The 2014 Guidance for the Preparation of TB Submissions includes a revised submission form, the roles and responsibilities of stakeholders, enhanced guidance on costing, tools for submission writers and new service standards for submissions. Departments and agencies have until April 1, 2014, to fully implement the updated guidance.

However, as communicated in the Guideline on Chief Financial Officer Attestation for Cabinet Submissions, a CFO Attestation letter must be annexed to all submissions that have financial implications, effective January 1, 2014.

Appendix C: Accrual Accounting Information

In 2002–03, the government implemented full accrual accounting for the preparation of the Finance Minister's budget and the summary financial statements of the Government of Canada included in the Public Accounts of Canada. However, the Main Estimates, or the appropriations, continue to be based on a "near‑cash" accrual basis of accounting.

Accrual accounting recognizes transactions when the underlying economic event occurs, that is, it recognizes revenue when earned rather than when cash is received, and expenses when incurred rather than when paid.

There are several categories of transactions where there are differences between the classification of elements in the transaction and the timing of charges against the appropriation and recognition of expenses for the purposes of determining the annual surplus or deficit. There are different treatments for revenues, certain liabilities, inventory, and the acquisition of tangible capital assets. A brief discussion of some of the differences is found in Annex 6 of the 2003 Budget Plan.

Accrual accounting provides a more comprehensive picture of the government's financial situation and a more accurate reflection of the financial impacts of economic events and government decisions during the year. The Secretariat is encouraging federal organizations to increase the use of accrual information in decision making since it gives a better presentation of the cost of resources used in a period and thus a better means of relating costs of programs to performance achieved.

To foster the use of accrual information in decision making, the Secretariat requires the inclusion of accrual information in submissions where capital spending is proposed and (a) the resources are incremental (i.e. not presently included in the federal organization's reference levels) and (b) the cash and accrual profiles are materially different.

The "Cost and source of funds" section of submissions related to acquisitions of capital assets or material amounts of inventory should include accrual financial information in addition to the cash profile. For other types of transactions where there are material differences between cash flows and expense recognition (e.g. contaminated sites remediation), the Secretariat may contact the federal organization to obtain accrual information.

For government accounting purposes, capital assets generally include any asset:

  • acquired, constructed, or developed at a cost exceeding $10,000;
  • to be used on a continuous basis to achieve government objectives for more than one fiscal year;
  • not intended for resale in the ordinary course of operations; and
  • the beneficial ownership and control of which rest with the government.

Capital assets also include betterments. Betterments are expenditures relating to alteration or modernization of an asset that appreciably prolongs the item's period of usefulness or improves its functionality.

For appropriations, the full purchase price or development cost of a capital asset is charged to an appropriation in the year of expenditure. Under full accrual, the costs of developing or acquiring the capital asset are allocated to the periods over which the asset will be used by the federal organization, through amortization.[1]

Basic steps for calculating annual accrual expense

(1) Cost

(2) Amortization period

(3) Amortization expense

Amortization is the allocation of the cost of the asset over its useful life.

For more information regarding capital assets, useful life, and amortization standards, please consult Treasury Board Accounting Standards 3.1 and 3.1.1, section 3.5 of the FIS Accounting Manual, and information on how accrual affects liabilities and revenues in Annex 6 of the 2003 Budget Plan.

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