Rescinded [2009-10-01] - Policy on the Contingent Liabilities of the Government of Canada and Consequential Policies with Regard to the Reporting of the Financial Position of, and Insurance Schemes Operated by, Crown Corporations - TB Circular 1984-63

Part VI of the Financial Administration Act requires that accounts be kept to show (Section 54(2)(a)), and the Public Accounts disclose (Section 55(2)(b)), "the contingent liabilities of Canada"

Contingent liabilities of the Government of Canada include:

1. explicit guarantees by the government of the following types of obligations of entities which are not Crown corporations:
   1. borrowings;
   2. insurance programs operated by the Government of Canada;
   3. other explicit guarantees (excludes borrowings); and
2. other potential losses arising from pending and threatened litigation relating to claims and assessments in respect of breach of contract, damages to persons and property, and like items.

The amount to be reported as a contingent liability of the Government of Canada is the specific amount when known; otherwise an estimate should be provided, where possible, along with a narrative description of the circumstances.

Where guarantees have been issued by the government, the percentage of average net claims to the average outstanding guarantees over the sixty-month period ending on the reporting date, is to be reported.

When Parliament has limited the aggregate value of guarantees, such limit shall be reported to disclose the utilization of the authority granted by Parliament.

The Senior Financial Officer of each department and agency within the accounting entity is responsible for:

1. identifying the contingent liabilities,
2. determining the amounts, and
3. reporting the information required to the Receiver General for Canada,

for the organizations and departmental corporations reporting through their Minister.

As a minimum, contingent liabilities are disclosed in a note to the audited financial statements of the government and are described in more detail in the "Statement of Contingent Liabilities" found in Volume 1 of the Public Accounts of Canada.

Included are the assets, liabilities (including identification of borrowings on behalf of the Crown), equity and contingent liabilities of Crown corporations which are outside the accounting entity.

The amounts to be reported are the values of the following items as shown in the accounts of the Crown corporations.

1. Assets
   • Total assets separately identifying claims against the government and other Crown corporations.
2. Liabilities
   • Borrowings separately identifying obligations to the government and other Crown corporations. Where any such borrowings are explicitly guaranteed under an authority of Parliament, the authorized limit of such guarantees will also be reported.
   • All other liabilities.
3. Financial interest of the government
   • Obligations to the government.
   • Share capital and contributed surplus.
   • Retained earnings/deficit.

The Chief Executive Officer of each Crown corporation is responsible for:

1. identifying the assets, liabilities, equity and contingent liabilities of the corporation;
2. ensuring that the amounts are calculated in accordance with the presentation in the annual report;
3. reporting the information required to the Receiver General for Canada.

Parent Crown corporations should report the amounts in paragraph 12 on a consolidated basis. Where a wholly-owned subsidiary is not consolidated, its parent Crown corporation must ensure that the amounts in paragraph 12 are reported for that subsidiary.

A separate note to the audited financial statements of the government will summarize the information required in paragraph 12.

A table is to be included in Volume I of the Public Accounts disclosing (as a minimum) the information requested in paragraph 12 for each Crown corporation.

Included are all insurance schemes operated by Crown corporations, where a fund or provision for claims has been established in the accounts of the corporation.

As a minimum, the following items are to be reported for such insurance schemes:

1. amount of insurance in force;
2. amount of the fund or provision;
3. amount of net claims paid during the year;
4. average of net claims paid over the most recent five years.

The Chief Executive Officer of each Crown corporation is responsible for:

1. identifying the insurance schemes operated by the corporation;
2. determining the amounts;
3. reporting the information required to the Receiver General for Canada; and
4. providing an assessment of the adequacy of insurance funds or provisions using Department of Insurance standards wherever applicable.

Parent Crown corporations should report the amounts in paragraph 16 on a consolidated basis. Where a wholly-owned subsidiary is not consolidated, its parent Crown corporation must ensure that the amounts in paragraph 16 are reported for that subsidiary.

A separate note to the audited financial statements of the government will summarize the information required in paragraph 16.

Commencing with the quarter ending March 31, 1984, and for each subsequent quarter, the Senior Financial Officer or Chief Executive Officer, as appropriate, shall submit to the Receiver General statements, as at the end of each quarter, of the contingent liabilities, the financial position of the Crown corporation, and the pertinent statistics of insurance schemes as described in this policy for the organizations for which he or she has the responsibility for reporting. These statements are to be sumitted in accordance with Receiver General Directives.

For further information concerning this circular contact: