2023-2024 Financial Reporting Requirements
Table of contents
- 1.0 Effective date
- 1.1 Context and background
- 2.0 Scope
- 3.0 Accounting standards
- 4.0 References
- 5.0 Definitions
- 6.0 Financial reporting requirements by recipient types
- 7.0 Financial reporting description
- Annex A Schedule of Revenue and Expenses
- Annex B Schedule of Remuneration and Expenses – Chiefs and Councillors
- Annex C Schedule of Remuneration and Expenses – Unelected Senior Officials
- Annex D Statement of Movable Asset Reserve
1.0 Effective date
These financial reporting requirements ("FRR" hereafter) form part of the departments of Indigenous Services Canada and Crown-Indigenous Relations and Northern Affairs Canada’s Reporting Guide, are effective April 1st 2023 for fiscal year 2023-2024 and will remain in effect for subsequent fiscal years until further notice.
1.1 Context and background
Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) and Indigenous Services Canada (ISC) ("the departments" hereafter), have consolidated their financial reporting requirements into this FRR document, which forms an integral part of the Reporting Guide.
Recipients required to provide their annual financial statements package to the departments as per their funding agreement must prepare them in accordance with the FRR. Recipients should refer to section PS1201 – Financial Statement Presentation, of the Public Sector Accounting Standards Handbook (PSA Handbook) for specific financial statement presentation requirements applicable to their situation and some illustrative financial statements.
Reporting on the use of contribution funding to Indigenous people and to Canadians remains an essential element of the management control framework for transfer payments. The departments must demonstrate to Parliament, through their respective Ministers, that all funds, including those transferred to Indigenous and other recipients are spent in accordance with the terms and conditions of the funding agreements.
CIRNAC and ISC receive and review financial and non-financial information, allowing annual compliance activities to be undertaken to ascertain whether funds provided are expended for the purposes intended, and whether the financial situation of recipients remains sufficiently stable to ensure continued delivery of funded programs/services.
The FRR is designed to assist recipients of contribution funding from CIRNAC and/or ISC to comply with the terms and conditions of their funding agreements which pertain to financial accountability, transparency and reporting. This document should be read in conjunction with the recipient's funding agreement.
Other stakeholders may be involved in the management of the funding agreement, such as the recipient's accountant, audit firms or sometimes agencies receiving part of the funding provided to a recipient. Recipients shall provide the FRR to all those involved in managing the funding agreement as all such parties must also understand the annual financial reporting requirements applicable to them.
2.0 Scope
This document applies to all recipients of grants and contribution funding through a funding agreement from CIRNAC and/or ISC and as such have financial reporting requirements as outlined within the terms and conditions of their funding agreement.
3.0 Accounting standards
Financial statements are essential elements of accountability by depicting a recipient's financial health and providing information on how much funding was spent and for what purposes. Financial statements also assist in future decision making.
Financial statements are prepared by the recipient and, when required, audited by an independent, qualified auditor who provides a written, professional opinion on whether the financial statements are prepared in all material respects, in accordance with the applicable financial reporting framework. Financial statements provide important information to all stakeholders including for example, federal government departments who fund transfer payment programs, and the financial institutions that do business with all such entities.
3.1 First Nations
First Nations are expected to adhere to the Public Sector Accounting Standards. Published by the Public Sector Accounting Board (PSAB), the PSA Handbook applies to all forms of public sector entities in Canada, which includes First Nations from an accounting perspective.
3.2 Tribal councils and First Nations political organizations
Tribal councils and First Nations political organizations must adhere to the PSA Handbook accounting recommendations unless they are deemed to be profit-oriented enterprises, or not-for-profit organizations as per the definitions and recommendations in the CPA Canada Accounting Handbook’s Canadian Accounting Standards, in which case these apply.
Recipients are responsible for determining which of the accounting standards collections (CPA or PSAB) are relevant to their organization, and seek advice from their auditor as needed.
3.3 Recipients other than First Nations, tribal councils and First Nations political organizations
Recipients other than those listed in Sections 3.1 and 3.2 must adhere to the PSA Handbook accounting standards unless they are deemed to be profit-oriented enterprises or not-for-profit organizations as per the definitions and recommendations in the CPA Canada Accounting Handbook’s Canadian Accounting Standards.
Recipients are responsible for determining which of the accounting standards collections (CPA or PSAB) are relevant to their organization, and seek advice from their auditor as needed.
