Vol. 145, No. 6 — March 16, 2011
SOR/2011-62 March 7, 2011
FINANCIAL ADMINISTRATION ACT
ARCHIVED — Regulations Exempting a Department and Parent Crown Corporations from the Requirements of Subsections 65.1(1) and 131.1(1) of the Financial Administration Act
T.B. 836029 March 7, 2011
The Treasury Board, pursuant to subsections 65.1(4) (see footnote a) and 131.1(4) (see footnote b) of the Financial Administration Act (see footnote c), hereby makes the annexed Regulations Exempting a Department and Parent Crown Corporations from the Requirements of Subsections 65.1(1) and 131.1(1) of the Financial Administration Act.
REGULATIONS EXEMPTING A DEPARTMENT AND PARENT CROWN CORPORATIONS FROM THE REQUIREMENTS OF SUBSECTIONS 65.1(1) AND 131.1(1) OF THE FINANCIAL ADMINISTRATION ACT
1. The Canadian Security Intelligence Service is exempted from the requirement of subsection 65.1(1) of the Financial Administration Act.
2. The Blue Water Bridge Authority, the Canadian Dairy Commission and the National Arts Centre Corporation are exempted from the requirement of subsection 131.1(1) of the Financial Administration Act for the first fiscal quarter ending after April 1, 2011.
COMING INTO FORCE
3. These Regulations come into force on April 1, 2011.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issue and objectives
Pursuant to sections 65.1 and 131.1 of the Financial Administration Act (FAA), departments and parent Crown corporations must prepare quarterly financial reports for each of the first three fiscal quarters ended after April 1, 2011. The legislation allows Treasury Board of Canada to exempt an entity from the requirement to produce a quarterly financial report or provide that content required in the legislation not be included in the report.
Since the quarterly financial reports will be made public, there are concerns from a national security perspective with regard to publishing information pertaining to the Canadian Security Intelligence Services (CSIS).
The National Arts Centre Corporation (NAC), the Canadian Dairy Commission (CDC) and the Blue Water Bridge Authority (BWBA) are transitioning to new accounting standards effective their first respective fiscal year starting after April 1, 2011. Based on their respective fiscal year end dates, all three would be required to issue a quarterly report for the third quarter which terminates after April 1, 2011, based on the current coming into force date for section 131.1 of the FAA. To alleviate the requirements to re-issue a third quarter report under the new accounting standards, it is proposed that a regulation exempt these three entities from the first quarterly report due to be published after April 1, 2011. All three will then be required to prepare and publish a quarterly financial report as per section 131.1 of the FAA effective the first quarter of the fiscal year that commences after April 1, 2011, and all subsequent quarters as required by section 131.1.
The objective of these Regulations is to ensure a smooth and orderly implementation of the legislative requirements for departments, agencies and parent Crown corporations to produce and publish a quarterly financial report.
Description and rationale
For national security reasons, an entity may be exempted from reporting on its performance. A regulation is required to indefinitely exempt CSIS from the requirements of section 65.1 of the FAA as disclosure of such information is not recommended due to national security reasons. Relieving CSIS from the requirements of section 65.1 of the FAA will ensure consistent reporting practices with other government performance reporting and eliminate the risk that sensitive, or potentially sensitive information, be released to the public.
A regulation is also required to exempt the NAC, the CDC and the BWBA from the requirements of section 131.1 of the FAA until the corporation’s first fiscal year starting after April 1, 2011. For parent Crown corporations, the coming into force date of April 1, 2011, coincides with requirements for the corporations to change accounting standards from current Canadian Private Sector Generally Accepted Accounting Principles (GAAP) to either Canadian Public Sector GAAP or International Financial Reporting Standards (IFRS) for fiscal year ends starting after January 1, 2011. This is a significant change in financial reporting, requiring extensive resources to implement. As well, there may be significant changes to financial positions and financial results for certain corporations as a result of this change.
Most parent Crown corporations have year ends of March 31 or December 31; thus the first quarterly reports will be under Canadian Public Sector GAAP or IFRS for the June 30, 2011, quarter. However, there are three corporations with non-standard year ends, namely the NAC, the CDC and the BWBA. With the April 1, 2011, coming into force date, these corporations would be required to prepare third quarter reports under Canadian Private Sector GAAP for the April or May 2011 quarter. In 2012, the comparative information would need to be restated to the new accounting basis, resulting in the previously reported third quarter results no longer being comparable. To reduce the burden on the corporations immediately prior to transitioning to Canadian Public Sector GAAP or IFRS, and to eliminate the need to explain changes in previously issued third quarter results, it is proposed that regulations be established to allow the NAC, the CDC, and the BWBA to implement the requirement for quarterly financial reporting in the first fiscal year starting after April 1, 2011. This will allow implementation to coincide with the first quarter of financial reporting under the new accounting standards.
These Regulations were drafted in consultation with the Treasury Board of Canada Secretariat and the Department of Justice. Affected departments and parent Crown corporations have been consulted, and support the Regulations. There are no other parent Crown corporations where the first quarterly financial report under the April 1, 2011, coming into force date would be for their third fiscal quarter; thus other parent Crown corporations were not consulted in the drafting of these Regulations.
Implementation, enforcement and service standards
Departments and parent Crown corporations are responsible for the preparation and publication of quarterly financial reports in compliance with the Financial Administration Act. The Treasury Board of Canada Secretariat will ensure that the parent Crown corporations noted within these Regulations publish a quarterly financial report once required.
Government Accounting Policy and Reporting
Treasury Board of Canada Secretariat
S.C. 2009, c. 31, s. 58
S.C. 2009, c. 31, s. 60
R.S., c. F-11