CHAPTER 14 FINANCIAL STATEMENTS
INTRODUCTION
1. This chapter outlines the requirements for financial statements
and describes the accounts, formats and procedures to be used when
preparing financial statements.
FISCAL YEAR
2. The fiscal year for all NPF operations in the Regular Force shall
normally be from March to the end of February of the following year. The
specific closing dates for each reporting period (ie. fiscal month)
based upon a 5-4-4 week cycle shall be determined annually by
NDHQ/DNPFS.
PURPOSE OF FINANCIAL STATEMENTS
3. The purpose of financial statements is to provide information to
management. They present fairly the financial position as at the balance
sheet date and the results of operations for the period ending as at the
balance sheet date in accordance with generally accepted accounting
principles applied consistently with those of the preceding accounting
period. A set of financial statements for each self-accounting entity
shall consist of the following and submitted in the order indicated:
a. Balance Sheet including the Equity Statement;
b. Notes/schedules to the Balance Sheet;
c. General Revenue and Expense Statement;
d. Notes/schedules to the General Revenue and Expense Statement;
e. Income Statement;
f. Notes/schedules to the Income Statement;
g. Closing Inventory Worksheet (CIW);
h. Departmental Analysis Report (DAR) (CANEX);
j. Markdown Report (CANEX); and
m. Statement of NPF Food Services account (if applicable).
FREQUENCY OF FINANCIAL STATEMENTS
4. CANEX financial statements shall be prepared:
a. as at the end of each month for all outlets and distributed
to managers within 10 working days after the closing date;
and
b. as at the end of each fiscal year for all outlets.
5. Financial statements for Base Fund, its subsidiaries and for
Messes shall be prepared:
a. normally, as at the end of each fiscal month and distributed
to managers within 10 working days after the closing date.
However, with CHQ approval, a BComd may authorize these
organizations to issue statements less frequently than
monthly but in no event shall they be issued less frequently
than quarterly (May, Aug, Nov, and Feb); and
b. as at the end of each fiscal year for all outlets.
DISTRIBUTION OF FINANCIAL STATEMENTS
6. CANEX. One hard copy of the monthly and annual statements shall be
distributed to the BComd, B Admin O, CANEX Svcs Mgr, CANEX RM, and to
CHQ Pers Svcs. Manual units must also send three hard copies of the
monthly statements to CANEX HQ while ABACIS units, on a quarterly basis
only, must send only one hard copy to CANEX HQ. The hard copies of the
statements are to reach their destinations within 15 working days after
the closing date. Statements for CANEX HQ must be addressed as follows:
CFO
CANEX Headquarters
245 Cooper Street
Ottawa ON K2P 0G2
7. For ABACIS units, the monthly CANEX financial statement
information is to be sent, via MONTHGEN, to CANEX HQ by the 11th working
day after the closing date.
8. Base Fund, its subsidiaries and Messes. Monthly and/or quarterly
statements shall be distributed to the BComd, B Adm O, and PMC or
Activity Manager. Annual audited financial statements shall also be
forwarded to CHQ and NDHQ/DNPFS in accordance with Annex A and
instructions issued by NDHQ/DNPFS annually.
9. Other managers may be provided with financial statements as
required.
REQUIREMENT PRIOR TO PREPARATION OF STATEMENTS
10. Prior to the preparation of the financial statements, the NPFAO
shall ensure that all known material transactions affecting the
operation of the entity concerned have been recorded in the books of
account.
11. The NPFAO shall ensure that all books of original entry have been
posted to the General Ledger, that all subledgers are reconciled to the
related GL and that a Trial Balance has been completed. This trial
balance is to be kept on file for the Annual Audit.
12. (Not allocated).
GUIDE TO THE PREPARATION OF FINANCIAL STATEMENTS
13. Control Accounts Balance Sheet. The format shown at Annex B shall
be adopted by all entities. Annex A indicates the schedules required in
support of this Balance Sheet:
a. Assets
(1) Bank. This account represents the total cash available
to the base and is therefore the total of all cash on
hand (undeposited receipts), balances of local bank
accounts (not transferred to Ottawa), and the total of
the entities' share of the Base CBA. If the bank is
overdrawn, it must be shown as a "Bank Overdraft" in
the Current Liabilities section;
b. Liabilities
(1) Bank Overdraft. This is used when the Bank balance is
in a negative (liability) position,
(2) CANEX Share of Base CBA. The CANEX share of the Base
CBA is to be shown as a current liability or current
asset depending on the balance of the account, and
(3) Entities Share of Base CBA. This is the net total of
all the individual entities' (excluding CANEX) shares
of the Base CBA account. This is to be shown as a
current liability or current asset depending on the
net balance of all the accounts.
