FIS INFO
September 2001
Full Accrual Accounting
With the implementation of the Financial Information Strategy (FIS) on April 1, 2001, the
Government of Canada moved from a modified accrual basis of accounting to full accrual
accounting for financial and management reporting purposes.
What are the defining characteristics of full
accrual accounting?
-
Expenses are recorded in the period when
the goods or services are consumed.
-
Revenues are recorded in the period
when they are earned.
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The multi-year benefits of some assets are
recognized by being expensed over the time
they are expected to be used, as opposed to
only at the time of their acquisition.
How will full accrual accounting affect departmental reporting?
A department's or agency's finance
organization will provide a full set of
financial statements. For example:
-
The Statement of Operations will show the
revenues earned and the expenses incurred
for a specific accounting period. The
difference between the revenues and
expenses is the net financial result of
operations for that period.
-
The Statement of Cash Flow will show
departmental cash flows. This statement
will focus on sources and uses of cash.
-
The Statement of Financial Position
will report on the departmental assets
and liabilities at the end of the
accounting period.
As departmental systems mature,
departments and agencies will be in a
position to generate financial statements
at various levels such as business lines,
sectors, branches and divisions.
Why the change to full accrual accounting?
Full accrual accounting is not just
another methodology for calculating the
Government's financial position and
operational results. It is an informational
tool for results-oriented managers.
The recent shift to results-based manage-ment
has made it necessary for managers
to have a wider range of information. Full
accrual accounting, by matching program
delivery results with the resources used to
achieve them, provides managers with
better information for decision-making.
This improved information will benefit not
only the individual departments and
agencies, but also Parliamentarians and,
ultimately, all Canadians.
In recognizing full accrual accounting as
the best accounting practice for the public
sector, the Government of Canada is
following the precedent of many other
countries, notably Australia, the United
Kingdom, and New Zealand.
For more information,contact your
departmental financial advisor or visit the
Treasury Board Secretariat Website at
http://www.tbs-sct.gc.ca/fin/sigs/fis-sif/.
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