Costing Process in support of CFO Attestation 22 February 2016 Vrenti Ghergari, CPA, CMA, CCEA

Background Costing Process CFO Attestation Guide Practical Application Agenda Background Costing Process CFO Attestation Guide Practical Application

Introduction Federal Accountability Act – 2006 Established Deputy Ministers as accounting officers Policy on Financial Management Governance - 2010 Outlines the role of the CFO Financial management, program financing, financial reporting and disclosure Guideline on Chief Financial Officer Attestation for Cabinet Submissions – 2014 Six fundamental assertions Guideline on Cost Estimation for Capital Asset Acquisitions – 2015 Outlines the costing process

Costing Process Components Plan Approach Establish GR&As Develop Cost Model Review, Analyze & Update Provide Assurance Present Each Component must be Documented! Cost Estimate = Model + Documentation Not Necessarily Sequential Many activities are iterative and can be accomplished in varying order or concurrently! Assistant Deputy Minister (Finance) Sous-ministre adjoint (Finances)

Training Requirements for the Costing Process Program Knowledge Canada School of Public Service Project Approval Course (DND specific) Technical Knowledge CEBoK

Link to CFO Attestation Costing Process Step Link to CFO Attestation Example Planning Stakeholder engagement Purpose Timing Informs the overall attestation process Length of time Resources dedicated to analysis Stakeholders: Decision Makers, NFPS, Central Agencies, Independent Reviewers Purpose: Inform Parliament as part of 7 Point Action Plan Timing: 60 days

Link to CFO Attestation Costing Process Step Link to CFO Attestation Example Establish Boundaries and Assumptions Boundaries: conditions that constrain the scope of the estimate Assumptions: developed by the cost analyst in order to address any information gaps to produce the estimate Criterion 1.1 Key financial assumptions are clearly documented. Criterion 1.2 Key financial assumptions are reliable. Boundaries: Aircraft Lifecycle (30 years); Number of Aircraft (65); Yearly Flying Rate (11,700); etc. Assumptions: FX (0.92 USD/CAD); Disposal Profile (FIFO); Force structure (similar to CF-18); etc.

Link to CFO Attestation Costing Process Step (s) Link to CFO Attestation Example Develop Model Purpose Scope CBS Sensitivity Criterion 3.1 A costing methodology has been established and used. Criterion 3.2 Financial requirements are clear, accurate, complete and consistent with assumptions. Criterion 3.3 Sensitivity of resource requirements is reflected. Criterion 3.4 The proposal reflects the effective, efficient and economical use of the Government of Canada's resources. Excel Model – compliant with Spreadsheet Standards Review Board principles Data, Populate, and Document Model Data Costing methodologies

Link to CFO Attestation Costing Process Step Link to CFO Attestation Example Review, Analyze and Update Sensitivity Risk Analysis Criterion 2.1 Key risks have been considered. Criterion 2.2 Likelihood and impact of key risks has been considered. Criterion 2.3 Risk response and mitigation strategies are clear. Shows the impact of a depreciation of CAD Quantifies the impact of identified risk factors Contingency Based on risk analysis

Annual Update 2014 Excerpt

Link to CFO Attestations Costing Process Step Link to CFO Attestations Example Present Develop reports for internal and external use Key financial assumptions are documented and reliable Key risks have been considered, assessed, and managed Financial requirements have been quantified and disclosed Sufficient Funding 2014 Annual Update to Parliament

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