land purchase ($49).


Land (Non-EDC) sold at gain Assume the following information on a land disposal.

BV = 50 Revenues recognized for land purchase (Non-EDC) = 49 POD = 55


Dr: Cash 55

Cr: BV 50





Cr: Deferred revenue (POD) 49 The net impact to deferred revenue is $54. This includes $49 from prior capital contributions plus the gain of $5. On a future asset purchase, this $54 will be available as a capital contribution (i.e. to

transfer to DCC). The difference ($1) between the impact to deferred revenue ($54) and the actual POD

($55) is the unsupported capital spending, which equals to net book value ($50) less the Revenue recognized for land purchase ($49).


Land (EDC) sold at loss Assume the following information on a land disposal.

BV = 50 Revenues recognized for land purchase (EDC) = 49 POD = 30


Dr: Cash 30


Cr: BV 50




Cr: Deferred revenue (EDC) 29

Cr: Revenue 20 The net impact to deferred revenue is that it now contains $29. This includes $49 from prior capital contributions less the loss of $20. On a future EDC asset purchase, only this $29 will be available. The difference ($1) between the impact to deferred revenue ($29) and the actual POD ($30) is

the unsupported capital spending, which equals to the net book value ($50) less the revenues recognized for land purchase ($49)


Land (Non-EDC) sold at loss Assume the following information on a land disposal.

BV = 50 Revenues recognized for land purchase (Non-EDC) = 49 POD = 30


Dr: Cash 30


Cr: BV 50





Cr: Revenue 20 The net impact to deferred revenue is that it now contains $29. This includes $49 from prior capital contributions less the loss of $20. On a future asset purchase, this $29 will be available as a capital contribution (i.e. to transfer to

DCC). The difference ($1) between the impact to deferred revenue ($29) and the actual POD ($30) is

the unsupported capital spending, which equals to the net book value ($50) less the revenues recognized for land purchase ($49)




Assets Held for Sale (AHFS) According to PS1200.051, an asset held for sale should be recognized as a

financial asset when all of the following criteria are met:

a) prior to the date of the financial statements, the government body, management board or an individual with the appropriate level of authority commits the government to selling the asset;

b) the asset is in a condition to be sold;c) the asset is publicly seen to be for sale;d) there is an active market for the asset;e) there is a plan in place for selling the asset; andf) it is reasonably anticipated that the sale to a purchaser external to the

government reporting entity will be completed within one year of the financial statement date.

Assets that meet the criteria above would be moved from TCA to Financial Assets (FA) on the Statement of Financial Position.

Financial Assets are subject to valuation allowances such that the assets are reflected at their net recoverable or other appropriate value [PS 1200.049]. TCA may be written down upon transfer to FA; not allowed to write-up

TCA.


Impact: AHFS

TCA that are in the process of being sold, but that are not yet sold at the Financial Statement date, would be transferred to FA.

TCA that go on the market and are sold within the fiscal year would be recorded as regular TCA disposal instead of FA.

These entries would generally apply to land and buildings, since minor TCA is likely to be sold in the year, or is disposed of after being fully depreciated.

Once an asset is transferred to FA, no capitalized additions/betterments will be reported; all costs incurred will be considered expenses and reported on the Income Statement.

Journal entries on the following slides will illustrate the sale of buildings and land, at both a gain and a loss.


AHFS: Building (Period 1) – No write-down A board decides to sell a building in fiscal period 1, but actually makes the sale in

fiscal period 2. Assume the following information: NBV = 80 DCC = 78 Market value in period 1 = 90

In period 1:

JE 1: To record valuation allowance and transfer TCA to financial asset. As the net recoverable value (market value) is higher than the book value, no write down is necessary.

Dr: Financial Asset 80

Cr: NBV 80

JE2: To remove the associated DCC balance

Dr: DCC 78

Cr: Deferred Revenue 78 The net impact to deferred revenue is $78, which equals to the supported capital

spending (DCC balance $78) The corresponding asset is not the cash, instead, it is the financial asset.


AHFS: Building (Period 1) – Write-down A board decides to sell a building in fiscal period 1, but actually makes the sale in fiscal period 2.

Assume the following information: NBV = 80 DCC = 78 Market value in period 1 = 50

In period 1:

JE 1: To record valuation allowance and transfer TCA to financial asset

Dr: Loss on write-down 30


Cr: NBV 80

JE 2: To recognize DCC revenue related to the loss on write down.

