Rescinded [2017-04-01] - Directive on Recording Financial Transactions in the Accounts of Canada

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1. Effective date

1.1 This directive takes effect on October 1, 2009.

1.2 It replaces the Policy on Classification and Coding of Financial Transactions (dated January 10, 1994).

2. Application

2.1 This directive applies to departments as defined in section 2 of the Financial Administration Act.

2.2 Those portions of sections of this directive that provide for the Comptroller General to monitor compliance with this policy within departments and/or request departments take corrective action, do not apply with respect to the Office of the Auditor General, the Office of the privacy Commissioner, the Office of the Information Commissioner, the Office of the Chief Electoral Officer, the Office of the Commissioner of Lobbying, the Office of the Commissioner of Official Languages and the Office of the Public Sector Integrity Commissioner. The deputy heads of these organizations are solely responsible for monitoring and ensuring compliance with this policy within their organizations, as well as for responding to cases of non-compliance in accordance with any Treasury Board instruments that address the management of compliance.

3. Context

3.1 This directive supports the objectives of the Policy on Internal Control by outlining the responsibilities of the chief financial officer for developing and maintaining a classification of accounts structure for the organization that is based on the government-wide classification structure.

3.2 Sound business practices and rigorous stewardship over public funds require all financial transactions to be accurately accounted for and recorded on a timely basis in the Accounts of Canada.

3.3 A sound government-wide classification structure is essential to the identification, aggregation and reporting of financial transactions. Accuracy in the recording of financial transactions ensures factual reporting, both on a government-wide and departmental basis, which supports decision making and reporting requirements at various levels.

3.4 The classification structure for the Accounts of Canada is composed of the following six elements: responsibility; financial reporting; authority; program; object and transaction type (internal/external).

3.5 This directive is issued pursuant to sections 7 and 9 of the Financial Administration Act.

3.6 This directive is to be read in conjunction with the Policy on Internal Control.

4. Definitions

Definitions to be used in the interpretation of this directive are in Appendix A.

5. Directive statement

5.1 Objective

To ensure the organization's classification of accounts structure is soundly managed and is based on the government-wide classification structure which allows for accurate identification, aggregation and reporting of financial transactions.

5.2 Expected results

  • Financial resources are used appropriately, based on the right authority, and losses due to waste, abuse, mismanagement, errors, fraud, omissions and other irregularities are minimized.
  • Financial information is accurately reported in the Public Accounts of Canada and departmental accounts.

6. Requirements

6.1 General

The chief financial officer is responsible for the following:

6.1.1 Developing and maintaining a departmental chart of accounts that is integrated with the departmental financial system.

6.1.2 Ensuring that when recording financial transactions, each coding element is used as defined and for the intended purpose and allows for the identification of all elements of the Government-wide Chart of Accounts for Canada shown in Appendix B.

6.1.3 Ensuring the departmental chart of accounts allows for financial reporting that is in accordance with the departmental Management Resources and Results Structures (including at the program activity level) and with central agency requirements.

6.1.4 Establishing and maintaining management practices and controls that ensure the quality and integrity of coding of financial transactions.

6.1.5 Ensuring that financial transactions are accurately recorded to allow a fair presentation of financial statements that meet the requirements of Treasury Board Accounting Standards (TBAS). Note that section 80(1)(d) of the Financial Administration Act applies.

6.2 Monitoring and reporting requirements

6.2.1 Chief financial officers are responsible for supporting their deputy head by overseeing the implementation and monitoring of this directive in their departments, bringing to the deputy head's attention any significant difficulties, gaps in performance or compliance issues, developing proposals to address these, and reporting significant performance or compliance issues to the Office of the Comptroller General.

6.2.2 The Comptroller General is responsible for monitoring departments' compliance with the requirements of this directive and conducting a review within five to eight years.

7. Consequences

7.1 In instances of non-compliance, the deputy heads are responsible for taking corrective measures within their organizations with those responsible for implementing the requirements of this directive.

7.2 In support of the responsibility of deputy heads to implement the Policy on Internal Control and related instruments, chief financial officers are to ensure corrective actions are taken to address instances of non-compliance with the requirements of this directive. Corrective actions can include requiring additional training, changes to procedures and systems, the suspension or removal of delegated authority, disciplinary action, and other measures as appropriate.

