Financial Administration Manual

745 - Environmental Liabilities

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Effective: April 1, 2016
Section: Purchasing Cycle
Administrator: Office of the Comptroller General
Applicability: GNWT Departments and Public Agencies

POLICY

Known or estimated costs required to remediate or manage an environmentally contaminated site shall be recognized in the period that the event occurs or becomes known.  All of the following criteria must be met prior to recognizing (recording) an environmental liability:

  • An environmental standard exists;
  • Contamination exceeds the environmental standard;
  • The GNWT or Public Agency is directly responsible or accepts responsibility;
  • It is expected that future economic benefits will be given up; 
  • A reasonable estimate of the amount can be made.

If the likelihood of a future event that would confirm the GNWT’s or Public Agency’s obligation to incur these costs is either not determinable, or in the event it is not possible to determine if future economic benefits will be given up, or if an amount cannot be reasonably estimated, the contingency shall be disclosed in the notes to the consolidated financial statements, and no liability is accrued. The environmental liabilities for contaminated sites shall be assessed on an annual basis.

PURPOSE        

To establish the timing of recording environmental liabilities and the frequency (annually) of quantifying environment liabilities to comply with Canadian generally accepted accounting principles (GAAP). 

SCOPE

This policy applies to all known environmentally contaminated sites, regardless of the level of assessment performed on the site. The site could either be a non-operating site or an operating site that has been identified as a high priority due to the risk to human health or property, whether due to actions of a Department or a Public Agency, abandonment, or where the Government has expressly accepted responsibility.

RESPONSIBILITIES

Deputy Head

Ensure that contaminated sites are identified and estimates of remediation costs (if estimable) are compiled and reported to the Office of the Comptroller, as required.

Comptroller General

Shall establish an oversight group; may approve Interpretation Bulletins associated with this policy.

Financial Management Board

May issue a directive respecting the financial management or financial administration of a Public Agency.

AUTHORITIES and REFERENCES

  • Financial Administration Act (FAA)
    • s. 10 – Board directives
  • CPA Canada Public Sector Accounting Handbook
    • PS3260 – Liability for Contaminated Sites

INTERPRETATION BULLETINS