Dr: DCC 30

Cr: Revenue 30

JE3: To remove the remaining DCC balance

Dr: DCC 48

Cr: Deferred Revenue 48 The net impact to deferred revenue is $48, which equals to the supported capital spending (DCC

balance $78) less the write-down ($30) The corresponding asset is not the cash, instead, it is the financial asset. The net impact on in-year surplus/deficit is zero as the DCC revenue equals to write-down


AHFS: Building (Period 2) – Sold at a gain Now assume the above mentioned asset is sold at a gain in period 2. The following

information is available: NBV = 80 DCC = 78 Market value in period 1 = 50 Actual POD in period 2 = 90

In period 2:

JE 1: To remove the financial asset from the books and record gain.

Dr: Cash 90

Cr: Financial Asset 50

Cr: Deferred revenue 40 The net impact to deferred revenue in this period is $40. The net impact to deferred

revenue recorded in period 1 was $48. Total net impact to deferred revenue is $88. This includes $78 from prior capital contributions plus the gain of $40 in period 2 less

the write-down of $30 in period 1. On a future asset purchase, this $88 will be available as a capital contribution (i.e. to

transfer to DCC).


AHFS: Building (Period 2) – Sold at a loss Now assume the above mentioned asset is sold at a loss in period 2. The following information is

available: NBV = 80 DCC = 78 Market value in period 1 = 50 Actual POD in period 2 = 35

In period 2:

JE 1: To remove the financial asset from the books and record loss.

Dr: Cash 35

Dr: Loss 15


Dr: Deferred revenue 15

Cr: Revenue 15 The net impact to deferred revenue in this period is ($15). The net impact to deferred revenue

recorded in period 1 was $48. Total net impact to deferred revenue is $33. This includes $78 from prior capital contributions less the write down of $30 in period 1 and less

the loss of $15 incurred in period 2. On a future asset purchase, this $33 will be available as a capital contribution (i.e. to transfer to

DCC). The net impact on surplus/deficit is zero as the loss equals to DCC revenue.


AHFS: Land (Period 1) – No write-down Similar to building, if a land meets the criteria to be classified as asset held

for sale, the board needs to transfer the land to AHFS at the end of accounting period 1.

Assume a board decides to sell land in fiscal period 1, but actually makes the sale in fiscal period 2. The following information is available:

BV = 80 Revenues recognized for land purchase = 78 Market value in period 1 = 90

In period 1:

JE 1: To record valuation allowance and transfer TCA to financial asset.


Cr: BV 80

Since the net recoverable value is higher than book value, no write-down is needed.


AHFS: Land (Period 1) – Write-down Now assume the net recoverable value is lower than the book value

in period 1. The following information is available:

BV = 80 Revenues recognized for land purchase = 78 Market value in period 1 = 50

In period 1:

JE 1: To record valuation allowance and transfer TCA to financial asset.

Dr: Loss on write-down 30


Cr: BV 80

The write-down is $30 ($80 BV less $50 market value).

The impact to surplus/deficit is $30.


AHFS: Land (Period 2) – Sold at a GainAssume the board disposed the above asset in period 2. The following information is available

BV = 80 Revenues recognized for land purchase = 78 Market value in period 1 = 50 Actual POD in period 2 = 90

In period 2:

JE 1: To remove the financial asset from the books and record gain.

Dr: Cash 90



JE 2: To recover revenue recognized before the future capital use



JE 3: To recognize deferred revenue related to the loss on write-down in period 1.

Dr: Deferred Revenue 30

Cr: Revenue (equals to loss on write-down in period 1) 30 The net impact to deferred revenue is $88. This includes $78 from prior capital contributions plus the gain

of $40 less the write down of $30. On a future asset purchase, this $88 will be available. The net impact on surplus/deficit is ($48) for period 2, which includes the recovery of prior capital

contribution ($78) less the loss recognized into revenue for $30 (from period 1).


AHFS: Land (Period 2) – Sold at a LossAssume the AHFS is disposed at a loss in period 2. The following information is available:

BV = 80 Revenues recognized for land purchase = 78 Market value in period 1 = 50 Actual POD in period 2 = 15

In period 2:

JE 1: To remove the financial asset from the books and record loss.

Dr: Cash 15



JE 2: To recover revenue recognized before for future capital use



JE 3: To recognize deferred revenue related to the loss on write-down in period 1 and the loss on disposal in period 2.

Dr: Deferred Revenue 65

Cr: Revenue (equals to loss on write-down) 30

Cr: Revenue (equals to loss on disposal) 35 The net impact to deferred revenue is $13. This includes $78 from prior capital contributions less the loss

on write-down recorded in period 1 of $30 and a loss on disposal of financial asset recorded in period 2 of $35.

On a future asset purchase, this $13 will be available.


