The Canadian Institute of Chartered Accountants’ Public Sector Accounting Board has released a new Government Reporting Model that will see federal, provincial and territorial governments move to a full accrual system of accounting and a more comprehensive set of financial statements that places less emphasis on the annual surplus or deficit number.

“The new reporting model will eliminate the one-dimensional focus on a government’s annual deficit or surplus number by requiring a more comprehensive set of indicators to be used in compiling the financial statements, numbers that will be much more useful to the public and anyone who has a stake in making sense of the numbers,” said Daryl Wilson, PSAB chair and the Auditor General for New Brunswick.

The new reporting model prescribes five indicators or ‘messages’ that should be included in government financial statements: net debt; accumulated surplus/deficit; annual surplus/deficit; change in net debt in the year; and cash flow in the year. It was approved in Fall, 2002, issued in January of this year, and will come into effect in April 2005, though some governments have indicated their intention to apply the new model sooner.

The new model, expected to reach full compliance among the senior governments, will also change the treatment of capital assets, such as roads, waterworks and buildings.

Wilson said the new rules won’t make it easier for governments to go on a capital spending spree. “A change in how a government measures its annual results doesn’t generate cash or open up spending room,” he said.

The Public Sector Accounting Board comprises eleven volunteer members drawn from senior levels of government, including federal and provincial auditors general, such as the Auditor General of Canada, Sheila Fraser, controllers, and deputy ministers, as well as municipal finance officials.