3.4 Agencies
In some instances, CIRNAC and/or ISC may provide transfer payment funding to a recipient who may in turn transfer a portion or all of this amount to an agency, as well as the related obligations i.e. delivery of programs and services, as outlined in its terms and conditions of the funding agreement. In such instances, the initial recipient remains accountable for the performance of its obligations as set out in the terms and conditions of the funding agreement.
The recipient and agency must have their own terms and conditions for transfer payment funding managed by the agency. The agency must provide to the recipient its financial statements. The departments may ask a copy of the agency’s financial statements upon written request to the recipient.
4.0 References
5.0 Definitions
For the purposes of this document see Appendix A of the Treasury Board of Canada's Directive on Transfer Payments.
6.0 Financial reporting requirements by recipient types
This section details the components of the financial reports that recipients must provide to the departments under their applicable funding agreement.
Recipients must submit their financial reporting package in the format of the Model for Audited Financial Statements available from the Reporting Guide website. When audited financial statements are required, recipients must hire an independent auditor who is a member in good standing of the provincial or territorial Chartered Professional Accountant (CPA) body of the province or territory in which the recipient has its administrative offices. These are the minimum standards to be met.
6.1 First Nations, tribal councils and First Nation political organizations
6.1.1 First Nations – Reporting Package F-0080
The First Nations Financial Transparency Act (the FNFTA) requires First Nations that are a band as defined in subsection 2(1) of the Indian Act (that is not party to a comprehensive self-government agreement given effect by an Act of Parliament) to publish on their internet site (or cause to be published on an Internet site) the following documents within 120 days after the end of their financial year:
- The First Nation's annual consolidated financial statements, audited by an independent auditor. The FNFTA requires the financial statements of a First Nation to be presented on a consolidated basis, see the FNFTA Section 2 for the meaning of "consolidated financial statements".
- A schedule of remuneration and expenses setting out the remuneration paid and the expenses reimbursed to its Chief and each of its Councilors for the financial year, accompanied by an independent auditor’s report or a review engagement report.
Reporting Package F-0080 for First Nations
First Nations are to provide their financial reports using the F-0080 reporting package and should submit 2 separate files, as follows:
FILE 1) Documents required under the FNFTA that will be published, on Canada’s FNFTA First Nations Profiles internet site including:
- Audited annual consolidated financial statements, including the independent auditor’s report (see Section 7.1)
- Audited schedule of remuneration and expenses (Chiefs and Councilors) accompanied by an independent auditor’s report or a review engagement report. This document is not to be part of the financial statements, it must be separate.
FILE 2) Documents required not covered by the FNFTA and that will not be published:
- Unaudited Program/Service/Activity Revenues and Expenses Schedules (see Section 7.2);
- Audited Schedule of Remuneration and Expenses (Unelected Senior Officials) accompanied by an independent auditor’s report or a review engagement report;
Please note that neither of the schedules in c) or d) are to be part of the financial statements. Refer to Section 7.3 for details on the schedules of remuneration and expenses.
6.1.2 Tribal councils and First Nation political organizations – Reporting Packages F-0080 or F-0081
Tribal councils and First Nation political organizations must refer to their funding agreement, or consult with their funding officer in the departments to determine which reporting package apply to their situation, either F-0080 or F-0081:
Reporting package F-0080 for tribal councils and First Nation political organizations
Tribal Councils and First Nation political organizations who provide their financial reports using the F-0080 reporting package should submit a single file including as follows:
- Annual audited consolidated financial statements, including the independent auditor’s report
- Unaudited program/service/activity revenues and expenses schedules (see Section 7.2)
- Audited schedule of remuneration and expenses (Chiefs and Councilors) accompanied by an independent auditor’s report or a review engagement report
- Audited schedule of remuneration and expenses (Unelected Senior Officials) accompanied by an independent auditor’s report or a review engagement report
Please note that neither of the schedules in c) or d) are to be part of the financial statements. Refer to Section 7.3 for details on the schedules of remuneration and expenses.
Reporting Package F-0081 for Tribal Councils and First Nation political organizations
Tribal councils and First Nation political organizations who provide their financial reports using the F-0081 reporting package need to submit the following:
- Unaudited Program/Service/Activity Revenues and Expenses Schedules (see Section 7.2)
6.2 Recipients other than First Nations, tribal councils and First Nation political organizations
Recipients other than tribal councils and First Nation political organizations must refer to their funding agreement, or consult with their funding officer in the departments to determine which reporting package apply to their situation, either F-0190, F-0191 or F-0192.
