Changes in Financial Statement Policies for Ministry of Education

1. 2009-10 Financial StatementEFIS Forms September 2010 Ministry of Education Training Sessions

2. Part F – Notes to the Financial Statement • Note 1: Significant accounting policies - Updated • Note 2: Change in accounting policy - Updated • Note 4: Accounts receivable – Government of Ontario - New • Note 12: Tangible Capital Assets – Updated • Note 13: Accumulated Surplus - New • Note 17: Budget data - Updated • Note 18: Partnership in Transportation Consortium - New • Note 19: Accounting for Contributions Used for Capital - New

3. Overview • Due to some significant accounting changes, the Ministry proposes changes to notes to the financial statements. Major changes include: • Moved funds and reserves to accumulated surplus as at September 1, 2009 as per PS-1200. • Implemented tangible capital assets (TCA) as at September 1, 2009 as per PS-3150. • Included the impact of the capital wrap-up as at August 31, 2010. • A draft notes was shared with boards. This slide deck is based on the draft notes. • Feedback is welcome, and will be incorporated in the final version, to be available after the training sessions.

4. Note 1 - Significant Accounting Policies • Investments are broken down into temporary and long-term investments • Temporary investment - maturities between 90 days and one year • Long-term investments - maturities more than one year • Tangible Capital Assets (TCA) • Three notes (note 1, note 2 and note 12) disclose TCA • Note 1 discloses general TCA accounting policy – every year • Note 2 discloses the impact of first time TCA reporting – only for this year • Note 12 discloses actual TCA information – every year • Accounting policy disclosed: • Asset class • Capitalization – what is capitalized • Amortization – straight line over the useful life or lease term • Land held for sale • Building permanently removed from service • Work of arts and historical assets

5. Note 2 - Change in Accounting Policy • First year full implementation of: • Section 1200 Financial Statement Presentation • Section 3150 Tangible Capital Assets • Focus on implementation of section 3150 • The approach to establish the opening balance • Historical cost – if available • If not available then • Building/Land – by the Ministry through BVC • Other classes – estimated by the boards • The impact on the statement of financial position and statement of financial activities • Restatement of Accumulated Surplus – Add the Net Book Value of TCA • Restatement of Annual Surplus/Deficit – Add capital expenditures previously expensed, gain on disposal that is not subject to restriction, less amortization expense, loss on disposal

6. Note 4 – Accounts Receivable – Government of Ontario • New note this year • The province changed the funding policy for capital • Variable funding is replaced with a one-time debt support grant and long-term accounts receivable • Cash payment will be over the remaining term of the existing capital debt instruments. • Disclose the total account receivable amount as at August 31, 2010

7. Note 12 – Tangible Capital Assets • Opening balances, in year change (additions, amortization, adjustment and disposals) and ending balances are disclosed • Also discloses: • Amounts of assets under construction • Amounts of write down • Amounts of asset permanently removed from service

8. Note 13 – Accumulated Surplus • New note this year • Disclose components of accumulated surplus • Invested in tangible capital assets • Restricted for future use by board motion • Other • Boards may also disclose detail of the amount restricted by board motion • Sick leave • Employee benefit • Retirement Gratuities • Amounts restricted for future use on capital expenditures

9. Note 18 – Budget data • TCA was not included in the original budget • Statement of operation is restated in order to reflect the same basis of accounting in budget and actual • Where amounts were budgeted, i.e. the pupil accommodation expenditure and capital expenditure for land and building, use the budgeted amount • Where the amount were not budgeted, use actual amount • Statement of Change in Net Debt is not restated because this is a new statement and boards did not prepare it in the budget

10. Note 19 – Partnership in Transportation Consortium • New note this year • Two kinds of transportation consortium • - Full Partner in a Separate Legal Entity • - Full Partner in a Consortium Agreement • Similarities: • Proportionate consolidation approach • Disclose asset, liabilities, accumulated surplus/deficit, revenues and expenses, annual surplus/deficit • Differences: • Full Partner in a Separate Legal Entity • Pro-rata share of assets, liabilities, revenues and expenses of the consortium • Inter-organizational transactions and balances have been eliminated. • Partner in a Consortium Agreement • Assets that it controls, • Liabilities that it has incurred, • Pro-rata share of revenues and expenses.

11. Note 20 – Accounting for Contributions Used for Capital • New note this year • To disclose the forthcoming government direction on accounting treatment on capital contribution starting 2010-11 • School boards are required to adopt the policy to recognize government transfers and external contributions used in the acquisition of TCA over useful life of the asset • Purpose of the policy • Ensure consistency with current practice of senior governments in Canada and other major broader public-sector organizations (hospitals, colleges and universities), • Ensure that school board operating surpluses or deficits are not distorted by capital grant revenues. • PSAB Compliance • Not currently a recognized option by the Public Sector Accounting Standards Board (PSAB) • Do not need to be implemented in 2009-10 financial statements.

12. Questions?

13. Further Information • Finance Officer As a first point of contact, please direct queries to your finance officer, who will coordinate with the Reporting Entity Team to resolve your query. • Reporting Entity Team Andrew Yang Elizabeth Sulkovsky Project Manager Senior Business & Policy Analyst 416-325-4212 416-325-8527 Andrew.Yang@ontario.caElizabeth.Sulkovsky@ontario.ca Soundari Vigneshwaran Patrick Pelletier Business Analyst Business Analyst 416-326-9168 416-325-2058 Soundari.Vigneshwaran@ontario.caPatrick.Pelletier@ontario.ca