CRA Annual Report to Parliament 2011-2012 (PDF - Agence du ...

2. Summary of significant accounting policies
For financial reporting purposes, the CRA’s activities have been divided into two sets of financial statements: agency activities
and administered activities. The Financial Statements - Agency Activities include those operational revenues and expenses
which are managed by the CRA and utilized in running the organization. The Financial Statements - Administered Activities
include those revenues and expenses that are administered on behalf of the federal, provincial, and territorial governments,
First Nations, and other organizations. The purpose of the distinction between agency and administered activities is to
facilitate, among other things, the assessment of the administrative efficiency of the CRA in achieving its mandate. Taxrelated
assets, liabilities, revenues and expenses are excluded from these financial statements because they can only accrue
to a government, not to the tax agency that administers those transactions.
As required by the Canada Revenue Agency Act, the Financial Statements - Agency Activities have been prepared using
accounting principles consistent with those applied in the preparation of the financial statements of the Government of
Canada. The accounting principles used are based on Canadian public sector accounting standards. A summary of significant
accounting policies follows:
(a) Parliamentary appropriations
The CRA is financed by the Government of Canada through Parliamentary appropriations. Accounting for appropriations
provided to the CRA does not parallel financial reporting according to Canadian public sector accounting standards, as
they are based in large part on cash flow requirements. Consequently, items recognized in the Statement of Financial
Position and the Statement of Operations and Agency Net Financial Position may be different from those provided
through appropriations from Parliament. Note 3(b) provides a high-level reconciliation between the two bases of
reporting. The planned results in the Statement of Operations and Agency Net Financial Position are the amounts
reported in the Future-oriented Financial Statements - Agency Activities included in the 2011-2012 Report on Plans and
Priorities.
(b) Net cash provided by the Government of Canada
The CRA operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for
Canada. All cash received by the CRA is deposited to the CRF and all cash disbursements made by the CRA are paid from
the CRF. The net cash provided by government is the difference between all respendable cash receipts and all cash
disbursements including transactions with departments and agencies.
(c) Expense recognition
Expenses are recognized when goods are received and/or services are rendered.
(d) Services provided without charge from other government agencies and departments
Estimates of the cost for services provided without charge from other government agencies and departments are
included in expenses.
(e) Revenue recognition
Non-tax revenue is recognized when the services are rendered by the CRA.
Non tax revenues that are not available for spending cannot be used to discharge the CRA’s liabilities. While
management is expected to maintain accounting control, it has no authority regarding the disposition of nonrespendable
revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government
of Canada and are therefore presented in reduction of the CRA’s gross revenues.
(f) Vacation pay and compensatory leave
Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of
employment. The liability for vacation pay and compensatory leave is calculated at the salary levels in effect at the end of
the year for all unused vacation pay and compensatory leave benefits accruing to employees.
CANADA REVENUE AGENCY
87
ANNUAL REPORT
2011-2012