Annex

Structural Changes required for Objects

for Services and Goods in fiscal Year 1999-2000

Overall Structure of the Master List

Overall Structure of the Master List

Overall Structure of the Master List

The structure needed to record both Services and Goods has required revisions to it for many years to fit into the structure implemented in the rest of the Master List of Objects several years ago. A structure of categories was established at that time as the highest level of object classification for expenditures were:

0. Services

1. Goods
2. Transfer Payments
3. Other Expenditures

Equivalent structures were also established for objects for revenues, and, subsequently, for financial claims and obligations.

At that time, categories 2 and 3 (as well as those used for revenues) were fully implemented, but the implementation of categories 0 and 1 was delayed pending decisions on the timing and method(s) of implementing accrual accounting. Under the category level, two digit Sub-categories and the three digit Reporting objects were established for Transfer Payments and Other Expenditures. The same structure is now being implemented for Services and Goods (categories 0 and 1). The introduction of this structure has also become more urgent with the use of electronic tools to extract this data to replace the former hard copy reports.

Category 1 - Goods

With the implementation of accrual accounting, the structure needed to record the acquisition of Goods in the Chart of Accounts for Objects is being revised due to

1. The implementation of the Financial Reporting Accounts as part of the FIS. These accounts will require the recording of all assets on an accrual basis, including capital assets and inventories. As a result, the disclosure of the types of goods being acquired needs improvement;
2. Whether an item is capital will depend on the definition in the Financial Reporting Accounts, where a limit of $10,000 or lower (at the department's discretion) has been established. This makes the use of $1,000 in determining whether a transaction is a capital item redundant;
3. the ability to use the Harmonized Classification of Goods (SCG), as promulgated by Statistics Canada in 1992 as a reference for classifying Goods. This will eliminate the need to depend on the Standard Commodity Classification (SCC), which has not been updated since 1972.

To do this the following changes are being made for fiscal year 1999-2000,

1. A separate category 1 has been established to record the acquisition of all Goods only. This requires the separation of Public Utility Services from the rest of the objects in standard object 07.

2. Within that category, three sub-categories have been established,
• 11 – Acquisition of Materials and Supplies

• 12 - Acquisition of Machinery and Equipment

• 13 - Acquisition of Land, Buildings and Works

3. Sub-category 11 corresponds to the current reporting object for Materials and Supplies in standard object 07. It will continue to include all purchases of materials and supplies, regardless of how they are accounted for under accrual accounting. Some of these materials and supplies equate to inventory acquisitions on an accrual accounting basis, as they are recorded as assets until they are consumed or re-sold at a profit. However, some of the purchases acquired are written-off when acquired, while still others are set up as inventory on a periodic basis at year-end only.

Within this sub-category, there are 7 reporting objects, some of which correspond to the old reporting objects under Materials and Supplies, but most do not.

4. Sub-category 12 for Machinery and Equipment Acquisitions includes all economic objects currently in standard object 09, as well as all economic objects under the Parts and Consumable Tools reporting object under standard object 07. The effect of this change will be to remove the $1,000 limit of in determining whether a transaction pertains to standard objects 07 or 09. As a result, all machinery and equipment acquisitions will be included in standard object 09, regardless of amount. The determination of whether these acquisitions are capital will be done in the Financial Reporting Accounts (or in the central accounts until a department is FIS-compliant).

Within sub-category 12, there are 7 reporting objects which correspond to the 6 reporting objects in standard object 09, and the 5 sub-reporting objects under Parts and Consumable Tools in standard object 07. This will result in a reduction of 8 economic objects with a potential of further reductions in future years.

5. Sub-category 13 for Acquisition of Land, Buildings and Works corresponds to all reporting and economic objects currently in standard object 08. This sub-category will continue to be aligned to standard object 08. Within the sub-category there are 4 reporting objects that correspond with the current ones. No change has been made to these economic objects other than to change the first 2 digits from "08" to "13".
   

6. Amounts for the Construction of Land, Buildings and Works, and for the Construction of Machinery and Equipment should no longer be included in standard objects 08 and 09 respectively, unless the assets concerned are acquired in their entirety. Amounts for Own Account Construction, where assets are being constructed by a department using its own labour, materials, hired professional services, etc. should be charged to the pertinent economic object in sub-categories 01 to 13 which describes the pertinent type of service or good purchased as part of constructing the asset.

7. To accommodate these changes, existing economic objects have been re-aligned to the new sub-categories and / or reporting objects. A list of the new economic objects is included in Appendix A to this document. The old economic objects they replace are shown on the right side of the name of the economic object.

Services

The structure needed to record the provision of Services in the Chart of Accounts has had to be revised to

1. Split Professional Services from Other Services,
2. Include Public Utility Services as services, and remove them from goods
3. Re-number certain objects in Professional Services to provide an easier numbering system for using the data at intermediate (reporting object) levels, and to include non-professional services as Other Services.

To do this, the following changes are being made for fiscal year 1999-2000,

1. A separate category 0 has been established to include all services.

2. Within that sub-category, 8 sub-categories have been established. The first 6 sub-categories correspond to the existing standard objects, though the existing standard object 04 has been split into 2 sub-categories. The new sub-categories are

• 07 - Public Utility Services
• 08 - Other Services

3. Sub-category 04 will now include Professional Services only. The old reporting objects for Other Services and Collection Agency Fees and their economic objects have been moved to sub-category 08. The reporting objects for Informatics Services and Other Professional Services have been moved to reporting objects 047 and 049 respectively, while the two reporting objects for Training and Educational Services are being merged.

4. Sub-category 07 for Public Utility Services was previously in standard object 07. Those economic objects will retain the same numbers, except for economic object 0704. They will also retain their alignment to standard object 07 for reporting purposes in the Estimates.

5. Sub-category 08 Other Services includes 2 reporting objects and several economic objects previously in standard object 04. It has now been split into 4 reporting objects, and all the economic objects have been re-numbered. These objects in this sub-category will retain their alignment to standard object 04 for reporting purposes in the Estimates.

To accommodate these changes, existing objects in standard objects 04, 05 and 07 have been re-aligned and / or re-numbered. A list of the new economic objects is included in Appendix B to this document. The old economic objects they replace are shown on the right side of the name of the economic object.

In future years it will be necessary to re-number the economic objects in sub-categories (and standard objects) 01 and 06. This will not be done for 1999-2000.

Internal objects (Standard objects 15 and 16)

For departments that are to become FIS-compliant on April 1, 1999 for fiscal year 1999-2000, it will be necessary to re-align all objects presently included in standard objects 15 and 16.

All economic objects currently in sub-category 33, and economic objects 3402 and 3413 in sub-category 34 will need to be re-patriated to the standard objects to which they relate on a gross reporting basis. Some of these objects relate to existing economic objects in sub-categories 01 to 31 so they can be included in those objects, while others cannot be readily combined so some new objects have had to be created within the relevant sub-categories.

To accommodate these changes, the objects referred to above in standard object 15 have been re-aligned to (or related to) existing sub-categories and reporting objects. A list of all such objects are included in Appendix C.

As economic objects 3319, 3349, 3359, 3369, 3379, 3389, 3399, 3402 and 3413 cannot be readily re-aligned to any reporting objects in sub-categories 01 to 31, due to the decision to maintain line object data in departmental systems only, all amounts or line objects aligned to those economic objects must be re-aligned to existing economic objects in those sub-categories.

All economic objects in sub-categories 34 (other than 3402 and 3413), 36 and 46 do not need to be re-aligned, as the entire sub-category will be re-aligned to sub-categories 3, 3 and 4 (standard objects 12, 13 and 14) respectively.