CPPM Policy Chapter 3: Planning, Budgeting and Reporting

Planning, budgeting and reporting are inter-related elements and fundamental to an understanding of government's performance management and accountability process. This comprehensive Core Policy and Procedures Manual chapter was created to cover previous disparate financial management content, such as accounting policy, account classification, financial planning, budgetary control and financial reporting.

Policy is included for direction on service plans, reports, capital plans and performance measures in support of the BTAA, and policy for ministerial accountability reports in support of the BBMAA. Government's accounting policies are disclosed at the end of the reporting section. BTAA, BBMAA and FAA report requirements and responsibilities are summarized in the information and reference section. 

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• 3.0 Planning, Budgeting and Reporting
  • Part I: Planning
    • 3.1 Objectives
    • 3.2 General
    • 3.3 Policy
  • Part II: Budgeting
    • 3.1 Objectives
    • 3.2 General
    • 3.3 Policy
  • Part III: Reporting
    • 3.1 Objectives
    • 3.2 General
    • 3.3 Policy
      • Service Plan Reports
      • Ministerial Accountability Reports
      • Financial Reports
      • Chart of Accounts
      • Significant Accounting Policies
    • 3.4 Information and References
      • 3.4.1 Guidelines for Ministry Service Plans and Reports
      • 3.4.2 Chart of Accounts
      • 3.4.3 Specific Accounting Policies
      • 3.4.4 Summary of Reports Required by the BTAA
      • 3.4.5 Summary of Reports Required by the FAA
      • 3.4.6 Summary of Reports Required by the BBMAA

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Part I: Planning

3.1 Objectives

• ensure that government and ministries plan for key services provided to the public
• provide for the economic, efficient and effective use of resources required to deliver services
• ensure that ministry planning processes are integrated with government's overall strategic and financial planning, budget preparation and reporting processes
• ensure that ministry planning processes and activities are conducted in accordance with applicable legislation, regulations and Treasury Board policy

3.2 General

Planning in government is concerned with the provision of public services to achieve a variety of social and economic goals. The Province's strategic plan outlines key goals for the economy, social infrastructure and the physical environment. Planning, budgeting and reporting are all elements of government's performance management and accountability process. The ministry performance management context is illustrated in Performance Management Context (PDF).

Part 3 of the Budget Transparency and Accountability Act (BTAA) requires that government produce a strategic plan and that ministries produce three-year service plans. Government's human, financial and capital resources required for its strategic plan are set out in its budget or main Estimates. The budget is developed based on forecasts, key assumptions and risk assessments, which are integral to the planning process. Uncertainties and risks impacting the achievement of objectives require identification and assessment to determine how to manage them.

Ministry planning should be closely tied to budget preparation processes and reporting systems. Ministry service plans need to identify strategies for achieving their objectives. Management information systems need to track costs and measure outputs and outcomes to close the performance loop and support assessment of results compared to plan.

The planning policy below outlines the standard requirements for government and ministry service plans. Standards do not explain how to plan and allocate resources, or how to manage and mitigate risks. These are management processes unique to each organization, and best left to the respective ministers, senior executives and managers to direct. For guidance on service plans, refer to Information and References, Guidelines for Ministry Service Plans and Reports. For guidance on risk management processes and techniques, refer to Risk Management, Information and References.

