GFOA November 5, 2005

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GFOA November 5, 2005

• Someone has issues with PSAB?

2
A Useful Starting Point

• Problems are the price of progress. Dont bring
  me anything but trouble. Good news weakens me.
  
• Charles F. Kettering

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Two new Troubles (for now)

• Funds and Reserves
• Accounting for Tangible Capital Assets
• A new Reporting Model
• Implementation Issues

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Funds and Reserves

• Final Handbook Section ( PSG-4) approved March
  2004
• Reason for project
• confusion expressed by jurisdictions regarding
  presentation
• to clarify existing standards as to whether these
  funds can be displayed on the statement of
  financial position

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Funds and Reserves

• Applies to federal, provincial and territorial
  governments
• Does not apply to funds and reserves that are
  externally restricted. External restrictions are
  addressed in RESTRICTED ASSETS AND REVENUES,
  Section PS 3100.

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Funds and Reserves

• Funds and reserves
• Variety of forms
• Reflect a government's intentions to undertake
  certain future activities or to demonstrate
  compliance with legislation.
• If supported by assets - meets the definition of
  designated assets set out in RESTRICTED ASSETS
  AND REVENUES, paragraph PS 3100.04(c) - reporting
  only allowed in the notes and not on the
  statement of financial position.

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Funds and Reserves

• Separate reporting of funds and reserves not
  supported by assets inconsistent with FINANCIAL
  STATEMENT PRESENTATION FEDERAL, PROVINCIAL
  TERRITORIAL GOVERNMENTS, Section PS 1200, and
  RESTRICTED ASSETS AND REVENUES, Section PS 3100
• Therefore for ANY funds or reserves only note
  disclosure permitted

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Local Government Reporting Model

• Background
• 1997 SOP and research studies
• Task force recruited
• Two meetings
• Assess the applicability of senior model

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Local Government Reporting Model

• Approach
• Assess the applicability of
• - PS 1000 Concepts
• - PS 1100 Objectives
• - PS 1200 General Standards
• - PS 3150 Tangible Capital Assets

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Local Government Reporting Model

• Issues
• Asset/liability view
• Budget comparison
• Funds balances disclosure?
• Accumulated surplus/deficit net assets
• Annual surplus/deficit revenues expenses
• Get 3150 out

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Local Government Reporting Model

• Reporting
• Financial assets liabilities FRR
• Below FRR non-financial assets (NFA)
• Net assets FRR NFA
• Other F/S explain changes in indicators

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Statement of Financial Position
2002 2001
Financial Assets 10,912 10,348
Liabilities 18,262 19,171
Net Debt (7,350) (8,823)
Non-Financial Assets 7,360 7,457
Net Assets 10 (1,366)
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Annual Results
2002 Budget 2002 Actual 2001 Actual
Revenues 14,277 16,322 16,854
Expenses (Depreciation, Inventories, Prepaids) 14,249 14,946 14,303
Annual Surplus 28 1,376 2,551
Opening Net Assets (1,366) (1,366) (3,917)
Closing Net Assets (1,338) 10 (1,366)
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Change in Net Debt
2002 Budget 2002 Actual 2001 Actual
Annual Surplus 28 1,376 2,551
TCA Acquired (294) (294) (250)
Depreciation 226 226 230
Net Prepaid Asset (10) (20)
Net Inventory 110 (222)
Change in Net Debt (40) 1,473 2,376
Opening Balance (8,823) (8,823) (11,209)
Closing Balance (8,863) (7,350) (8,823)
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Local Government Reporting Model

• When
• SOP fall of 2004
• AED/PED spring 2005
• Final fall of 2005