ASSISTANT DEPUTY MINISTER (FINANCE)
DIRECTOR GENERAL FINANCIAL MANAGEMENT
Costing Process in support of
CFO Attestation
22 February 2016
Vrenti Ghergari, CPA, CMA, CCEA
Agenda
Background
Costing Process
CFO Attestation Guide
Practical Application
Introduction
Federal Accountability Act – 2006
•
Established Deputy Ministers as accounting officers
Policy on Financial Management Governance - 2010
•
Outlines the role of the CFO
•
Financial management, program financing, financial reporting and
disclosure
Guideline on Chief Financial Officer Attestation for Cabinet
Submissions – 2014
•
Six fundamental assertions
Guideline on Cost Estimation for Capital Asset Acquisitions – 2015
•
Outlines the costing process
Costing Process Components
Plan
Approach
Establish
GR&As
Develop
Cost Model
Review,
Analyze &
Update
Provide
Assurance
Not Necessarily Sequential
Each Component must be
Documented!
Many activities are iterative
and can be accomplished in
varying order or concurrently!
Cost Estimate =
Model + Documentation
Assistant Deputy Minister (Finance)
Sous-ministre adjoint (Finances)
Present
4
Training Requirements for the Costing
Process
Program Knowledge
•
•
Canada School of Public Service
Project Approval Course (DND specific)
Technical Knowledge
•
CEBoK
Costing Process
Step
Planning
• Stakeholder engagement
• Purpose
• Timing
Link to CFO
Attestation
Example
Informs the overall attestation Stakeholders:
process
Decision Makers,
NFPS, Central
• Length of time
Agencies,
Independent
• Resources dedicated to
Reviewers
analysis
Purpose: Inform
Parliament as part of
7 Point Action Plan
Timing: 60 days
Costing Process
Step
Link to CFO
Attestation
Establish Boundaries and Criterion 1.1 Key financial
Assumptions
assumptions are clearly
documented.
• Boundaries: conditions
that constrain the scope
of the estimate
• Assumptions: developed
by the cost analyst in
order to address any
information gaps to
produce the estimate
Criterion 1.2 Key financial
assumptions are reliable.
Example
Boundaries: Aircraft
Lifecycle (30 years);
Number of Aircraft
(65); Yearly Flying
Rate (11,700); etc.
Assumptions: FX
(0.92 USD/CAD);
Disposal Profile
(FIFO); Force
structure (similar to
CF-18); etc.
Costing Process
Step (s)
Develop Model
• Purpose
• Scope
• CBS
• Sensitivity
Data, Populate, and
Document Model
• Data
• Costing methodologies
Link to CFO
Attestation
Criterion 3.1 A costing
methodology has been
established and used.
Criterion 3.2 Financial
requirements are clear,
accurate, complete and
consistent with assumptions.
Criterion 3.3 Sensitivity of
resource requirements is
reflected.
Criterion 3.4 The proposal
reflects the effective, efficient
and economical use of the
Government of Canada's
resources.
Example
Excel Model –
compliant with
Spreadsheet
Standards Review
Board principles
Costing Process
Step
Review, Analyze and Update
• Sensitivity
• Risk Analysis
Link to CFO
Attestation
Criterion 2.1 Key risks
have been considered.
Criterion 2.2 Likelihood
and impact of key risks
has been considered.
Criterion 2.3 Risk
response and mitigation
strategies are clear.
Example
Sensitivity
- Shows the impact of
a depreciation of
CAD
Risk Analysis
- Quantifies the
impact of identified
risk factors
Contingency
- Based on risk
analysis
Annual Update 2014 Excerpt
Costing Process
Step
Present
• Develop reports for
internal and external
use
Link to CFO
Attestations
Example
Key financial assumptions are 2014 Annual Update
documented and reliable
to Parliament
Key risks have been
considered, assessed, and
managed
Financial requirements have
been quantified and disclosed
Sufficient Funding
Questions?