7.3 Individuals are reminded that sections 76 to 81 (Civil Liabilities and Offences) of the Financial Administration Act as well as sections 121 (Frauds against the Government), 122 (Breach of Trust), 322 (Theft) and 380 (Fraud) of the Criminal Code may apply.

8. Roles and responsibilities of government organizations

This section identifies other significant departments with respect to this directive. In and of itself, it does not confer an authority.

8.1 The Department of Public Works and Government Services Canada is responsible for:

  • Communicating any changes made to the Government-wide Chart of Accounts for Canada;
  • Issuing operational instructions and providing advice on and interpretation of the Government-wide Chart of Accounts for Canada;
  • Providing implementation assistance on the Government-wide Chart of Accounts for Canada, including appropriate training or information sessions;
  • Posting financial information received from departments and agencies into the "Receiver General-General Ledger", allowing the centralized recording of financial information in the Accounts of Canada;
  • Monitoring the quality of government-wide classification and coding; and
  • Providing reports to parliamentarians, central agencies, departments and other key stakeholders.

8.2 Treasury Board Secretariat, Office of the Comptroller General is responsible for development, oversight and maintenance of this directive and for providing interpretative advice.

9. References

9.1 Other relevant legislation and regulations

9.2 Related policy instruments and publications

10. Enquiries

10.1 Please direct enquiries about this directive to your departmental headquarters. For interpretation of this directive, departmental headquarters should contact:

Government Accounting Policy and Reporting Division
Financial Management and Analysis Sector
Office of the Comptroller General
Treasury Board Secretariat
Ottawa ON K1A 0R5

Email: fin-www@tbs-sct.gc.ca
Telephone: 613-957-7233
Fax: 613-941-8487

10.2 For enquiries related to the Government-wide Chart of Accounts and for requests for new codes, departmental headquarters should contact:

Central Accounting and Reporting Sector
Central and Public Accounts Reporting Directorate
Accounting, Banking and Compensation Branch
Department of Public Works and Government Services
Gatineau QC K1A 0S5

Email: ncr.rgacas@pwgsc.gc.ca
Telephone: 819-956-0432
Fax: 819-956-8400

Appendix A — Definitions

Accounts of Canada (comptes du Canada)
Is the centralized record of the financial transactions and account balances of the Government of Canada, maintained by the Receiver General. The Accounts of Canada consist of the summarized classification of transactions and account balances by responsibility, financial reporting, authority, program, object and transaction type.
authority classification (classification par autorité)
Is derived from the Estimates and identifies the parliamentary appropriation (vote), statute or other legislative authority under which the transaction is authorized. It also identifies whether the transaction is budgetary or non-budgetary and statutory or non-statutory.
departmental chart of accounts (plan comptable ministériel)
Is a list of departmental accounts and codes for all fields used to classify, record and report financial transactions in the government-wide coding block.
financial reporting classification (classification par rapports financiers)
Identifies the relevant asset, liability, equity, revenue or expense account and is used to maintain the accounts in the "Receiver General-General Ledger" and to prepare financial statements and the Public Accounts of Canada.
object classification (classification par objets)
Identifies the type of goods or services acquired, the transfer payments made, the source of receipts or the cause of increases or decreases in assets and liabilities.
management practices and controls (pratiques et contrôles de gestion)
Are policies, processes, procedures and systems that enable a department to operate its programs and activities, use its resources efficiently and effectively, exercise sound stewardship, fulfill its obligations and achieve its objectives.
program classification (classification par programme)
Is derived from the Estimates and identifies the program activities within a department's program activity architecture. Because departments provide expenditures for each program down to its activities and lower levels, expenditures can be aggregated to account for the use of resources in the achievement of results and the realization of the strategic outcome.
responsibility classification (classification par responsabilité)
Identifies the organizational unit that is responsible and accountable for the transaction. The responsibility structure must be consistent with the organizational structure to allow aggregation at the department or agency level.
transaction type (internal/external) classification (classification par type d'opération [interne/externe] )
Identifies transactions as being either internal to the government or external (i.e., related to parties outside the Government of Canada reporting entity), allowing the government to produce consolidated financial statements that exclude internal transactions.

Appendix B — Government-wide Classification Structure and Sample Departmental Chart of Accounts

This chart exhibits the six government-wide classifications for financial transactions. It also illustrates a typical departmental chart of accounts.

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Recording Financial Transaction in the Accounts of Canada
Text version: Recording Financial Transaction in the Accounts of Canada

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