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PUT TITLE HERE. The New Reporting Model and Sample Forms. OASBO Finance Committee Workshop Transfer Payments & Financial Reporting Branch March 2008. Financial Reporting Model?? – What is it??.

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  1. PUT TITLE HERE The New Reporting Model and Sample Forms OASBO Finance Committee Workshop Transfer Payments & Financial Reporting Branch March 2008

  2. Financial Reporting Model?? – What is it?? • Sets out the rules, parameters and content requirement that prescribe what must be presented in the financial statements • the NUMBER, TYPE and FORMAT of the FS; • WHAT is to be reported; • WHEN it should be reported and • the NOTES that are required with the financial statements

  3. Why do I care? Implementation… • 2008-09 DSB Financial Statements (Nov 09) • 2009-10 DSB Estimates (Jun 09) • Therefore -- NEW • NUMBER, TYPE and FORMAT of the FS; • WHAT is to be reported; • WHEN it should be reported and • the NOTES that are required with the financial statements

  4. So What’s New? • Full accrual accounting • capitalization and amortization of capital assets • Statement of Financial Position – new format • “Net Debt” and • “Accumulated Surplus/Deficit” • Statement of Operations shows • replaces Stmt of Fin. Activities • a new calculation of annual surplus/deficit incl. amortization • New Statement of Changes in Net Debt • Capital expenditures • New Statement of Cash Flow • replaces Stmt of Changes in Financial Position • Requires boards to report budget numbers on both: • Statement of Operations (annual surplus/deficit) • Statement of Change in Net Debt (mostly capital expenditures)

  5. Key Features of New Model • 5 “Messages” about DSB finances Indicators of Financial Position • Net Debt • Accumulated surplus/deficit Indicators of Changes in FinancialPosition • Annual surplus/deficit • Change in net debt • Cash Flows • Moves away from a one-dimensional focus on surplus/deficit.

  6. Net Debt • Financial assets minus Liabilities • Often call “Future revenue requirements” • Focus of the Old financial reporting model • “Change in Net Debt” is what we used to call the “PSAB Surplus/Deficit” Example: Board builds a school for $30M and finances it. Net debt increases by $30M (loan liability)

  7. Accumulated Surplus/Deficit - NEW • Used to have only “Net Debt” (Fin. Assets less Liabilities) • Add the non-financial assets (mostly – Capital Assets) = “Net Economic Resources” (Resources available to provide future services net of liabilities owed) • An accumulated surplus - financial and physical resources to provide future services. • An accumulated deficit - annual operating deficits have been financed by borrowing. Previous Example: Where net debt increases when a school is built – Accumulated Surplus/Deficit does not change.

  8. Annual Surplus/Deficit • Answers the question - Do revenues cover the costs of services provided in the year? Complicated Number…. • Revenues – mostly from gov’t funding – cash flow based • Expenses - includes the annual cost of providing services. - not cash flow based - amortization, actuarial expense for benefits • A surplus does not necessarily mean the school board has money to spend or vice-versa • “Balanced Budget” discussions ongoing.

  9. Detail of Accumulated Surplus/(Deficit)- Sch 1.2 • New schedule – not a required form per GAAP • Somewhat replaces our old “FUNDS” reporting • Explains what the Accumulated Surplus/Deficit is composed of • Explains pieces of the Annual Surplus/Deficit

  10. Change in Net Debt • Explains the difference between the Annual Surplus/Deficit and the Net Debt • Major item – Investment in Capital Assets • Calculation of the Annual surplus/deficit uses amortization or the cost of capital assets over their useful lives • Calculation of Change in Net Debt uses the whole cost of the asset when purchased. Note: Budget numbers are required.

  11. Consolidated Statement of Cash Flows • Where the cash has come from? • What has been done with it? • Starts from Annual Surplus/(Deficit) Sections • OPERATING • CAPITAL (NEW) • INVESTING • FINANCING

  12. Useful Reference Document 20 Questions about Government Financial Reporting • http://www.psab-ccsp.ca/index.cfm/ci_id/18658/la_id/1 • Published in 2003 • Refers to Senior Levels of Government but still applicable

  13. Other Forms • Sch 5.1 Deferred Revenue Statement of Continuity • Sch 7 Detail of Consolidated Statement of Financial Position • Sch 8 Tangible Capital Asset Continuity Schedule • Sch 8A Inter-entity Tangible Capital Asset Activities • Sch 9 Revenues • Sch 10 Expenses

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