Directive on Accounting Standards: GC 3260 Liability for Contaminated Sites

States the Government of Canada’s accounting policies for liabilities for contaminated sites.
Date modified: 2023-11-02

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Note to reader

This document is part of the Appendix A of the Directive on Accounting Standards.

A. Primary PSAS reference

  • PS 3260 Liability for contaminated sites

B. Effective date

  • April 1, 2017

C. Government of Canada Consolidated Financial Statements

  1. All contaminated sites must be reported in the Federal Contaminated Sites Inventory (FCSI), which is maintained by the Acquired Services and Assets Sector at the Office of the Comptroller General.
  2. For sites with liabilities associated with asset retirement obligations, refer to GC 3280 Asset Retirement Obligations.

D. Recognition

  1. The Government of Canada determines whether contamination is above the environmental standard, in accordance with subsection 4.2.17 of the Directive on the Management of Real Property.
  2. If a liability is not being recorded because a reasonable estimate cannot be made, future economic benefits are not expected to be given up, or the government is not responsible or is not accepting responsibility, the reason or reasons must be provided, by site, to the Office of the Comptroller General.
  3. Further to PS 3260.36-.39, if there is uncertainty regarding the government’s responsibility, the government may have a contingent liability. Refer to GC 3300-3310 Contingent Liabilities and Loan Guarantees for the accounting treatment of contingent liabilities. All contingent liabilities related to the costs to remediate a contaminated site must be recorded in the FCSI.

E. Measurement

  1. Remediation liabilities include:
    1. Care, maintenance, and monitoring costs that are a part of the remediation strategy and that are completed during the remediation phase;
    2. Final confirmatory sampling and the final report;
    3. Short-term (that is, two to five years) monitoring costs included in the remediation strategy; and
    4. Risk management costs only if directly related to reducing, removing, or containing the contaminant in order to prevent, minimize or mitigate damage to human health or the environment.
  2. Remediation liabilities exclude:
    1. Costs related to research and development of technologies (that is, bench-scale testing or demonstration on a small scale at field sites) or a skill development program;
    2. Costs relating to surveying areas in order to find archaeological sites, excavating sites in order to recover cultural remains, and the subsequent classification, analysis, and preservation of these sites; and
    3. Costs incurred once the site has been brought to a level that is considered acceptable such as sampling, maintenance, and monitoring performed after the site has been remediated and confirmed to be successfully remediated.
  3. Costs in excess of the amount required to bring the site to the current minimum standard should be classified as a betterment. Refer to GC 3150 Tangible Capital Assets for the accounting treatment of betterments.
  4. When the planned use of a site is expected to cause contamination that must be cleaned-up on a regular basis, for example firing ranges, these costs do not meet the definition of a remediation liability and should be expensed.

F. Recoveries

  1. Further to PS 3260.62, the accounting treatment of recoveries will depend on the nature of the event. Further analysis should be done to determine if the recoveries are related to an asset or a contingent asset.
  2. Refer to GC 3320 Contingent Assets for the accounting treatment of contingent recoveries.

G. Disclosure

  1. Pursuant to PS 3260.66, the following nature and source categories are used for disclosure in the Public Accounts of Canada and reporting in FCSI:
    • 01: Radioactive Material
    • 02: Former Mineral Exploration Sites
    • 03: Military and Former Military Sites
    • 04: Fuel Related Practices
    • 05: Landfill/Waste Sites
    • 06: Engineered Assets/Air and Land Transportation
    • 07: Marine Facilities/Aquatic Sites
    • 08: Parks and Protected Areas
    • 09: Office/Commercial/Industrial Operations
    • 10: Other

H. Departmental Financial Statements

  1. Applies without additional policy choices or interpretation for Departmental Financial Statements.

I. Other related references

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