Asset Upload File


Overview of Changes

No change to the structure/columns of the asset upload file

Boards can no longer make adjustments to opening gross book value and opening accumulated amortization balances

5 New Asset Classes added for the Assets Held For Sale

Assets being transferred from TCA to AHFS will be mapped into Schedule 3C for any in-year activities prior to the transfer and into Schedule 3D for the closing balances


Adjustments

Boards are no longer able to make adjustments to Opening Gross Book Value and Opening Accumulated Amortization Balances

Any adjustments should go through the in year additions/amortization/write down

Implication is that there will be no prior period restatement related to TCA anymore

These two columns are still kept in the asset upload file but boards should enter “0” for these two columns in order to avoid file rejection


New Asset Classes

EFIS forms have changed to accommodate the requirements to report asset held for sale (AHFS)

A new schedule 3D is added to capture the AHFS information

Five new asset classes are added in the asset upload file:

40H = Building 40 Held for Sale 20H = Building 20 Held for Sale LAH = Land Held for Sale LIH = Land Improvement Held for Sale PRH = Building 40 Permanently Removed from Service Held for

Sale These asset classes are correspondent to the existing land and

building asset classes



Only these assets that are in the process of being sold, but that are not yet sold at the Financial Statement date, would be classified and transferred to AHFS

TCA that go on the market and are sold within the fiscal year would be recorded as regular TCA disposal instead of AHFS

Asset is only transferred to financial asset at the end of the accounting period

Any activities before the transfer is still reported as TCA activities

Example:

An asset met the criteria to be classified as AHFS in December. The asset is not sold on August 31

From September to December the asset is still amortized. Before the transfer from TCA to AHFS, a write-down is recorded if required

Impact - The amortization and write down will be treated as TCA activities and reported in Schedule 3C; any betterments done will also be considered as TCA transactions

The ending balance after the amortization and write down will be transferred to AHFS and reported in Schedule 3D


Reporting of AHFS in Asset Upload File

If an asset is newly classified as AHFS, report the asset similar to regular TCA except that report the asset class as one of the 5 AHFS classes

All the in-year activity (addition/amortization, if there is any), no matter what asset class, will be mapped into Schedule 3C as TCA activities

Board needs to enter the total transfer of the ending balance in Transfer to Asset Held for Sale Column in Schedule 3C

Only the ending balance of TCA asset classes will be mapped into the Closing Balance from Asset Upload Data in Schedule 3C

That total ending balance will be checked against calculated ending balance (Closing Balance August 31, 2011 column) based on information reported in Schedule 3C

In the subsequent year, this asset will be removed from asset upload file and reported directly in Schedule 3D

Any disposal of assets held for sale and proceeds from disposal should be reported in Schedule 3D in the subsequent years


Schedule 3C - ExcerptRELATIONSHIP BETWEEN EXCEL/PIPE DELIMITED FILE AND SCHEDULE 3C

Gross Book ValueBalance at September 1,

2010Transfers Between

Asset Class*Additions

September 1, 2010 to August

31, 2011

Disposals September 1, 2010 to August 31, 2011

Transfer to AHFS

Land & Land Improvements with Infinite Lives

PRE-POPULATED FROM 0910 FS CLOSING

INPUT

LAN_GBV_ADD Col

15+LAH_GBV_ADD Col 15

LAN_GBV_DISP Col 19+LAH_GBV_DISP Col

19

Land Held for Sale Notes

Land Improvements PRE-POPULATED FROM 0910 FS CLOSING

INPUT

LIM_GBV_ADD Col

15+LIH_GBV_ADD Col 15

LIM_GBV_DISP Col 19+LIH_GBV_DISP Col

19

INPUT

Land Improvements Held for Sale Notes

Buildings (40 Years) PRE-POPULATED FROM 0910 FS CLOSING

INPUT

B40_GBV_ADD Col

15+40H_GBV_ADD Col 15

B40_GBV_DISP Col 19+40H_GBV_DISP Col

19

INPUT

Buildings Held for Sale (40 Years) Notes

Other Buildings (20 Years) PRE-POPULATED FROM 0910 FS CLOSING

INPUT

B20_GBV_ADD Col

15+20H_GBV_ADD Col 15

B20_GBV_DISP Col 19+B20_GBV_DISP Col

19

INPUT

Buildings Held for Sale (20 Years) Notes


Schedule 3DSchedule 3D - Financial Asset Continuity

Opening balance at September

1, 2010In-year

additions In-year disposals

Closing balance at August 31,

2011 = From Asset Upload

File = Transfer Column Proceeds of Disposition

Gain/Loss on Disposal = Proceeds - Disposals

LOCKED

FROM SCH 3C

TRANSFER COL INPUT CALCULATED INPUT CALCULATED

LOCKED

FROM SCH 3C


LOCKED

FROM SCH 3C


LOCKED

FROM SCH 3C


LOCKED

FROM SCH 3C



Notes to theFinancial Statements


Notes to the Financial Statements

Sample Independent Auditor’s Report Updated

Note 1a: Significant Accounting Policies-Basis of Accounting Updated

Note 1h: Significant Accounting Policies-Tangible Capital Assets Updated

Note 1i: Significant Accounting Policies-Government Transfers Updated

Note 2: Change in Accounting Policy Updated

Note 4: Accounts Receivable – Government of Ontario Updated

Note 5: Assets Held for Sale New

Note 6: Deferred Revenue Updated

Note 7: Deferred Capital Contributions New

Note 14: Tangible Capital Assets Updated

Note 15: Accumulated Surplus Updated

Note 20: Budget Data Updated

Note 22: Repayment of “55 School Board Trust” Funding Added Back


Audit Report and Basis of Accounting Note

Sample Independent Auditor’s Report

and

Note 1a (Significant Accounting Policies – Basis of Accounting)

