FIS is a government-wide initiative designed to enhance decision–making and
accountability across government, and improve organizational performance through the
strategic use of financial and non-financial performance information. The three key
components of FIS are:
Accounting is only the starting point. The greater goal of FIS is to bring about all
the attendant changes in systems, policies and people. Ultimately, FIS aims at nothing
less than changing the culture of resource management in the Government of Canada.
Yes, all Government of Canada departments and agencies as defined by Section 2 of
the Financial Administration Act (FAA) will be required to implement FIS. Through the
requirements of the FAA, crown corporations already practice FIS principles.
The change to full accrual accounting, which is a key component of FIS, was
announced in the 1995 Budget Plan of the Minister of Finance. In November 1995, Treasury
Board Ministers approved FIS as a project.
FIS is part of the overall reform and renewal of management within federal
government under the umbrella of Modernization of Comptrollership. It is the foundation of
the government's management framework, outlined in the April 2000 document Results
for Canadians.
FIS was developed primarily to yield improved information to help departments
and agencies manage their resources and activities and report better information to
Parliament on the costs of these activities.
FIS is not so much about accounting as about accountable decision-making. Finance,
Materiel and Real Property communities, Human Resources, Administrative and most other
functional support groups are also affected by FIS. In fact, FIS will have an impact on
everyone who is involved in any aspect of spending or in the management of resources. FIS
will succeed only when program managers and other non-financial specialists become adept
at using and applying good financial and non-financial performance information in their
daily decision-making to improve accountability and organizational performance. Changes in
systems, policies and people are all necessary for success. The key is not number
crunching, but managing for results.
The federal government will change from the modified accrual basis of accounting to
the full accrual basis of accounting for the purposes of its financial statements. The
major change for departments will be the adoption of full accrual accounting. Accrual
accounting provides an information tool for managers. It focuses on a wider range of
information on which to base decisions and measure program and operational results. By
capturing information not previously reported, accrual accounting enhances analytical
techniques that will allow a shift in focus from the purchase of inputs to the management
of outcomes and results.
Modern integrated financial and materiel systems are being adopted. Many new policies
and procedures are being developed to guide users of the new systems and provide the kind
and quality of information that managers need for good decision-making. New training and
learning programs are also being developed to offer everyone the opportunity to shift to a
new way of thinking, managing and focusing on responsible decision-making. FIS requires
these changes because the emphasis is now on program and operational performance results.
FIS goes far beyond a financial number-crunching exercise.
FIS will eventually have an impact on the work of managers of all kinds, finance
officers, functional specialists, support staff, parliamentarians and the public, and
departments:
Managers: will have better financial and non-financial information for decision
making. Managers will have to make the transition from being budget managers to business
managers. Their actions and decisions will no longer be measured only on the impact of
their current year budget, but on the impact of future operations.
Financial Specialists: will have more active roles in supporting management
decisions. They will become full business partners and play a key role in advising on
strategic issues. They will analyze and assist managers in the interpretation of
integrated management information.
Materiel Management & Real Property Officers: will be required to keep track
of ongoing changes in valuation to address issues such as: whether the level of investment
in capital assets is appropriate; are assets close to being fully amortized; and are
capital assets being effectively utilized. They will also need to differentiate between
"repair" and "betterments."
Human Resource and Benefits Specialists: will be able to make use of new
information to better assess the full cost of personnel decisions.
Administrative Officers and Financial Staff: will enter business transactions
into the integrated finance and materiel system differently. The importance lies with
properly coding financial transactions so they can be reflected appropriately in financial
statements.
Parliamentarians and the Public: will receive more relevant and timely financial
information from departments and agencies.
Departments: will be responsible for maintaining detailed accounting records.
Departments will set up their own general ledgers, and keep their books in accordance with
Treasury Board policies based on the Public Sector Accounting Board (PSAB) of the Canadian
Institute of Chartered Accountants (CICA).