6.2.1 Reporting Package F-0190
- Audited annual financial statements (see Section 7.1)
- Unaudited program/service/activity revenues and expenses schedules (see Section 7.2)
OR
6.2.2 Reporting Package F-0191
- Audited program/service/activity revenues and expenses schedule(s) (see Section 7.2), accompanied by an auditor's report or review engagement report.
OR
6.2.3 Reporting Package F-0192
- Unaudited program/service/activity revenues and expenses schedule(s) (see Section 7.2)
7.0 Financial reporting description
7.1 Annual audited financial statements
Please note: Restatements of audited financial statements should only be considered if an event classified as exceptional occurs e.g. a material inaccuracy due to an accounting error, non-compliance with GAAP - Generally Accepted Accounting Principles, etc. CPA Canada Standards are to be applied when a restatement is requested by the recipient and reason for restatement documented in the restated financial statements’ notes.
Elements of the annual audited financial statements
When required to be submitted, the annual audited financial statements package must include, at a minimum, the following:
For First Nations (F-0080) |
For tribal councils and First Nation political organizations (F-0080) |
For all other recipients (F-0190) |
---|---|---|
Auditor’s letter to management | Auditor’s letter to management | Auditor’s letter to management |
Auditor's report | Auditor's report | Auditor's report |
Consolidated statement of financial position | Statement of financial position | Balance sheet |
Consolidated statement of operations (including budget figures) | Statement of operations (including budget figures) | Income statement (including budget figures) |
Consolidated statement of changes in net debt | Statement of changes in net debt | Statement of retained earnings |
Consolidated statement of cash flows | Statement of cash flows | Statement of cash flows |
Notes to financial statements | Notes to financial statements | Notes to financial statements |
The financial statements package is to be signed by an official authorized to represent the recipient.
7.2 Schedule of Revenue and Expenses (Annex A)
PLEASE NOTE: A separate schedule of revenue and expenses must be provided for each program/service/activity/project and broken down by set, fixed, flexible or block contribution funding types, as identified in the funding agreement for which the recipient has received funding.
The schedules of revenue and expenses must:
- Be presented on an accrual basis (revenues/funding received during the statement period less expenses incurred)
- Revenues are accounted for in the year in which the transactions or events occur giving rise to the revenues for monetary transactions
- Expenses are accounted for in the year in which the goods and services are acquired and a liability is incurred, or transfers are due for monetary transactions but do not include non-monetary transactions e.g. amortization expenses
- Disclose all revenues/funding received by source and expenses incurred by object for each program/service/activity specified in the funding agreement
- Include a revenue section that outlines funding/revenue from all sources including funds received from other government departments, private enterprises and other sources
- When there is more than 1 funding source for a program/service/activity/project, it would be beneficial for the recipient to provide additional detail on all funding sources as this information may be considered in the calculation of proportional reimbursements, where applicable.
- Present unexpended funds in other word prior year unexpended funding - where applicable
- Detail opening and closing balances of deferred/unexpended funding
- Disclose budget figures
- Include any additional information to the schedules/financial statements, if relevant
- Be approved by an authorized representative of the recipient through signature on the financial statement package submitted
7.3 Schedules of remuneration and expenses (Annexes B and C)
7.3.1 Auditor's attestation
The schedules of remuneration and expenses must include, for each schedule described in this section, an audit report or e review engagement report, as prepared by the recipient's auditor.
7.3.2 Requirement for schedules of remuneration and expenses
- Chief and Councillors - A schedule of remuneration and expenses for Chiefs and Councillors, in Annex B, that sets out separately the remuneration paid and the expenses reimbursed to the Chief and each Councillor—acting in their capacity as such and in any other capacity, including their personal capacity—by the First Nation and by any entity that, in accordance with Generally Accepted Accounting Principles, is required to be consolidated with the First Nation. See Annex B for definitions of "remuneration" and "expenses." The schedule must not include information about individuals other than the Chief and Councillors.
- Unelected Senior Officials – A schedule of remuneration and expenses, that sets out the information described in Annex C. The schedule must not include information about individuals other than unelected senior officials.
Please note:
- Schedules of remuneration and expenses are not to be part of the audited financial statements.
- As information about identifiable individuals (personal information) will appear in these reports, the First Nation should provide advance notice to those individuals these documents will be published and may be disclosed to its members. Only personal information that is reasonably necessary to complete the Schedules of Remuneration should be included in these documents.
