Date sent:  June 5, 2012

To:  Deputy Chief Financial Officers

Message from Sylvain Michaud, Executive Director, Government Accounting Policy and Reporting, Office of the Comptroller General

The purpose of this communication is to provide additional guidance on the disclosure of the obligation for termination benefits associated with the estimated workforce adjustment costs included in Budget 2012 in the 2011-2012 departmental financial statements as previously provided on April 27, 2012.

As per the previous communication, recognition of the obligation for termination benefits is in compliance with the Public Sector Accounting Standards 3255, Post-Employment Benefits, Compensated Absences and Termination Benefits.  Organizations are reminded to record an obligation and provide additional disclosure taking into account the materiality at the entity level financial statements.

For presentation purposes only, the obligation for termination benefits should be recorded as an accrued liability included in the Accounts Payable and Accrued Liabilities in the Statement of Financial Position and the expense should be recorded as salaries and employee benefits.

If this transaction is considered material by an organization, additional disclosure should be provided in Note 4 as per the departmental financial statements illustrative package as follow:

4. Accounts payable and accrued liabilities

The following table presents details of the Department's accounts payable and accrued liabilities:

Accounts payable and accrued liabilities 2012 See endnote 1 * 2011 See endnote 1 *

* In thousands of dollars

Accounts payable - Other government departments and agencies $32,456 $27,894
Accounts payable - External parties 144,266 126,116
Total accounts payable 176,722 154,010
Accrued liabilities 13,719 8,006
Total accounts payable and accrued liabilities $190,441 $162,016

In Canada’s Economic Action Plan 2012, the Government announced savings measures to be implemented by departments over the next three fiscal years starting in 2012-2013.  As a result, the Department has recorded at March 31, 2012 an obligation for termination benefits for an amount of $xx thousand as part of accrued liabilities to reflect the estimated workforce adjustment costs.

Should you have any questions regarding this communication, please contact Andrée Pelchat at 613-957-9853, or Anne-Marie Dionne at 613-952-1004.

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