Message sent on behalf of Mr. Bill Matthews, A/Assistant Comptroller General, Office of the Comptroller General
The purpose of this note is to:
- Provide guidance to departments on the calculation of the severance pay liability for eligible employees for inclusion in departmental financial statements;
- Communicate the Government contribution rate for the public service pension plan for disclosure in departmental financial statements; and
- Remind departments to establish PAYE for the Lump Sum payment for employees who were members of the PSAC Tables PA and EB as at December 15, 2008.
Severance Pay Liability - Annex A provides additional information on how to calculate the severance liability and expense relating to severance for Public Service employees, coding for the accounting transactions and the financial statement disclosure requirements. Note that this liability was devolved to departments in 2005-06.
Departments should strive to record this adjustment in P12-1.
Pension Benefits – Government contribution rate by employees for the Public Service Pension Plan
Both the employees and the department contribute to the cost of the Plan. The 2008-09 expense represents approximately 2.0 times (2.1 times for 2007-08) the contributions by employees. This rate is for note disclosure in your departmental financial statements (see Illustrative Financial Statement Package Note 11 a) of TBAS 1.2 – Pension Benefits).
Should you have any questions on the severance pay liability and the contribution rate, please contact Hamid Haffaf at (613) 957-9676 or Contact Hamid Haffaf by email:email@example.com.
PAYE for the lump-sum payment to members of PSAC Tables PA and EB
Departments are reminded that funding for the lump sum payment of $4,000 to employees who were members of PSAC Tables PA and EB on December 15, 2008 in settlement of the pay equity complaints has been received through Supplementary Estimates C. According to the PAYE policy, the unpaid amounts related to these settlements should be accrued and charged to the 2008-09 departmental appropriations in P12-1. The payments will be issued in the 2009-10 using the entitlement code 087 therefore the PAYE should be recorded in civilian regular time salaries and wages in either:
- the economic object 0101 for continuing employee, or
- the economic object 0102 for part-time, seasonal, and casual.
The documents to support these transactions will be made available for audit to the Office of the Auditor General centrally. Please note that the substantiation of all other information such the information on employees is the responsibility of the departments.
Should you have any questions on the PAYE for the lump-sum payment, please contact Andrée Pelchat at (613) 954-0117 or Contact Andrée Pelchat by email:andrée.firstname.lastname@example.org.
Annex A – Calculation of Severance Pay Liability and Expense
Severance Pay Liability
Context and Application: In line with the Treasury Board Accounting Standard 1.2 (TBAS 1.2), Departments are reminded that they must account for their allowance and related severance pay liability in their 2008-09 financial statements. This applies to all organizations defined as departments in accordance with section 2 of the Financial Administration Act (FAA).
Calculation: The March 31, 2009 liability relating to Public Service employees is determined by multiplying 23.19% (compared to 23.27% at March 31, 2008) by the department's annual gross payroll at year-end subject to severance pay, which is the payroll related to indeterminate employees. The 2008-09 annual expense for severance pay is determined by the difference between your opening and closing liability added to (or subtracted from) the actual severance expenditure for the year.
Process: The following accounting entry should be recorded in CFMRS:
March 31, 2009 year-end entry (assuming an increase in the liability):
|DR Provision for Severance Benefits – PS||$XXX||518461||F1242||34693|
|CR Allowance for Severance Benefits||$XXX||214154||F4135||70236|
Departments are reminded that the coding for actual severance benefits payable, at the end of year, remains unchanged. These accounting entries are described in the FIS Accounting Manual.
Financial Statements Presentation: The presentation in departmental financial statements of the severance benefits and the related liability should be in line with the TBAS 1.2.
1 51846 – Provision for severance benefits – Public Service
2 F124 – Allowances set up for severance pay
3 3469 – Charges to other liability accounts
4 21415– Allowance for severance benefits - departments
5 F413 – Charges to accruals for severance pay
6 7023 – Allowance for employee benefits
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