7.4 Schedule of Movable Asset Reserve (Annex D)
Recipients who received Health Program "block" funding (or a "transfer", "flexible" or "flexible transfer" funding through agreements dated prior to April 2012) shall also provide the schedule of movable asset reserve, accompanied by an auditor's report or a review engagement report.
7.5 Auditors’ recommendations letter to management (Auditor's Letter)
The CPA Handbook recommends auditors to present to the audit committee or a similar governing body, any shortcomings in internal controls identified as a result of the audit process. This communication is referred to as either an "auditor's letter" or an "internal control letter". These letters and the recommendations contained therein, are valuable management tools with may assist the recipient in building and improving financial and administrative capacity.
The handbook also requires auditors to communicate, in writing and on a timely basis, significant deficiencies in internal controls identified during the audit, to those charged with governance. It is strongly recommended that the "auditor's letter" or "internal control letter" be provided to the departments, its submission however becomes a mandatory reporting requirement in the following cases:
- Where a recipient is already in default, as defined under default provisions of a funding agreement, this reporting requirement will be in addition to previously imposed requirements; and
- When a recipient is in default of the terms and conditions of its funding agreement and the departments have notified the recipient that a default management action is required.
Annex A
Schedule of Revenue and Expenses
20XX Budget | 20XX Actuals | 20XX (Prior year actuals) |
|
---|---|---|---|
Revenue (examples) | |||
Indigenous Services Canada and/or Crown-Indigenous Relations and Northern Affairs Canada | |||
Other revenue | |||
Indigenous Services Canada and/or Crown-Indigenous Relations and Northern Affairs Canada - Trust fund interest revenue | |||
Prior year unexpended funding (where applicable) | |||
Total revenues | |||
Expenses (examples) | |||
Advertising | |||
Audit fees | |||
Bank charges | |||
Emergency assistance | |||
Honoraria | |||
Insurance | |||
Interest on long-term debt | |||
Medical supplies | |||
Medical transportation | |||
Miscellaneous | |||
Office supplies | |||
Professional fees | |||
Rent | |||
Repairs and maintenance | |||
Salaries and benefits | |||
Security | |||
Telephone | |||
Tradition and culture | |||
Travel | |||
Total expenses | |||
Less: Non-Cash Items Note 2 | |||
Surplus (deficit) before transfers | |||
Transfers between programs | |||
Transfer to education (example) | |||
Transfer from casino (example) | |||
Surplus (deficit) |
Annex B
Schedule of Remuneration and Expenses – Chiefs and Councillors
Name of individual | Position title | Number of months (Note 1) |
Remuneration (Note 2) |
Expenses (Note 3) |
---|---|---|---|---|
Annex B Notes
- The number of months during the fiscal year that the individual was a Chief or Councillor.
As per the First Nations Financial Transparency Act: - "Remuneration" means any salaries, wages, commissions, bonuses, fees, honoraria and dividends and any other monetary benefits — other than the reimbursement of expenses — and non-monetary benefits.
Examples are provided in the supporting document which accompanies this document on the Internet sites of Crown-Indigenous Relations and Northern Affairs Canada and Indigenous Services Canada, in the section entitled: "Supplementary Information". - As per the First Nations Financial Transparency Act:
"expenses" include the costs of transportation, accommodation, meals, hospitality and incidental expenses.
Annex C
Schedule of Remuneration and Expenses – Unelected Senior Officials
Name of Individual (optional) |
Position title | Number of months (Note 1) |
Actual or approved salary range from / to |
Other remuneration (Note 2) |
Expenses reimbursed as part of other remuneration (Note 3) |
---|---|---|---|---|---|
Annex C notes
- The number of months during the fiscal year that the individual was on staff.
- "Remuneration" means any salaries, wages, commissions, bonuses, fees, honoraria, dividends and reimbursement of expenses — including the costs of transportation, accommodation, meals, hospitality and incidental expenses — and any other monetary benefits and non-monetary benefits.
- Expenses reimbursed as part of amount shown in Column 5.
Annex D
Statement of Movable Asset Reserve
20XX | 20XX (previous year) |
|
---|---|---|
Balance at beginning of year | ||
Amount provided in agreement for movable asset reserve | ||
Total | ||
Revenues generated | ||
Expenses (acquisitions and replacements) | ||
Balance at end of year |