3.3 Policy

1. The government must make public its overall strategic plan before or when the main Estimates are presented to the Legislative Assembly.
2. Ministries must prepare annual service plans that:
   • are consistent with the government's strategic plan;
   • describe the ministry's core business goals, objectives, strategies, performance measures and targets;
   • cover ministry appropriations (and other appropriations of the responsible minister) for the strategies outlined;
   • address the upcoming fiscal year and the following two fiscal years;
   • include a statement that the responsible minister is accountable for the service plan and for achieving the specific objectives in that plan; and
   • are made public by the responsible minister on the third Tuesday in February.
3. Ministries must establish performance measures for inclusion in their service plans, which may include a mix of output, outcome and efficiency measures. The measures must be results-oriented and must link with core business areas, service plan goals and resource allocation decisions. Performance measures should be reasonably stable to enable an assessment of changes over time. Where applicable, performance measures and targets should be consistent with any of those that have been included in ministry budget submissions.
4. Ministries must disclose in their service plans information concerning any commitment or anticipated commitment that exceeds $50 million (cumulative) towards the capital cost of an individual project. Ministries should link capital requirements with operating budgets and service delivery.  
5. Ministries must include a high level overview of their Information Resource Management Plan (IRMP) in their service plan, as required by the Chief Information Officer. A suitable level of content would include reference to significant expenditures or service enhancements, rather than operational items.
6. Ministries must include a high level overview of their Human Resource Management Plan (HRMP) in their service plan, as required by the Head of the BC Public Service Agency. The HRMP should tie into the ministry's overall plan and the government's plan for renewal of the public service.
7. Ministries must include a high level overview of their Enterprise-wide Risk Management (ERM) plan in their service plan. Refer to Risk Management, Policy, for additional requirements.
8. Ministry service plans will be subject to review by the Government Caucus Committees.
9. Ministry service plan reports must be published in the following year by August 31. 

Part II: Budgeting

3.1 Objectives

• provide assurance to the public that funds are spent and used for the purposes authorized by the Legislature
• ensure that revenues are collected, resources are allocated and expenditures are disbursed in an efficient, effective and economic manner
• hold managers accountable for spending public money both in terms of outcomes achieved and value for money

3.2 General

According to law and parliamentary practice, funds may not be expended without legislative authority. In controlling public expenditures, the Legislative Assembly reviews and authorizes the annual budget (main Estimates) for the forthcoming fiscal year.

The Financial Administration Act (FAA), sections 4 and 4.1 provide Treasury Board with authority regarding the form and content of the budget. Development of the budget and fiscal plan is an integral part of financial management, as it determines the resources needed to fulfill the objectives of ministry programs and forms the basis for operational and financial control and accountability.

Funding targets are established by Treasury Board to assist ministries in developing budgets. Ministries identify budget packages for their programs and rank them in priority order as part of their initial review. Budget proposals are reviewed by various levels and finally by Treasury Board.

Once approved and implemented, budgetary control is required to ensure that resources are properly used, and that actual revenues and expenditures do not differ significantly from forecasts. Ministers, deputy ministers, senior managers and program managers across government must fulfill responsibilities assigned to them in managing budgets, consistent with legislative requirements, Treasury Board and the Minister of Finance. For example, the Balanced Budget and Ministerial Accountability Act (BBMAA) holds ministers collectively and individually accountable for spending control. Ministers will incur salary penalties for failure to stay within budget.

Budgetary control is usually put into practice on a responsibility centre basis, as ministries can be large and complex and cannot be centrally managed without the delegation of authority. Reporting by responsibility centre supports delegated authority and management control throughout the ministry. Managers also need to account for their actions in relation to plans and to take corrective action to live within budget or alter operations to support the ministry in achieving overall goals.

3.3 Policy

1. Ministry senior management must coordinate preparation of their annual budget submission, including:
   • providing advice and guidance throughout the ministry; conducting appropriate review and analysis; communication and reporting to all levels of ministry management; liaison between the ministry and Treasury Board Staff; and
   • ensuring that Treasury Board requirements are met.
2. Ministries must make use of their service plan goals, objectives and performance expectations to develop their annual budgets.
3. Ministries must allocate their annual budget based on tabled estimates. Ministry annual budgets must support the achievement of annual service plans. Ministry monthly budgets must link to operational targets to support performance measurement.
4. Ministries must monitor expenditures in relation to budget on a monthly basis and prepare monthly reports that compare actual expenditures to estimated expenditures, including an analysis of major variances.
5. Ministries must maintain control accounts for each of their appropriations so that expenditures in relation to budget limits can be determined at any time.
6. Ministries must ensure that appropriate management systems are in place to measure the efficiency and effectiveness of programs, and to maintain budgetary control so that expenditure ceilings set by the Legislative Assembly and Treasury Board are not exceeded.
7. Responsibility centre managers who are assigned a budget must control how the funds are used by:
   • maintaining budgeted costs by service line and stob, and by period in relation to planned output; reporting actual costs and outputs by period (monthly) consistent with the way in which the budget was produced; and
   • analyzing variances (monthly) between budgeted and actual costs in relation to outputs with a view to corrective action.
8. Responsibility centre managers must report any significant financial differences from planned expenditures to the ministry chief financial officer and, as necessary, adopt an alternative course of action to remain within budget.
9. Ministries must prepare monthly expenditure projections for each vote over the twelve-month period in a fiscal year based on the tabled estimates. The financial information in the projections must correspond to the information provided in expenditure review reports. Based on these reports and expenditure projections, the Minister of Finance may establish budgetary controls as required from time to time.
10. The Ministry of Finance, through the Office of the Comptroller General, must not issue a cheque, or electronic funds transfer, for a ministry payment when the limit specified by the Legislative Assembly or Lieutenant Governor would be exceeded.
11. Ministries must have appropriate processes in place to ensure that any budget variances are quickly identified and investigated. This not only includes methods for variances related to revenues and expenses, but possible impacts from asset write downs and other valuation adjustments.