14. Entity Balance Sheet. The format shown at Annex C shall be adopted
by all entities. Annex A indicates the schedules required in support of
each Balance Sheet.
15. Explanations for items on the balance sheet are as follows (items
applicable to certain entities only are annotated):
a. Assets
(1) Current Assets. These are assets that, in the normal
course of operations, are expected to be converted
into cash or consumed in the production of income
within one year. An asset, subject to restrictions
that prevent its use for current operating purposes,
should not be included as a current asset,
(2) Petty Cash and Change Funds. This includes all petty
cash, change, and imprest funds,
(3) Share of Base CBA. This is the amount on deposit by
each entity in the Base CBA. If this account reflects
a credit balance, it must be shown as a current
liability under the same heading,
(4) Foreign Exchange Position. (NATEX only). This account
represents the exchange rate variance or difference
between the amount shown in a foreign currency bank
account and the actual value, using Director of Pay
Services (DPS) rates, shown on the entity's balance
sheet,
(5) Accounts Receivable. These are the accounts
outstanding with individuals or companies as of the
statement date. They consist of the general ledger
accounts 1101 to 1196 such as Visa, MasterCard,
Coupons, Travel Allowances, Gift Certificates, etc. No
allowance for uncollectible accounts is allowed for
any entity,
(6) Accounts Receivable - CANEX Bases. This account is
used, in CANEX only, to record transactions between a
CANEX at one location and a CANEX at another location,
(7) Accounts Receivable - CANEX HQ (CANEX only). This
account is used to record transactions between CANEX
at one location and CANEX HQ,
(8) Inventory. This is the total value of merchandise
inventories at cost held by the entity. This item is
not to be entered until the Closing Inventory
Worksheet has been completed and the inventory
account(s) adjusted,
(9) Prepaid Expenses. These are those costs incurred to
acquire goods or services that have not yet expired or
been consumed, such as one year inventory of
consumable supplies and equipment maintenance
contracts that will expire over a definite period of
time. When assessing the requirement to establish
prepaid expense accounts, the materiality of the
amounts involved and the period of use remaining
should be considered. During the useful life of the
item, the prepaid balance shall be reduced either on a
monthly basis or by the rate of actual consumption by
means of a General Journal entry which debits the
appropriate expense account and credits the prepaid
account,
(10) Loans Receivable - Current. This is the portion of an
intra-base loan that is receivable within one year
from the balance sheet date,
(11) Total Current Assets. This is the total of all of the
current assets in subparas (2) to (10),
(12) Work in Progress. This account records the value of
projects yet to be completed and transferred to fixed
assets,
(13) Loans Receivable - Non Current. This is the total of
intrabase loans outstanding at the date of the balance
sheet less any current portion at subparagraph (10),
(14) Fixed Assets - Net Book Value. This is the total value
of all "F and E" items recorded in the books of the
entities less the accumulated depreciation recorded as
at the Balance Sheet date,
(15) Investments (Base Fund only). These are monies
invested in third party organizations with the direct
approval of NDHQ/DGPS in accordance with Chapter 9.
This item requires a note to the financial statements
indicating the authority for such investments. This
could also include a Credit Union "Share" purchased in
order to be a member entitled to banking services or
shares in local sports clubs in order to use the
facilities,
(16) Investment in Subsidiaries (Base Fund only). This
account is used to record the investment by Base Fund
in self-accounting entities such as golf clubs,
curling clubs, etc. This account equals the capital
account balance of those entities,
(17) Total assets. This is the total of all the individual
assets;
b. Liabilities
(1) Current Liabilities. These are debts owing which will
fall due within one year,
(2) Share of Base CBA. This is the entity's Share of the
Base CBA, if it reflects a credit balance,
(3) Accounts Payable. This includes all trade and payroll
liabilities,
(4) Accounts Payable GST. This is the net result of the
Input Tax Credits (ITC) claimed from Revenue Canada
and the GST collected and owed when the total GST
payable exceed the total ITC,
(5) Accounts Payable - CANEX Bases (CANEX only). This item
records transactions between a CANEX at one location
and a CANEX at another location,
(6) Accounts Payable - CANEX HQ (CANEX only). This item
records transactions between CANEX at a base and CANEX
HQ,
(7) Public Grants (Base Fund only). This item includes the
balance remaining of Public Grants received,
(8) Trust Accounts. This represents the total of the
amounts, which belong to trust accounts, included in
the Base Fund's Share of the Base CBA,
(9) (Not allocated).
