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Financial Statements – presentation to municipal staff and elected officials Government of Yukon Community Services Whitehorse, Yukon March 30, 2011. Presentation Outline. Users of the Financial Statements (F/S) F/S Components Introduction to Public Sector Accounting Board (PSAB)

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Presentation Outline

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  1. Financial Statements – presentation to municipal staff and elected officials Government of Yukon Community ServicesWhitehorse, YukonMarch 30, 2011

  2. Presentation Outline • Users of the Financial Statements (F/S) • F/S Components • Introduction to Public Sector Accounting Board (PSAB) • Reporting model • Recent change to the reporting model: Tangible Capital Assets (TCA) • Non-compliance with Generally Accepted Accounting Principles (GAAP) • Audit opinion • Subsequent consequences • What to look for in F/S

  3. Users of the Financial Statements • Community residents • Resources available to your community and how they are used • Leadership and management of council • Mayor and Council • Planning and good decision making • Validated information by professional independent auditor • Governments • Funding decisions

  4. F/S Components • F/S have 4 Statements (plus Notes): • Statement of Financial Position • Statement of Operations • Statement of Change in Net Financial Assets • Statement of Cash Flows • Also required: • Schedules – i.e. Tangible Capital Assets and Segmented Information • Significant accounting policies – i.e. Tangible Capital Assets, Revenue Recognition • Comparative balances for all statements, notes, and schedules • Budget figures (approved by Mayor and Council)

  5. TCA Schedule - Example

  6. Introduction to PSAB • What is PSAB? • External organization, part of the Canadian Institute of Chartered Accountants • What does it do? • Sets financial reporting standards for all governments (Federal, Provincial/Territorial, Local) across Canada • Why? • To enhance public confidence in public sector reporting: • Accountability • Transparency • Comparability

  7. Reporting model Remember: Different basis = different results! Budget ≠ F/S

  8. Recent change to the reporting model: TCA Tangible Capital Assets (TCA)

  9. Non-compliance with GAAP Audit report: • Unqualified – Objective: No significant issues! • Reserved: • Qualified: positive opinion on the financial statements as a whole, but qualifies due to a departure from GAAPor a limitation in the scope of the examination (departure is not pervasive – can be isolated) • Adverse: financial statements are not presented fairly in accordance with GAAP (generalized issue) • Denial: Unable to form an opinion

  10. Non-compliance with GAAP Subsequent consequences: • Could affect financing costs with banks • Could affect receipt of funds from other governments • Public concern over council’s management practices • Federal Gas Tax agreements require that municipalities comply with PSAB – possibility of funds being held back • Affect eligibility for other federal and territorial programs – risk of reduced funding

  11. What to look for in F/S • Audit opinion • Significant differences between current year and prior year/budgeted figures • Notes should always agree to the F/S • Accumulated Surplus • Key indicator of a municipality’s financial health • Does not represent excess cash • Does represent its net worth • Contingent liabilities (i.e. lawsuits) • Subsequent events: Important events that occurred after the year-end, but before the date on which auditor signs opinion (and Council takes responsibility for the F/S

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