Consistent Consolidated Financial Statements for First Nations, Tribal Councils and First Nations Political Organizations

A. Basis of accounting

Reference PS 2100.07,.09, 1200.005

These consolidated financial statements have been prepared in accordance with Canadian public sector accounting standards prescribed for governments as recommended by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants.

B. Reporting Entity

Reference PS 2100.09

The ABC First Nation reporting entity includes the ABC First Nation government and all related entities that are controlled by the First Nation.

C. Principles of consolidation

Reference PS 1300, .27, .35, .39, 2100.09(a)

All controlled entities are fully consolidated on a line-by-line basis except for the commercial enterprises which meet the definition of government business enterprise, which are included in the Consolidated Financial Statements on a modified equity basis. Inter-organizational balances and transactions are eliminated upon consolidation.

Under the modified equity method of accounting, only ABC First Nation's investment in the government business enterprise and the enterprise's net income and other changes in equity are recorded. No adjustment is made for accounting policies of the enterprise that are different from those of ABC First Nation.

Organizations consolidated in ABC First Nation's financial statements include:

• Loon Bay Gas Station
• ABC General Store
• Four Winds Café

Organizations accounted for on a modified equity basis include:

• ABC Lodge Inc.
• ABC Forestry Inc.

D. Cash and cash equivalents

Reference PS 1200.096&.097

Cash and cash equivalents include cash on hand, balances with banks net of bank overdrafts and term deposits having a maturity of three months or less at acquisition which are held for the purpose of meeting short-term cash commitments.

E. Inventories for resale

Reference PS 1100.23, 1200.48, 1200.51

Inventories of supplies and goods available for resale are recorded at the lower of cost and net realizable value.

F. Loans receivable

Reference PS 3050.54

Loans receivable are recorded at cost less any amount for valuation allowance. Valuation allowances are made when collection is in doubt as assessed by management. Loans are reviewed on an annual basis by [committee, management, etc.]. Interest income is accrued on loans receivable to the extent it is deemed collectable.

G. Portfolio investments

Reference PS 3040.26

Portfolio investments are recorded at cost. Portfolio investments are written down where there has been a loss in value that is other than a temporary decline.

H. Tangible capital assets

Reference PS 3150. 31-33, 40-42, PSG-2.24

Tangible capital assets are recorded at cost, which includes amounts that are directly related to the acquisition, design, construction, development, improvement or betterment of the assets. Cost includes overhead directly attributable to construction and development, as well as interest costs that are directly attributable to the acquisition or construction of the asset.

Leases that transfer substantially all the benefits and risks of ownership to the lessee are recorded as capital leases. Accordingly, at the inception of the leases, the tangible capital asset and related lease obligations are recorded at an amount equal to the present value of future lease payments discounted at the lower of the interest rate inherent in the lease contracts and ABC First Nation's incremental cost of borrowing.

Amortization is provided for on a straight-line basis over their estimated useful lives as follows:

Tangible capital assets are written down when conditions indicate that they no longer contribute to ABC First Nation's ability to provide goods and services, or when the value of future economic benefits associated with the tangible capital assets are less than their net book value. The net write-downs are accounted for as expenses in the consolidated statement of operations.

Contributed capital assets are recorded into revenues at their fair value on the date of donation, except in circumstances where fair value cannot be reasonably determined, in which case they are recognized at nominal value. Transfers of capital assets from related parties are recorded at carrying value.

Certain assets which have historical or cultural value, including works of art, historical documents and historical and cultural artifacts, are not recognized as tangible capital assets. Assets under construction are not amortized until the asset is available to be put into service.

I. Inventories held for use

Reference PS 1000.60 (a), 1100.24, 1200.062

Inventories of supplies held for consumption are recorded at the lower of cost and replacement cost.

J. Employee benefit obligations

Reference PS 3250.100-104

K. Revenue Recognition

Reference PS 1200.077-.081, PS 3100.10-11, PS 3410.16-.27,.33-.34

Revenues are recognized in the period in which the transactions or events occurred that gave rise to the revenues. All revenues are recorded on an accrual basis, except when the accruals cannot be determined with a reasonable degree of certainty or when their estimation is impracticable.

Government transfers are recognized as revenues when the transfer is authorized and any eligibility criteria are met, except to the extent that transfer stipulations give rise to an obligation that meets the definition of a liability. Transfers are recognized as deferred revenue when transfer stipulations give rise to a liability. Transfer revenue is recognized in the statement of operations as the stipulation liabilities are settled.

Contributions from other sources are deferred when restrictions are placed on their use by the contributor, and are recognized as revenue when used for the specific purpose.

Revenue related to fees or services received in advance of the fee being earned or the service is performed is deferred and recognized when the fee is earned or service performed.

L. Foreign currency translation

Reference PS 2600.09-.17

Foreign currency transactions are translated at the exchange rate prevailing at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the exchange rate prevailing at the financial statement date. Gains and losses resulting from foreign currency transactions are included in the consolidated statement of operations.

Unrealized foreign currency gains and losses on long-term monetary assets and liabilities are reported as a component of [describe financial position line item] and amortized over the remaining terms of the related items on a straight-line basis.

M. Measurement uncertainty

Reference PS 2130.06 -.08

In preparing the consolidated financial statements for ABC First Nation, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the period. Items requiring the use of significant estimates include XXXX, XXXX and XXXX. Actual results could differ from these estimates.

Obligations under capital leases

Reference PSG-2 24

Repayments are due as follows:

Vacation and overtime

The vacation and overtime liability is comprised of the vacation and overtime that employees are deferring to future years. Employees have either earned the benefits or are entitled to these benefits within the next budgetary year.

Post-employment benefits

ABC First Nation provides extended health, dental and life insurance benefits to qualifying retirees and their surviving spouses from the date of retirement. The plan is unfunded and requires no contribution from employees. ABC First Nation's cost of these benefits is recognized as a program expenditure as the employees provide service. The most recent actuarial accounting valuation report for the plan was prepared on March 31, 201X. Significant assumptions used in the valuation include a discount rate of X%, annual inflation of X%, and inflationary increases in insurance premiums of X%. Total benefit payments on behalf of retirees during the year amounted to X,XXX (201W – X,XXX). The post-employment benefit expenditure includes current period benefit costs of X,XXX (201W – X,XXX) and post-employment benefit interest of X,XXX (201W– X,XXX).

Pension Plan

ABC First Nation provides a defined contribution plan for eligible members of its staff. Members are required to contribute X% of their salary up to a maximum of x% of their basic salary. ABC First Nation contributes X% which contributions are directed to the member's contribution account. The amount of retirement benefit to be received by the employees will be the amount of retirement annuity that could be purchased based on the member's share of the pension plan at the time of the member's withdrawal from the plan. ABC contributed during the year $XX,XXX (201W- $XX,XXX) for retirement benefits. ABC First Nation does not have any other obligations with regards to the pension plan as at March 31, 201X.