Rescinded [2009-10-01] - Policy on Classification and Coding of Financial Transactions

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Policy Objective

The objective of the classification system is to provide information for multiple uses both within and outside departments. The classification of accounts provides the framework to identify, aggregate, and report financial transactions for planning, resource allocation, management control, accounting, statistical, and evaluation purposes.

Policy Statement

To meet financial information requirements, government policy requires departments to:

  • use a four-way classification of transactions--by authority, purpose, responsibility and object.
  • relate their transactions to the uniform government-wide classification maintained by the Receiver General for objects and for programs activities.
  • identify their internal transactions


This policy applies to all organizations considered to be departments within the meaning of section 2 of the Financial Administration Act (FAA).

Policy Requirements

  1. Classification of Transactions
    • For financial transactions, the departmental classification of accounts must be a fourfold classification by:
    • authority, to identify the Parliamentary appropriation vote or other statute under which the transaction was undertaken;
    • purpose, to relate the transaction to the departmental objectives by program and activity;
    • responsibility, to identify the organizational unit that is responsible and accountable for the transaction; and
    • object, to identify the type or nature for an expenditure, the source for any revenue, or the cause of the increase or decrease for financial claims and obligations.

    The relationship between the four classification structures is depicted in Appendix A.

    This four-fold classification structure is linked through an integrated but mutually exclusive coding system which requires each transaction to be identified in terms of each classification. This allows subsequent retrieval and analysis of financial data by separate categories.

    These classifications are explained briefly in Appendix B and in more detail in Chapter 3 of the Chart of Accounts Volume, which is a supplementary volume to the Comptrollership Volume of the Treasury Board Manual.

  2. Departmental programs and activities must be related to the government-wide list of programs and activities in the program and activity classification prescribed by the Treasury Board.

    The government-wide list of programs and activities is included in section 6.2 of the Chart of Accounts Volume. The classification has been derived from the programs and activities included in Part II of the Main Estimates for the current fiscal year.

  3. Departmental objects must be related to the government-wide objects in the object classification prescribed by the Treasury Board.

    The government-wide object classification is in the Master List of Objects included in Section 8.2 of the Chart of Accounts Volume.

  4. To determine and report more accurately the impact of government revenues and expenditures on the rest of the economy, the net amount of government purchases and sales by standard object must be determined by identifying internal transactions so they can be eliminated.

To identify internal transactions properly:

  1. All departments, including those that use revolving funds, must charge their expenditures for purchases from outside the government to standard objects 01 to 12. Similarly, sales to entities outside the government must be credited to standard objects 13 or 14.
  2. All expenditures relative to purchases from other departments or from within a department must be charged to standard object 15.
  3. All revenues from sales to other departments or within a department must be credited to standard object 16.

Procedural Requirements

The classification system is incorporated as part of the accounting system and, together with the budgetary process, provides government managers at various levels with information necessary to manage their policy and control functions.

The classification of accounts for the Government of Canada is dictated by the requirements to:

  • provide information in a summarized form required for the Accounts of Canada;
  • meet central agency and other requirements for uniform classifications of data on a government-wide basis, and
  • provide summarized and detailed information at the departmental level.

The four classifications required for transactions are explained briefly in Appendix B, with cross-references provided to where more details can be found in the Chart of Accounts Volume.


To ensure effective control and for disclosure of information, the departmental classification of accounts should make provision for recording assets and liabilities, even though they may not be recorded in the Accounts of Canada, nor appear in the Statement of Assets and Liabilities of the Government of Canada.

Additional explanations for the asset and liability classification are included in Chapter 3 of the Chart of Accounts Volume.


Treasury Board Secretariat

Treasury Board Secretariat (TBS) is responsible for policy development, advice and interpretation, and implementation assistance including appropriate training/information sessions for departments, and for promulgating any changes required to the Chart of Accounts Volume for the Government of Canada.

This includes the annual amendments to the Master List of Objects and Master List of Programs and Activities which are now included in chapters 8 and 6 respectively of the Chart of Accounts Volume.

Receiver General

The Receiver General is responsible for recording the transactions received from departments and agencies in the Central Accounting System, processing them according to the uniform classification prescribed by statute or by Treasury Board, and providing reports to various users in Parliament, central agencies and departments. To accomplish this, the Receiver General provides departments and agencies with any supporting operational instructions, such as Receiver General Directives, Bulletins and other guidance related to the classification and coding system.