Procedure Requirements - A.1

Part III: Reporting

3.1 Objectives

• maintain accurate, complete and consistent accounting records to support performance measurement;
• provide meaningful information to managers for planning, decision-making and reporting purposes;
• allow for the monitoring and control of commitments and disbursements in relation to appropriated amounts;
• serve as the foundation for demonstrating accountability for the resources entrusted to managers and their programs;
• ensure early identification of budget variances so that ministries can mitigate as appropriate to remain within budget;
• improve legislative, governmental and management control by maintaining transactions, accounts and financial statements in accordance with government accounting policies. 

3.2 General

The Budget Transparency and Accountability Act (BTAA) provides the legislative framework for a regular cycle of planning, reporting and accountability. Under the BTAA ministries are responsible for producing three-year service plans, which need to be updated yearly, and annual service plan reports. Reports show results and stewardship of the use of public funds. The service plan report compares actual results to what was indicated in the ministry's service plan. Within the context of ministry goals and objectives, reports should emphasize the performance measures that the ministry will be using to measure progress. The primary audiences for service plan reports include the Legislative Assembly and the public. The principal external reports of government are:

• the Budget or main Estimates presented each fiscal year to the Legislative Assembly by the Minister of Finance;
• the Quarterly reports and the annual Public Accounts including the Summary Financial Statements;
• service plans, including:
  • government's strategic plan setting out its priorities, specific objectives and expected results;
  • ministry and agency service plans that identify goals, objectives, performance measures and major capital plans; and
• the annual reports of government and ministries, including:
  • a summary comparison of results with the government's strategic plan; and
  • comparisons of actual results of ministries and agencies with expected results identified in their service plans.

Ministers, through their respective ministries, are responsible for their annual service plan reports, and have flexibility in adapting the contents to best reflect ministry activities and achievements. However, it is intended that reports have a similar look and common elements to assist the public and legislators in using them. For guidance, refer to Information and References, Guidelines for Ministry Service Plans and Reports.

The Balanced Budget and Ministerial Accountability Act (BBMAA) requires a comparison of expected and actual performance results, a ministerial accountability report, to be released with the Public Accounts. A holdback of 20% of ministerial salaries is payable after release of the Public Accounts where financial and non-financial requirements are met. Half of the holdback relates to collective responsibilities (i.e., the total Summary Accounts surplus or deficit target being met in which all cabinet ministers participate) and half relates to individual ministerial responsibilities for meeting expense targets or other non-financial targets. 