(10) Accrued Liabilities. These are a developing but not
yet enforceable claim by another person, which is
accumulating with the passage of time or the receipt
of service (eg. vacation pay for part-time employees),
(11) Unearned Revenue. These are payments received in
advance for goods or services to be delivered at a
later date (eg. CANEX Special Order, associate members
mess dues, layaway deposits),
(12) Loans Payable - Current Portion. These are the
principal payments on loans outstanding due within one
year of the balance sheet date,
(13) Reserves (except CANEX). Reserves can only be
established for specifically identified renovation or
construction projects for which funding is provided
from special assessments. As assessments are
collected, the appropriate liability account will be
credited. Upon capitalization of the project, this
account will be debited to result in a nil balance and
the offsetting credit will be made to the Capital
account,
(14) Gift Certificates Outstanding (CANEX HQ and NATEX
only). This represents the total value of gift
certificates held by the HQ, the CANEX outlet or held
by customers but not yet redeemed for merchandise,
(15) NPF Food Services. This consists of the retained
earnings at the beginning of the period plus the
income or minus the loss during the period,
(16) Total Current Liabilities. This is the total of all
the individual current liabilities (subparagraphs
12.b(2) to 12.b.(15)),
(17) Long-Term Liabilities. These are those liabilities
payable over a period greater than one year from the
date of the balance sheet,
(18) Loans Payable - Non-Current. This includes the
residual portion of all loans after the current
portion is deducted. Loan balances will be confirmed
with the Base by DNPFS annually, and
(19) Total Liabilities. This is the total of subparagraphs
(16) to (18));
c. Equity
(1) Opening Retained Earnings. This must be the same
figure as the closing capital of the prior year-end,
(2) Prior Year Adjustments. Prior Year Adjustments (PYA)
are rare and shall only include adjustments meeting
all of the following characteristics:
(a) the value per occurrence must be in excess of $
2,000 for CANEX and $ 1,000 for Base
Fund/Messes;
(b) they must be specifically identifiable with and
directly related to the business activities of
prior years;
(c) they are not attributable to economic events
occurring subsequent to the date of the
financial statements for such prior years; and
(d) they could not be reasonably estimated prior to
their determination;
NOTES
1. Each PYA shall be explained in the notes to the
financial statements.
2. Expenditures that would normally qualify as PYA
but do not exceed the thresholds must be charged
against the Miscellaneous Expense account of the
appropriate outlet or against the General Revenue and
Expense Statement if they cannot be allocated to an
outlet.
3. CANEX PYAs must be approved by the CANEX CFO
prior to being actionned to the books of accounts.
(3) Net Income/Loss. This is the income earned by the
entity during the period ending as at the date of the
Balance Sheet and is the total of all of the General
Statement and Income Statement accounts,
(4) Increase/decrease in Investment in Subsidiaries (Base
Fund only). This is the income earned by the
subsidiaries of the Base Fund during the period ending
as at the date of the Balance Sheet and is the total
of all of the General Statement and Income Statement
accounts of the subsidiaries,
(5) Closing Retained Earnings. This is the total of
subparagraphs (1) to (4),
NOTES
At year-end, after the Financial Statements have been
prepared, all revenue and expense accounts and the
Prior Year Adjustment account must be closed to the
entity's Retained Earnings account. Additionally, if
applicable and only in the Base Fund books, a General
Journal (ABACIS ADJREG) entry must be made to adjust
the "Investment in Subsidiaries" asset account and the
Base Fund's "Retained Earnings" account for the net
increase or decrease in the Equity balance of Base
Fund subsidiaries,
(6) Contributed Capital. This item represents grants or
donations given to an entity. When grants or donations
are conditional, the amount is initially accounted for
and controlled through a trust account. When the
conditions of a conditional grant have been satisfied
(eg, Program High Standard grant), the trust account
is cleared and the amount is recorded as Contributed
Capital. By definition, the Contributed Capital
account cannot have a debit balance unless a
bookkeeping error is made. Grants are not to be
recorded as operating revenues unless specifically
directed,
(7) Total Equity. This is the total of subparagraphs (5)
and (6), and
(8) Total Liabilities and Equity. This is the total of
subparagraphs 15.b.(19) and 15.c.(7).
