1. MODULE 8
Financial Statements
Lecturer:
Peter Moreira, MBA, CGA

2. RESPONSIBILITY FOR FINANCIAL STATEMENTS
f/s include statement of responsibility
agency responsible for integrity and objectivity of f/s (Canadian GAAP)
agency responsible for financial management and internal control systems and maintenance of government accounts (FAA)
role of Auditor General in providing opinion on f/s (Auditor’s Report refers to government responsibility for f/s)

3. RESPONSIBILITY FOR FINANCIAL STATEMENTS
parliamentary procedure for tabling and reviewing public accounts
SORP-1 “Financial statement discussion and analysis should include a statement acknowledging the government’s responsibility for its preparation.”

4. FINANCIAL STATEMENTS CONCEPTS AND OBJECTIVES
f/s concepts and objectives form foundation of financial accounting and reporting
objective of accounting and reporting standards (PSAB, CICA)
many concepts and objectives described in Public Sector Accounting Handbook similar to those contained in CICA Handbook - Accounting
provide principles for measurement, recognition, presentation and disclosure of financial information
promote accountability and be informative to users of f/s - public, legislators, analysts

5. f/s evaluate financial position
full accounting of resources
information about current and future ability to provide services
information about changes in financial position over reporting period
information useful in determining quality of government stewardship function
information on whether government operated within legislative mandate

6. SUMMARY FINANCIAL STATEMENTS
summary financial statements provide most complete information including GAAP, required disclosures and consolidation of required entities that make up GRE
Consolidated Fund - Operating and Special Accounts
Crown and Not-for-profit Organizations
GBEs
individual departments, crown organizations and GBEs prepare f/s summarized in the accounts of Canada maintained by the Receiver General
Public Accounts of Canada (3 volumes)
Volume I - Summary Report and Financial Statements
Volume II - Details of Expenses and Revenues
Volume III - Additional Information and Analyses

7. Public Accounts of Manitoba (4 Volumes)
prepared annually by statutory requirement in accordance FAA and reflect financial position of government and operating results for fiscal year
Volume 1 (published as part of Government Annual Report)
audited Summary Financial Statements of government focusing on entire reporting entity

8. Table of Contents - Summary F/S 2009/10 Statement of Responsibility
Auditor's Report
Consolidated Statement of Financial Position
Consolidated Statement of Revenue and Expense
Consolidated Statement of Accumulated Deficit
Consolidated Statement of Change in Net Debt
Consolidated Statement of Cash Flow
**Notes to Summary Financial Statements

9. Schedules to Summary Financial Statements
Schedule 1 - Consolidated Statement of Amounts Receivable
Schedule 2 - Consolidated Statement of Loans and Advances
Schedule 3 - Government Business Enterprises Schedule of Consolidated Operating Results and Financial Position
Schedule 4 - Consolidated Statement of Borrowings
Schedule 5 - Consolidated Statement of A/P, Accrued Charges, Provisions and Unearned Revenue
Schedule 6 - Consolidated Statement of Pension Liability
Schedule 7 - Consolidated Statement of Tangible Capital Assets
**Schedule 8 - Funds, Organizations, Business Enterprises Comprising GRE
**Schedule 9 - Consolidated Statement of Operations by Sector
Schedule 10 - Consolidated Details and Reconciliation to Core Government Results

10. STATEMENT OF RESPONSIBILITY
The summary financial statements are prepared under the direction of the Minister of Finance in accordance with the stated accounting policies of the Government reporting entity and include summary statements of financial position, revenue and expense, accumulated deficit, change in net debt, cash flow, notes and schedules integral to the statements. Together, they present fairly, in all material respects, the financial condition of the Government reporting entity at the fiscal year end and the results of its operations for the year then ended in accordance with Canadian generally accepted accounting principles, applied on a basis consistent with that of the preceding year.

11. The Government is responsible for the integrity and objectivity of the
summary financial statements. In the preparation of these statements,
estimates are sometimes necessary because a precise determination of
certain assets, liabilities, revenues and expenses is dependent on future
events. The Government believes such estimates have been based on
careful judgements and have been properly reflected in the summary
financial statements.
The Government fulfills its accounting and reporting responsibilities, through the
Office of the Provincial Comptroller, by maintaining systems of financial
management and internal control. The systems are continually enhanced and
modified to provide timely and accurate information, to safeguard and control the
Government’s assets, and to ensure all transactions are in accordance with The
Financial Administration Act.

12. The Auditor General expresses an independent opinion on these financial
statements. Her report, stating the scope of her audit and opinion, appears on the
following page.
These financial statements are tabled in the Legislature. They are referred to the
Standing Committee on Public Accounts, which reports to the Legislature on the
results of its examination together with any recommendations it may have with
respect to the financial statements and accompanying audit opinion.
On behalf of the Government of the Province of Manitoba.
xxxxxxx
Provincial Comptroller
August 16, 2010

22. DISCLOSURE NOTES TO FINANCIAL STATEMENTS
PS 2100
standards for disclosure notes of significant accounting policies and various financial statement items
disclosure notes included with f/s to provide additional information to users but not to compensate for improper accounting treatment
disclosure requirements for public sector similar to private sector to ensure fair disclosure of information

23. Disclosure Notes 1-14 of Public Accounts of Canada include disclosure of
1. Significant accounting policies
2. **Spending and borrowing authorities
3. **Expenses
4. Accumulated deficit
5. Unmatured debt and other financial instruments
6. Public sector pensions and other employee and veteran future benefits
7. Due to Canada Pension Plan
8. Tax and other accounts receivable
9. Foreign exchange accounts
10. Crown corporations and other government business enterprises
11. **Other loans, investments and advances
12. **Tangible capital assets
13. **Contractual obligations
14. Contingent liabilities

28. SCHEDULES TO THE FINANCIAL STATEMENTS
schedules to f/s
used to elaborate (explanatory) on f/s items and to present information necessary for fair presentation of government operations
not be used as substitute for proper accounting treatment
integral part of f/s (follow disclosure notes)

29. schedules include Consolidated Statement of A/R
Consolidated Statement of Borrowings
Consolidated Statement of Tangible Capital Assets
Funds, organizations and business enterprises comprising the GRE

30. CONDENSED FINANCIAL STATEMENTS
Government of Canada issues condensed f/s in Annual Financial Report
condensed f/s
extracted and summarized from audited f/s contained in Volume 1 of public accounts
not contain all required disclosures contained in complete f/s
Annual Financial Report more analytical than public accounts and contains
economic analysis (economic and fiscal update)
financial highlights on revenues and expenses
information on o/s debt and budget surplus

31. Module Summary
Review the statement of responsibility that usually accompanies government financial statements, and the PSAB requirements with respect to this statement. (Level 1)
Identify the objectives of financial statements and the qualitative characteristics of financial statement information. (Level 1)
Identify the main components of each of the four required financial statements, and evaluate how this information contributes to assessing a government’s financial condition at the end of the accounting period and its financial performance during the accounting period. (Level 1)

32. Identify the relationships among the statements of financial position, operations, remeasurement gains and losses, change in net debt, and cash flow. (Level 1) Explain the PSAB disclosure requirements and provide examples of disclosures typically found in public-sector financial reporting. (Level 2)
Compare and contrast summary, condensed, and detailed financial statements. (Level 2)
Explain the importance and purpose of financial statement schedules. (Level 2)