3.3 Policy

a. Service Plan Reports

1. The minister is accountable for their ministry's annual service plan report, and must approve the report prior to publication.
2. A ministry's annual service plan report must include:
   • description of the ministry's core business;
   • key programs and services provided to the public;
   • output, quality and client statistics to provide report users with an understanding of services provided;
   • ministry progress in achieving its goals and objectives in conjunction with the performance measures and targets, as set out in its service plan; and
   • a ministerial accountability statement.
3. Ministries must report on the financial resources used during the year, compare actual expenditures to the amounts estimated and explain significant variances. Where practicable, annual service plan reports should provide a balanced explanation of successes, failures and corrective actions taken, and disclose:
   • operating expenses by core business area;
   • other resources, including FTEs, ministry (Consolidated Revenue Fund) capital expenditures, Consolidated Capital Plan capital expenditures and other financing transactions where applicable. Totals should correspond to the totals appearing in the main Estimates and the Public Accounts;
   • links between operating expenses, capital expenditures and financing transactions, and the delivery of services;
   • revenues and significant fees and licenses linked to the programs funded, particularly if major changes occurred or segments of the public were impacted;
   • major valuation adjustments, e.g., an asset write-off.
4. The ministry annual service plan report must disclose information concerning any commitment on a major capital project (exceeding $50 million (cumulative) capital costs). Ministries should describe the progress of each project and include project expenditure plan information. Ministries are also expected to include the following information in their annual reports:
   • the objectives of the project;
   • the costs and benefits of the project;
   • the ongoing risks associated with those costs and benefits; and
   • the use of any public private partnership arrangement in delivering the project.
5. Each year, Treasury Board Staff will advise ministries of the required publication date for their annual service plan reports. It is government's intention to release annual service plan reports and the Public Accounts for a particular year together, and no later than August 31st which is the statutory requirement.
6. The Government's annual report on the strategic plan, which compares actual government-wide results with expected results, must be made public not later than August 31st in each year. 

b. Ministerial Accountability Reports

1. Part 4 of the BTAA provides that:
   • a ministry service plan report is to include a statement signed by the responsible Minister that the Minister is accountable for the results set out in the report; and
   • if a Minister of State with functions pertinent to a ministry service plan report had expected results set out for them under the BBMAA, the report is to also include a signed statement by the Minister of State that they are is accountable for those results.
2. A ministerial accountability report must include the use of resources or the resource summary included in the ministry annual service plan report.

c. Financial Reports

1. Ministries must develop an account structure with the objective of producing useful financial reports in accordance with the chart of accounts policy in this section.
2. Ministry financial reports must:
   • support checks of transactions to ensure they have been processed accurately and completely;
   • enable effective budgetary control (by identification of allocations, disbursements, undischarged commitments and free balances);
   • be made available to managers and staff, as required, to effectively manage their programs;
   • include timely and accurate accruals.
3. The Corporate Accounting System (CAS) office must provide financial data on a timely basis and a reporting tool to allow ministries the ability to extract management reports on a timely basis. Specifically, the data to create detailed transactions reports, month-end status reports and financial management reports must be made available within six working days of the month-end.
4. Ministries must check the accuracy of financial management reports produced by CAS to ensure that:
   • only authorized transactions have been processed;
   • transactions have been accurately coded; and
   • transactions have been recorded and reported on a consistent basis.
5. Ministries are responsible for conducting their own expenditure reviews on at least a monthly basis, which compare costs by budget unit to target amounts of each program for the period under review.
6. Ministries must review their assets and liabilities for valuation adjustments, in addition to reviews of revenues and expenses.
7. The Minister of Finance must publish the Public Accounts for the previous fiscal year by August 31st.

For a summary of reports required by the BTAA and the FAA, refer to Information and References, sections 3.4.4 and 3.4.5.

Procedure Requirements - H.1

d. Chart of Accounts

1. For reporting purposes, financial transactions need to be identified and accounted for in a responsible and consistent manner. The chart of accounts is a standard classification and reporting system and, along with budgetary processes, provides information to support program management. The chart of accounts should support hierarchical and other reporting from the same data. For example, in developing a chart of accounts, a ministry should consider how to integrate it with budget and service plan needs. Also, the ministry's chart of accounts should support reporting against its service plan. For detailed chart of accounts information, refer to Information and References, section 3.4.2.
2. Ministries must use the chart of accounts that has been designated the Corporate Chart of Accounts.
3. Ministries and OCG must be able to roll up Service Lines to the Vote and sub-vote format in the main Estimates.
4. Within each approved appropriation, ministry classification must be as follows:
   • by Client to identify the legal entity;
   • by Responsibility Centre to identify assigned responsibilities and to support accountability. Ministries must determine their own responsibility centres (and project account classifications) within the parameters set up by OCG, Financial Reporting and Advisory Services;
   • by Service Line to identify functional activities at the lowest business unit level. Ministries must use mandatory and common service lines for functions or activities that exist across government to ensure corporate reporting requirements are met; and
   • by Standard Object to identify goods and services acquired, non-cash transactions, revenue and balance sheets items.
5. Ministry additions or deletions to a Client, Service Line or Standard Object classification must be approved by OCG, Financial Reporting and Advisory Services.

