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

1 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

2 Why do I care? Implementation…  DSB Financial Statements (Nov 09)  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

3 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)

4 Key Features of New Model  5 “Messages” about DSB finances Indicators of Financial Position 1. Net Debt 2. Accumulated surplus/deficit Indicators of Changes in Financial Position 1. Annual surplus/deficit 2. Change in net debt 3. Cash Flows  Moves away from a one-dimensional focus on surplus/deficit.

5 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)

6 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.

7 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 - not cash flow based - amortization, actuarial expense for benefits - 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.

8 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

9 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.

10 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

11 Useful Reference Document 20 Questions about Government Financial Reporting   Published in 2003  Refers to Senior Levels of Government but still applicable

12 Other Forms  Sch 5.1Deferred Revenue Statement of Continuity  Sch 7 Detail of Consolidated Statement of Financial Position  Sch 8Tangible Capital Asset Continuity Schedule  Sch 8AInter-entity Tangible Capital Asset Activities  Sch 9Revenues  Sch 10Expenses