Discussed in an earlier presentation called “Accounting Standard: Government Transfers”.


Note 1h: Significant accounting policies

Tangible Capital Assets (TCA)

Updated note. Added explanation on assets held for sale.

Not amortized. Recorded at lower of carrying value and

estimated net realizable value.


Note 1i: Significant accounting policies

Government Transfers

Updated note. Added explanation on government capital

transfers that meet the definition of a liability. Referred to as DCC. Recognized into revenue as the liability is

extinguished over the useful life of the asset.


Note 2 - Change in Accounting Policy

Updated note.

First year of implementation of PS 3410 Government Transfers

Implemented as described in Note 1a. Retroactively with prior periods restated.

The approach to establish the opening balance

Value of depreciable TCA less the unsupported capital debt at August 31, 2010.


Note 2 - Change in Accounting Policy continued

The impact on the prior period Statement of Financial Position and Statement of Operations

Restatement of Accumulated Surplus – Deduct amount recorded as DCC.

Restatement of Annual Surplus/Deficit – Add DCC recognized into revenue and deduct in-year provincial capital contributions received.


Note 2 - Change in Accounting Policy continued

The impact on the current period Statement of Operations

Starting with Annual Surplus/Deficit as per prior year policy – Add DCC recognized into revenue and deduct in-year provincial capital contributions received at arrive at annual surplus/deficit as currently reported.


Note 4 – Accounts Receivable – Government of Ontario

Updated note.

Receivable is adjusted to reflect in-year capital grants, not just the initial capital wrap-up amount.


Note 5 – Assets Held for Sale

New note.

Denotes the value of land and buildings recorded as assets held for sale in the period.

Shows the value of assets held for sale at the beginning of the period that were sold.

Proceeds, carrying value, gain/loss. Gains on assets restricted under Ontario

Regulation 193/10 are deferred for future capital purchases.


Note 6 – Deferred Revenue

Updated note.

Added a column for transfers to deferred capital contributions.


Note 7 – Deferred Capital Contributions

New note.

Includes explanation on government capital transfers that meet the definition of a liability.

Referred to as DCC. Recognized into revenue as the liability is

extinguished over the useful life of the asset. A continuity table in included.


Note 14 – Tangible Capital Assets

Updated note.

Added columns under the cost and accumulated amortization sections for transfer to assets held for sale.


Note 15 – Accumulated Surplus

Updated note.

This note is optional as it is not required under PSAB.

Disclose components of accumulated surplus

Invested in non-depreciable tangible capital assets *new* Employee future benefits to be covered in the future Designated for future use by board motion Other

Boards may also disclose detail of the amount restricted by board motion

Sick leave Retirement gratuities Amounts restricted for future use on capital expenditures


Note 20 – Budget Data

The components of DCC revenue at financial statements are different from the original budget because the budget was prepared based on the third re-exposure draft of the government transfers standard and the financial statements were prepared based on the final standard.

Other changes include the treatment of sinking fund interest.

The Statement of Operations is restated in order to reflect the same basis of accounting in the budget and actuals.

As boards budget only the Statement of Operations, the budget figures in the Statement of Change in Net Debt have not been provided.


Note 22: Repayment of “55 School Board Trust” Funding

This note was erroneously deleted in the 2009-10 financial statement sample notes.

It has been added back.


Form Changes


Section 1

OMERS contribution supplement is a new allocation at line 1.19.1

Divided into 2 pages:

Section 1A –

− Show operating and capital allocation separately

− Show revenues on Schedule 9 at line 1.81 and 1.82

− Show allocation amounts transfer to deferred revenues at line 1.84

− Show allocation amounts transfer to deferred capital contribution at line 1.85

− Show the operating allocation to be used for compliance allocation at line 1.92

Section 1B –

− Show monthly grant payment base at line 1.80

− Show non-monthly grant payment amount at lines 1.70 to 1.73), e.g. OFA loan payment and 55 school Boards Trust payment.

Documents

2010-11 Financial Statements Changes Information Session for School Boards and External Auditors Financial Analysis and Accountability Branch Fall 2011