16. (Not allocated).
17. General Revenue and Expense Statement. This statement shall be
prepared each month for every entity to show the consolidated results of
all outlets and activities operating within the entity. The format shown
at Annex D shall be followed. Annex A indicates the schedules required
in support of each statement. An explanation of the items shown on the
statement are as follows:
a. General Revenue
(1) Operating Income/Loss. This is the operating income or
loss carried forward from the income statements of
each outlet,
(2) PST Commissions. This represents the remuneration paid
by some provinces for the collection of provincial
sales taxes,
(3) Contribution from CANEX (Base Fund only). This is the
CANEX royalty received by Base Fund,
(4) Contributions from Messes (Base Fund only). This is
the revenue received from the messes in accordance
with Chapter 2, paragraph 7,
(5) Interest Revenue (Base Fund only). This includes
interest revenue from DNPFS authorised bank accounts
or investments and the CFCF Investment Revenue Rebates
to units,
(6) Mess Charges (Mess only). This is the general mess
assessment received from mess members,
(7) (Not allocated),
(8) Entertainment Revenue. This includes the entertainment
portion of mess dues as well as all other revenues for
entertainment functions,
(9) Private Functions (Mess only). This is the revenue
related to functions held in a mess other than for the
benefit of mess members (eg, weddings, etc). The
expenses associated with such activity shall be
recorded as Private Functions expense,
(10) Gain on Disposal of Fixed Assets. This is the amount
received from the sale of an asset which exceeds the
net book value of the asset,
(11) Miscellaneous General Revenue. This includes
miscellaneous revenues which do not regularly occur
and for which a separate account has not been
established,
(12) (Not allocated), and
(13) Total General Revenue. This is the total of
subparagraphs (1) to (12);
b. General Expense
(1) Accounting Services. This includes the total cost of
accounting personnel salaries and other administrative
costs (supplies, etc) incurred by the NPFAO. These
costs may be recovered from each entity, based on a
predetermined allocation,
(2) Personnel Manager Services. This includes the
total cost of salaries and other administrative costs
(supplies, etc) incurred by the NPF Personnel Manager.
These costs may be recovered from each entity, based
on a predetermined allocation,
(3) Administrative Services (CANEX only). This includes
payroll expenses only related to administrative
services incurred by the CANEX Services Manager's
office. Miscellaneous administrative expenses will be
charged against Miscellaneous General Expense. It does
not include expenses of the Regional Manager,
(4) Maintenance and Other Support Services (CANEX only).
This is the cost of cleaning services, salaries for
building maintenance, etc,
(5) Depreciation. This is the depreciation expense of
equipment that cannot be reasonably charged
specifically to an outlet (e.g. equipment in the Base
Manager's office, mall common areas),
(6) Travel (CANEX only). This is the travel expenses
incurred by the CANEX Services Manager and staff. It
does not include travel of the Regional Manager,
(7) RM Office (CANEX only). These are the expenses of the
Regional Manager,
(8) Contribution to Base Fund (Messes only). These are the
funds remitted by the messes to the Base Fund in
accordance with Chapter 2 paragraph 7,
(9) Loan Interest (Base Fund and messes only). This
reflects all interest charges on loans shown on the
balance sheet,
(10) Cash Discounts Lost. This represents all purchase
discounts lost by the entity, where discount terms had
been offered by suppliers for prompt payment for goods
and services. This expense shall not be allocated to
the outlets as the expense is incurred primarily by
delays in payment of invoices or a lack of adequate
working capital. In ABACIS, this amount is
automatically calculated if the SUIREG is used
properly,
(11) Sports Expenses,
(12) Entertainment Expenses,
(13) Private Functions (Mess only). This is the expense
related to functions held in a mess other than for the
benefit of mess members (eg, weddings, etc),
(14) CO's Representation (Base Fund only). This represents
the expenses incurred by the CO to meet
obligations to represent the Department, Command or
the unit as authorized by CFAO 27-6,
(15) (Not allocated),
(16) CFCF Levies. This is the percentage on sales in
accordance with A-PS-110-001/AG-003,
(17) Contribution to HQ (CANEX only). This is the
proportionate share of the CANEX HQ Expenses charged