e. Significant Accounting Policies

In general, accounting policies are a blend of the principles followed and the procedures necessary for applying those principles. For example, accounting policies may establish the basis for determining how or when expenses and revenues are reported, or whether assets are recorded as capital items, or whether separate entities are combined and reported together.

A consistent set of accounting principles is required to classify, measure and interpret government financial information for complete, accurate and consistent reporting. In high level external financial statements, as the Public Accounts, it is important that the accounting policies followed within ministries, central agencies, and externally through to the Legislative Assembly and hence to the public, are consistently and accurately applied.

Under the Budget Transparency and Accountability Act (BTAA), section 9(2)(e), the Public Accounts must include a summary of the accounting policies of the government reporting entity as established by Treasury Board and disclosure of any material variances of those policies from generally accepted accounting principles for senior governments in Canada. The more significant accounting policies are as follows:

1. Basis of Accounting
   
   The government’s Summary Financial Statements are prepared in accordance with generally accepted accounting principles (GAAP) for senior governments as required by the Budget Transparency and Accountability Act and as recommended by the independent Public Sector Accounting Board of The Canadian Institute of Chartered Accountants.
    
2. Reporting Entity
   
   These financial statements include the accounts of organizations that meet the criteria of control (by the province) as established under GAAP. The reporting entity also includes government partnerships.
   
   Trusts administered by government or government organizations are excluded from the reporting entity.
    
3. Principles of Consolidation
   
   Taxpayer–supported Crown corporations, agencies, and the school districts, universities, colleges, institutes, health organizations (SUCH) and the Consolidated Revenue Fund (CRF) are consolidated using the full consolidation method. The government’s interests in government partnerships are recorded on a proportional consolidation basis.
   
   Self–supported Crown corporations, agencies, entities and government business partnerships are consolidated using the modified equity basis of consolidation.
   
   Adjustments are made for Crown corporations, agencies and entities whose fiscal year ends are different from the government’s fiscal year end of March 31. These Crown corporations, agencies and entities consist of the British Columbia Assessment Authority, the Insurance Corporation of British Columbia, the British Columbia Railway Company, and all school districts.
   
   Statistics Canada's Financial Management System for Government Statistics provides the guidance for establishing segment disclosure and function reporting. The statements by sector include the operations of the consolidated revenue fund, taxpayer–supported Crown corporations and agencies, and SUCH sector organizations. Each taxpayer–supported Crown corporation, agency and SUCH sector organization is assigned to a sector based on its major activity. Sectors are identified using functions.
   
   For specific accounting policies, refer to Information and References, Specific Accounting Policies.

3.4 Information and References

3.4.1 Guidelines for Ministry Service Plans and Reports

Service Plans, Reports and Templates: For additional information, refer to the Deputy Ministers' Policy Secretariat Ministry Service Plan Guidelines (PDF) (government access only). For an overview of service planning and the annual service plan reporting processes, refer to: Plan & Report for Ministries & Other Organizations.

3.4.2 Chart of Accounts

For the government chart of accounts, classification is as follows:

Vote – identifies a group of programs usually associated with one ministry. A budget is associated with a vote and can be broken down to sub votes. The Legislative Assembly votes on the amount appropriated for the vote and once passed the ministry may spend the funds for the purposes outlined in the vote description in the Estimates.

Client – the legal entity (Ministry, Trust, Special Account, Special Fund) and the balancing segment in the General Ledger.

Responsibility Centre – identifies how the ministry has assigned responsibility and accountability to manage human, financial and capital resources.

Service Line – identifies the ministry program or service at the lowest functional level desired. A Service Line would be transferred in a government reorganization. Common Service Lines are established for an activity or service that is generally found across all of government.