FIS will eventually have an impact on the work of managers of all kinds, finance
officers, functional specialists, support staff, parliamentarians and the public, and
departments:
Managers: will have better financial and non-financial information for decision
making. Managers will have to make the transition from being budget managers to business
managers. Their actions and decisions will no longer be measured only on the impact of
their current year budget, but on the impact of future operations.
Financial Specialists: will have more active roles in supporting management
decisions. They will become full business partners and play a key role in advising on
strategic issues. They will analyze and assist managers in the interpretation of
integrated management information.
Materiel Management & Real Property Officers: will be required to keep track
of ongoing changes in valuation to address issues such as: whether the level of investment
in capital assets is appropriate; are assets close to being fully amortized; and are
capital assets being effectively utilized. They will also need to differentiate between
"repair" and "betterments."
Human Resource and Benefits Specialists: will be able to make use of new
information to better assess the full cost of personnel decisions.
Administrative Officers and Financial Staff: will enter business transactions
into the integrated finance and materiel system differently. The importance lies with
properly coding financial transactions so they can be reflected appropriately in financial
statements.
Parliamentarians and the Public: will receive more relevant and timely financial
information from departments and agencies.
Departments: will be responsible for maintaining detailed accounting records.
Departments will set up their own general ledgers, and keep their books in accordance with
Treasury Board policies based on the Public Sector Accounting Board (PSAB) of the Canadian
Institute of Chartered Accountants (CICA).
FIS will eventually have an impact on the work of managers of all kinds, finance
officers, functional specialists, support staff, parliamentarians and the public, and
departments:
Managers: will have better financial and non-financial information for decision
making. Managers will have to make the transition from being budget managers to business
managers. Their actions and decisions will no longer be measured only on the impact of
their current year budget, but on the impact of future operations.
Financial Specialists: will have more active roles in supporting management
decisions. They will become full business partners and play a key role in advising on
strategic issues. They will analyze and assist managers in the interpretation of
integrated management information.
Materiel Management & Real Property Officers: will be required to keep track
of ongoing changes in valuation to address issues such as: whether the level of investment
in capital assets is appropriate; are assets close to being fully amortized; and are
capital assets being effectively utilized. They will also need to differentiate between
"repair" and "betterments."
Human Resource and Benefits Specialists: will be able to make use of new
information to better assess the full cost of personnel decisions.
Administrative Officers and Financial Staff: will enter business transactions
into the integrated finance and materiel system differently. The importance lies with
properly coding financial transactions so they can be reflected appropriately in financial
statements.
Parliamentarians and the Public: will receive more relevant and timely financial
information from departments and agencies.
Departments: will be responsible for maintaining detailed accounting records.
Departments will set up their own general ledgers, and keep their books in accordance with
Treasury Board policies based on the Public Sector Accounting Board (PSAB) of the Canadian
Institute of Chartered Accountants (CICA).
The following are among the many significant benefits expected to ensue from FIS
over time:
Stronger focus on results based management: Managers will have a blend of
financial and non-financial performance indicators that will not only indicate the results
of past decisions, but also provide indicators on strategic priorities achievement, and
key success factors;
Integration of operational and financial information: Systems will now aim at
tracking and integrating financial transactions and operating results, thereby minimizing
rekeying and eliminating other manual intervention. Current systems provide managers with
budget information not integrated financial management information;
Improved asset management: Under FIS, managers will have to recognize all
assets, including accounts receivable, physical assets and other long-term assets. Accrual
accounting will also allow managers to identify ongoing costs, such as amortization and
maintenance, of owning and operating assets. All this information will help managers
ensure the most efficient use and disposal of assets. Better management of assets may
contribute to better service delivery;
Better identification and comparison of costs: Accrual accounting will provide
managers with more complete costs of programs, which can be compared to program results.
Once these costs are determined, managers can easily compare them from one accounting
period to another, and with costs from other departments or private sector organizations.
These comparisons will allow managers to measure their department's financial
performance accurately;
Other benefits: More timely and relevant departmental and government-wide
reports; more informed decision-making.