to each CANEX sub-detachment. This share is based on
the net HQ Expense budget as approved annually by the
CANEX Board of Directors,
(18) Loss/Gain on Exchange Rate. This represents the loss
or gain on the revaluation of foreign currency
holdings,
(19) Loss on Disposal of Fixed Assets. This is the amount
received below the net book value of the asset
disposed,
(20) Miscellaneous General Expense. This includes
miscellaneous expenses which do not regularly occur
and for which a separate account has not been
established,
(21) (Not allocated), and
(22) Total General Expense. This is the total of
subparagraphs (1) to (21);
c. Income/(Loss) Before Extraordinary Items. This is the result
of subtracting Total General Expenses from Total General
Revenues,
(1) Extraordinary Items include provisions for revenues
and losses exceeding $ 2,000 which, by their nature
are not typical of the normal business activities of
the entity, are not expected to occur regularly over a
period of years, and are not considered as recurring
factors in any evaluation of the ordinary operations
of the entity. An example is the loss or write-down of
inventory due to a flood or freezer malfunction. The
CFCF Surplus Distribution is also an extraordinary
item. In the case of CANEX, approval from the CFO is
also required prior to being actioned in the books of
account,
d. Net Income/(Loss) Before Distribution. This is the net
amount earned during the period by the entity,
(1) Royalties (CANEX only). These are the amounts paid by
CANEX to each Base Fund. The amount of royalties paid
each month will be the amount which will result in the
YTD royalties being the greater amount of:
a. 80 % of the YTD net income, and
b. 1 % of YTD consumer sales
Of CANEX and its concessions. This monthly amount
could be negative; however, the YTD royalties will be
positive,
(2) Distribution to Units (CANEX only). This is the amount
of fund distributed to unique organizations (Cadet
camps, Militia Training Centres, etc) in accordance
with special agreements, and
(3) Distribution to Base Fund. This is the portion of net
income transferred from Base Fund subsidiaries to Base
Fund (entities other than CANEX and only if
applicable); and
e. Net Income/(Loss) After Royalties and Distribution. This is
the amount which is included in Retained Earnings,
NOTE
The Canex General Revenue and Expense Statement will show the
total Consumer Sales and the total Wholesale Sales for all outlets
at the end of the statement.
18. Income Statement. This statement shall be prepared for all outlets
except the NPF Food Services operation. The format shown at Annex E
shall be followed. Annex A indicates the schedules required in support
of each statement. An explanation of the items shown on the statement
are as follows:
NOTE
Before this statement is completed, the Closing Inventory
Worksheet must be completed and the necessary journal entry posted
to adjust the inventory adjustment account and the inventory
accounts.
a. Operating Revenue
(1) Consumer Sales. These are the sales of merchandise or
services to consumers. Payment is generally made with
cash, cheque, credit card or under the credit plan;
(2) Wholesale Sales. These are the sales of merchandise or
services by CANEX outlets to a non-CANEX (e.g. mess,
Base Fund clubs, CF unit) organizations. Normally
these sales generate a lower gross profit margin than
Consumer Sales,
(3) Transfers. This applies to transactions from the CANEX
warehouse to another CANEX outlet, either within the
base or at another base,
(4) Total Sales. This is the total of amounts recorded as
"Consumer Sales" and "Wholesale Sales" in the general
ledger for the period. For entities on retail
accountability, the figure here must be the same as
that recorded on the Closing Inventory Worksheet.
Sales are recorded net of provincial sales taxes,
(5) Cost of Goods Sold. This is the difference between the
Goods Available for Sale and the Closing Inventory,
and
(6) Gross Profit. This is the difference between Total
Sales and the Cost of Goods Sold;
b. Operating Expenses
(1) Salaries. These are the gross amounts paid as
calculated from the payroll journal. This includes all
salaries, incentive and bonuses paid by the employer
for employees directly involved with the operations of
the outlet,
(2) Employer Payroll Expense. This includes all costs to
the employer (the outlet) resulting from employing
personnel such as premiums to Canada Pension Plan
(CPP), Vacation Pay, Group Medical, Government
Employees' Compensation Act, etc,
NOTE
For CANEX outlets, Salaries and wages are combined with
Employer Payroll Costs and reported as Payroll Cost on the
Income Statement.