Standard Object (STOB) – identifies the nature of goods and services purchased (office supplies, salaries) and the nature of payment (government transfers). Also used to classify transactions according to common characteristics such as expenses, revenue, assets, liabilities and equity.

Project – identifies projects or additional activity detail as defined by ministries or agencies. A project may span multiple sub-votes or votes, and project codes are to be used for temporary programs. An example is the FAA section 25 account detail. Ministries will use the Payments Based on Contributions Service Line, but use a project code to identify the specific section 25 account.

Location (not yet implemented) – defines where (the location) the benefit was received as a result of the transaction.

Future (not yet implemented) – segment reserved for future business.

For more chart of accounts information (i.e., STOB numbers/descriptions), refer to the Office of the Comptroller General intranet site, Chart of Accounts (government access only). 

3.4.3 Specific Accounting Policies

For the government’s specific accounting policies, refer to Note 1 of the Summary Financial Statements (PDF) in the Public Accounts.

3.4.4 Summary of Reports Required by the BTAA

Report Description	Responsibility	Budget Transparency & Accountability Act Section Reference
Main Estimates (form, content, due date, including fiscal forecasts & major capital project information)	Treasury Board Staff	Sections 5, 6, 7 & 8
Public Accounts (form, content, due date, reporting entities, supplementary statements & schedules, CRF & schedules)	Comptroller General	Section 9(1)(2)(3)
Quarterly Reports (form, content & due dates of interim financial statements)	Comptroller General and Treasury Board Staff	Section 10(1)(2)(3)(4)
Service Plans for government, ministries & government organizations (including form, content, due dates)	Ministries (supported by Treasury Board Staff & the Crown Agencies Secretariat)	Sections 12 & 13
Service Plan Reports for government, ministries & government organizations (including form, content, due dates)	Ministries (supported by Treasury Board Staff & the Crown Agencies Secretariat)	Sections 15 & 16

3.4.5 Summary of Reports Required by the FAA

Report Description	Responsibility	Financial Administration Act Section Reference
Assets & Liabilities Written Off & Forgiven	Comptroller General	Sections 17 & 18
Remissions	Comptroller General	Section 19
Amounts Received by Government	Comptroller General	Section 25(2)
Liabilities in Excess of Appropriation	Comptroller General	Section 26(3)
Overrulings & Irregularities	Comptroller General	Section 35
Investment Portfolio	Provincial Treasury	Section 44(3)
Borrowing Transactions	Provincial Treasury	Section 70(2)
Capital Lease Obligations	Comptroller General	Section 70(3)
Payments on Guarantees & Indemnities	Comptroller General	Section 74(3)

3.4.6 Summary of Reports Required by the BBMAA

Report Description	To be made Public	Responsibility	Balanced Budget & Ministerial Accountability Act Section Reference
Estimated operating expenses authorized by a vote for a Minister with portfolio in the main estimates	With the main estimates for the fiscal year	Treasury Board Staff (supported by ministries)	Sections 6(1)(a)
Amount of revenue specified by Treasury Board regulation for the revenue Minister	With the main estimates for the fiscal year	Treasury Board Staff (supported by Ministry)	Section 6(1)(b)
Expected results specified by Treasury Board regulation for a Minister of State	With the main estimates for the fiscal year	Treasury Board Staff (supported by ministries)	Section 6(1.1)
If there is a government reorganization after the main estimates have been presented, revised information to reflect any transfer of spending authority for operating expenses authorized by vote	Within 90 days of the reorganization	Treasury Board Staff (supported by ministries)	Section 6(1.2)
If supplementary estimates are presented, revised information on the operating expenses authorized by a vote to reflect the supplementary estimates	With the supplementary estimates	Treasury Board Staff (supported by ministries)	Section 6(1.2)
Actual surplus or deficit for the government reporting entity; actual operating expenses authorized by votes for Ministers with portfolio; actual revenue from sources specified by Treasury Board regulation; actual results of Ministers of State; and expected results related to all of the above	With the public accounts for the fiscal year. Or, as soon as reasonably practicable, and in any case before December 31 in the year in which the public accounts for the fiscal year are made public	Treasury Board Staff & Office of the Comptroller General Staff (supported by ministries)	Section 6(2) & 6(3)

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