Effective: April 1, 1998
Responsibility: Vice-President and Chief Financial Officer
APPENDIX A
GENERAL ACCOUNTING
1. ACCRUAL ACCOUNTING
The Corporation is required by the Broadcasting Act to adhere to generally accepted accounting principles. In addition, financial reporting throughout the year must be consistent and provide all levels of CBC/Radio-Canada Management with complete and accurate financial information. Therefore, the accrual method of accounting will be followed in the preparation of monthly financial reports.
DEFINITION
"Accrual basis of accounting" is the method of recording revenue and expense transactions for the determination of net income in the period that they are deemed to have been earned and incurred, respectively, whether or not such transactions have been settled by the receipt or payment of cash or its equivalent. Revenues and expenses are recorded as goods/services are received/rendered regardless of the timing of related cash receipts or payments. This method attempts to match revenues and expenses during each fiscal period.
During the fiscal year, the degree of accuracy and completeness of the various accruals and estimates may not be the same as at year-end when extra time is provided to ensure full compliance.
At fiscal year-end, the full provisions of the Fiscal Year-end Procedures will apply.
2. YEAR-END INSTRUCTIONS
Year-end instructions, timetable and procedures will be updated and revised each year. The procedures are such as to enable the Corporation to comply with the governing statutes, while the timetable ensures that the CBC/Radio-Canada's annual report, which includes financial statements, is submitted to the appropriate minister within three months of the end of the fiscal year, as required by the Broadcasting Act.
In preparing its annual financial statements, the Corporation, as required by the Financial Administration Act, follows the provisions of the Canada Business Corporations Act which, in turn, requires adherence to the generally accepted accounting principles (GAAP) promulgated in the Canadian Institute of Chartered Accountants Handbook.
The precise determination of the values of many assets and liabilities is dependent on future events. Nevertheless, when the Corporation's financial statements are prepared, it must be with the utmost regard for accuracy in light of information currently available, in particular:
- Inventories of programs will be stated at cost. Programs which are unusable, as defined in Corporate Policy 2.3.24 will be written-off, as required by that policy, under the authority specified in Financial Signing Authorities. In this context "cost" is to include all costs (direct, indirect, labour, facilities, etc.).
- Fixed assets will be recorded at original cost, and accumulated amortization is calculated on the straight-line method based on the estimated useful life of the asset. (Reference: Corporate Policy 2.3.2)
- Proceeds on sale/trade-in of capital assets will be accounted for in accordance with Corporate Policy 2.3.2.
- Accounts receivable will be reflected in the Financial Statements net of the allowance for doubtful accounts. (Reference: Corporate Policy 2.3.7)
3. RESPONSIBILITIES
3.1 CORPORATE
The Year-end Requirements Procedures specify deadlines which are themselves determined by the ultimate deadline imposed by Parliament. Corporate Finance and Administration is required to prepare consolidated corporate financial reports and comments, as well as any special or supplementary reports for review by Senior Management prior to their submission to the Audit Committee of the Board of Directors on a date in June specified in the Year-end Timetable.
3.2 NETWORK/REGIONAL FINANCE
The Network and Regional Senior Finance and Administration officers are responsible for the punctual execution of the functions described in detail in the Year-end Requirements Procedures and the prompt submission, to the specified officers, of the reports, schedules, exhibits and other documents described therein, including any necessary information and explanations.
The Network and Regional Senior Finance and Administration officers must establish local detailed procedures and timetables for the guidance of all local responsibility and cost center managers in preparing and submitting to Finance the following documents and information:
- A Liability Certificate, on a Corporation letterhead, duly completed and signed. This document must be supplied even when the liability is "nil".
- Any relevant documents in their possession, such as suppliers' invoices and receiving memos, verifying receipt of goods and services.
- Details of any pending claims, lawsuits or actions against the Corporation, which may have a future financial impact, and which must be referred to as Contingent Liabilities" in a note to the financial statements.
4. REPORTING
4.1 FORECASTS ON YEAR-END RESULTS
Monthly forecasts will be submitted to Corporate Finance and Administration within the timeframe communicated. These forecasts should be updated at any point as soon as any major change is known.
4.2 MATERIAL ADJUSTMENTS
Consolidated material adjustments are required from the Senior Finance and Administration Officers in Toronto, Montreal and Ottawa to satisfy the year-end requirements for both the Corporation and the CRTC. In the event that a material adjustment has been omitted or posted incorrectly at any other reporting point during the fiscal year, the Senior Finance and Administration Officers in these locations will ensure that Corporate Finance and Administration is made aware of the required correction, based on the schedule established by Head Office.
Any adjustments should be sent to Corporate Finance and Administration at Head Office.
Material adjustments for year-end purposes are defined as follows: single entries of $100,000 or greater for regional offices, $500,000 or greater for network offices - exceptions may be made for highlighted reporting areas, such as CBC/Radio-Canada Newsworld, R.D.I., Olympic Games, etc.
Consolidated analytical reviews on major variances may be required from time to time by Head Office Finance and Administration for inclusion in the quarterly financial reports.
4.3 CRTC REPORTING
The Directors of Finance and Administration and/or the senior Finance and Administration officer in each network location will provide the consolidated information required for the annual CRTC return. For licence renewals, specific instructions will be issued regarding the requirements by Corporate Finance and Administration.
5. ACCOUNTS RECEIVABLE - AGING
A credit and collections report will be prepared monthly by the Directors of Finance and Administration in Toronto, Ottawa and Montreal, in the format determined by Corporate Finance and Administration. These reports will be reviewed and analyzed by Accounting Operations, Head Office. A consolidated report is submitted to the Board of Directors on an annual basis.
6. DEADLINES
The due dates for submission of the above reports and analytical reviews will be communicated and revised as required by Corporate Finance and Administration.
7. REPORTING TO VICE PRESIDENT and CHIEF FINANCIAL OFFICER
Financial statements, funding and responsibility reports, analytical reviews, credit and collection reports and joint venture statements will be sent for review on a quarterly basis to the Vice President and Chief Financial Officer, for possible submission to the Board of Directors. This submission will be coordinated at Head Office.
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