Departments are responsible for implementing the four-way classification in departmental accounts and meeting coding requirements for government-wide classifications included in the master lists of objects and of programs and activities. This includes the primary responsibility for ensuring that appropriate departmental classification changes are made to reflect any changes in the master lists, for ensuring transactions are coded accurately, and for monitoring the quality of departmental coding. It is imperative that departments implement all requirements specified by Treasury Board Secretariat and the Receiver General to ensure appropriate quality, integrity and timeliness for government-wide financial information. This includes the need for monthly reconciliations between classification in the departmental and central accounting systems.


The internal audit group in each department will include the review of classification and coding in internal audit plans. The Government Operational Services Sector of Public Works and Government Services Canada will monitor the quality of government-wide classifications and coding.

The Treasury Board Secretariat will monitor the overall quality of data in the CAIS Relational Data Base. However the primary responsibility for the application of this policy rests with the Senior Full-Time Financial Officer (SFFO).


This policy is issued by the Treasury Board under the authority of Section 9(1) of the Financial Administration Act.

In implementing this policy departments must refer to the Chart of Accounts Volume which is a supplementary volume to the Comptrollership Volume of the Treasury Board Manual.

With the issue of this chapter, and the Chart of Accounts manual, the following TB circulars are being replaced:

1986-33 Introduction of a Government-wide Purpose Classification by Program Activity for Budgetary Expenditures

1987-50 Title of Standard Object 12

1987-54 Identification of Internal Transactions within the Government of Canada

Departments are also referred to the latest Receiver General Directive on the Reporting and Reconciliation of Government-wide Classifications of Financial Information.


This chapter cancels chapter 7-1 of the "Financial Management" volume dated April 1, 1991; and

this policy supersedes chapter 4 of the Treasury Board "Guide on Financial Administration".


Enquiries concerning this policy should be directed to your departmental headquarters. For interpretation of this policy, departmental headquarters should contact:

Government Accounting Policy
Comptroller Sector
Program Branch
Treasury Board Secretariat
Ottawa, Ontario
K1A 0R5

Telephone: (613) 952-3404
Facsimile: (613) 952-9613

For information on the Chart of Accounts Volume departmental Headquarters should contact:

Strategic Information Services
Office of Information Management, Systems
and Technology
Treasury Board Secretariat
Ottawa, Ontario
K1A 0R5

Telephone: (613) 952-3357
Facsimile: (613) 941-0287

Appendix A - Relationship Between the Four Classification Structures

Appendix B - Explanation of the Four Classifications Required for Financial Transactions

1. Classification of transactions by authority

The authority classification identifies the Parliamentary appropriation (vote) or other legislative authority under which the transaction has been authorized.

Transactions are classified by authority to enable management within departments and agencies to maintain records and to report to Parliament on the exercise of the related authorities. This classification determines the account to which the transaction is to be recorded in the central accounts and the Accounts of Canada, and whether the transaction is budgetary or non-budgetary.

This classification is explained in more detail in Chapter 3 of the Chart of Accounts Volume.

2. Classification of transactions by purpose

The purpose classification using the "program and activity" classification identifies the program or service provided. It is the structure used to account for the use made of resources in the achievement of results designed to promote overall government program objectives. This classification deals with the programs and activities of the Government of Canada, by providing a breakdown of the expenditures of each program by activities and lower levels. They can then be aggregated to determine the purposes for which funds are spent to attain program objectives. Programs and activities included are derived from those in Part II of the Main Estimates for the current fiscal year.

This classification is described in chapter 6 of the Chart of Accounts Volume.

3. Classification of transactions by responsibility

The responsibility classification identifies the organizational unit which is responsible and accountable for the transaction. The responsibility classification ranges from the highest managerial level, where a single official is responsible for a program, to progressively lower levels of delegated responsibility, identifying who is responsible and accountable for the expenditure of funds provided by Parliament at the responsibility centre level.

The responsibility classification is explained in more detail in Chapter 3 of the Chart of Accounts Volume.

4. Classification of transaction by object

The object classification accounts for the type or nature of expenditures, the sources of revenue, and the causes of changes to financial claims and obligations.

The object classification identifies:

  • in the case of expenditure, the types of resources (goods or services) acquired or the transfer payments made;
  • in the case of revenue, the sources of the receipts;
  • in the case of other-than-budgetary transactions, the causes of increases or decreases to the assets and liabilities recorded in the accounts of Canada.

To accommodate the need for differing degrees of detail, there are several levels of classification as shown in Appendix A. In descending order of aggregation, they are categories; sub-categories; standard objects; reporting objects; sub-reporting objects; economic, source and class objects; and departmental (or line) objects.

The object classification, including each of these terms, is defined in Chapter 8 of the Chart of Accounts Volume.