Financial Information Strategy Audit
Opening Balance for Capital Assets
Audit and Evaluation Branch
Audit Report
September 4, 2002
Executive Summary
In its 1995 budget the federal government adopted a private sector model of full accrual accounting and reporting for its departments and agencies. This initiative, an integral element of the Financial Information Strategy (FIS), was implemented in Industry Canada April 1, 2001.
To ensure an appropriate implementation of FIS, the Treasury Board Secretariat (TBS) suggested that internal audit organizations conduct a review of the implementation of FIS in their department. As a result, the Audit and Evaluation Branch (AEB) undertook an audit of FIS.
Sharing information with other departments, the Office of the Auditor General and TBS at the inter-departmental Internal Auditors' Working Group, AEB planned to audit the following key issues related to the implementation of FIS: opening balance for capital assets; mapping of the chart of accounts; reconciliation procedures including roles and responsibilities; and the financial statement format and procedures.
AEB began with the audit of the opening balance for capital assets (as of April 1, 2001) because capital assets represented a significant figure on the departmental financial statements. At April 1, 2001, the department had recorded a net book value (acquisition cost less amortization) of approximately $56 million in assets plus $68 million for the Canadian Intellectual Property Office (CIPO), a special operating agency with a revolving fund, whose financial data is consolidated with Industry Canada. Capital assets include such items as vehicles, buildings, computer hardware, etc.
The audit of capital assets was also selected because of the risk of errors as capital assets and amortization were recorded for the first time. It was a massive undertaking to train staff on the new accounting concepts and to identify and record all the assets owned by the department in the Integrated Financial & Materiel System (IFMS) and then to calculate amortization for each asset.
This report provides the findings and recommendations of the audit covering the opening balance for capital assets.
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Date Created: 2002-12-17
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