(3) Depreciation. This is the charge to expense for the
reduction in the net book value of fixed asset items
during the reporting period,
(4) Utilities. This includes all heat, light, and water
charges allocated to the outlet,
(5) Advertising/Promotions. This covers all costs
(production, printing, and distribution) of
advertising material used in or by the outlet. This
could include local newspaper advertising or in store
promotional material, promotions, special events,
special entertainment or activities, public relations,
prizes, gifts, draws, etc,
(6) Supplies. This includes the cost of supply materials
(bags, wrapping paper, string, etc) consumed in
support of the sale of merchandise or services,
(7) Repairs & Maintenance F ∧ E. This covers non-
capitalized repairs and maintenance to fixed assets
(eg. repairs to electrical motors in freezer
equipment, painting of vehicles, etc),
(8) Repairs & Maintenance Buildings. This covers non-
capitalized repairs and maintenance to the building
(eg. floor cleaning) not considered a public
responsibility,
(9) Telecommunications. This includes all telecommu-
nications costs (telephone, FAX) directly attributable
to lines originating from the outlet,
(10) Cash Over/Short. This includes the daily cashiers
over/short reported on the Daily Sales Report (DSR)
and any differences reported by the bank,
(11) Equipment Rental. This includes the cost of any leased
equipment not owned by the outlet or base,
(12) Travel. This includes all costs of travel incurred by
non-public employees on behalf of the outlet,
(13) Uncollectible Accounts. This includes the write-off of
accounts receivable, supplier credit notes and NSF
cheques deemed uncollectible,
(14) Stationery and Postage. This covers all expenditures
for office supplies, postage and courier services used
solely for the outlets use,
(15) Credit Card Fees. These are the service charges
associated with processing credit cards, debit cards
and Air Miles cards,
(16) Bar Mix. This includes those items which, as a matter
of policy, are expensed immediately,
(17) Bar Snacks. This includes those items which, as a
matter of policy, are expensed immediately,
(18) Spoilage (bars only). This is the value of good
spoiled and expensed,
(19) Janitorial/Cleaning. This covers all cleaning expenses
except payroll which will be charged against the
payroll expense account,
(20) Vehicle Expense (CANEX only). This includes all costs
such as gas and repairs incurred in maintaining
vehicles for the use of the outlets,
(21) Loan Interest (CANEX only). This reflects all interest
charges on loans shown on the CANEX balance sheet,
(22) Handling Fee Expense (CANEX only). These are fees paid
to other CANEX outlets for merchandise received from
them,
(23) (Not allocated)
(24) (Not allocated)
(25) (Not allocated)
(26) Miscellaneous Operating Expense. This includes
miscellaneous expenses which do not regularly occur
and for which a separate account has not been
established, and
(27) Total Operating Expense. This is the total of
subparagraphs (1) to (26),
c. Other Revenue
(1) Concession Revenue. In general, concession revenue is
reported under Special Services (see Chapter 49);
however, where the concession forms an integral part
of a CANEX outlet (i.e. the outlet incurs expenses in
support of the concession), such revenue may be
credited to the outlet in this account,
(2) Commission Revenue. This is, for example, a commission
paid to the outlet by the Lottery Corporation when a
winning lottery ticket is sold to a customer.
Commission on the sale of Money Orders is another
example,
(3) Handling Fee Revenue (CANEX only). These are fees
charged to other CANEX outlets for merchandise
transfers to them, and
(4) Miscellaneous Revenue. This includes miscellaneous
revenues which do not regularly occur and for which a
separate account has not been established; and
d. Operating Income/(Loss). This is the total of gross profit
minus operating expenses plus other revenue. This amount is
transferred to the General Revenue and Expense Statement.
NOTE
For a CANEX Income Statement which includes Department 40
(gasoline) or Department 46 (propane), the litres sold is to be
indicated at the bottom of the Income Statement.
STATEMENT OF NPF FOOD SERVICES
19. This statement is simply another income statement; however, the
net income or loss recorded on the statement is closed annually to the
NPF Food Services Account. This account is given visibility on the
balance sheet because of the unique aspects associated with it (ie,
break-even over time).
NOTE
If the NPF Food Services Account is in a debit balance, it shall
still be recorded under liabilities; however, administrative steps
must be taken to rectify this situation in the subsequent months.
NOTES TO FINANCIAL STATEMENTS
20. Notes are an integral part of the financial statements and are
required to further clarify or explain items in the financial statements
to management. When a note is used, the financial statement item is to
be cross-referenced to the note.
21. Notes to the financial statements may take the form of an
explanation in narrative form or a schedule. Schedules are generally
used to break down an amount in the financial statements (eg. when that
amount is a total of more than one general ledger account).
22. The required notes to the annual NPF financial statements are
indicated at Annex A. The requirement for notes to the monthly financial
statements for local management review is at the discretion of those
managers.
