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Unaudited Financial Statements for the period ending March 31, 2010

Preface to the Departmental Financial Statements of Environment Canada

The fundamental purpose of the departmental financial statements is to provide information to Parliament and Canadians, to facilitate an understanding and evaluation of the full nature and extent of the financial affairs and resources for which Environment Canada is responsible.

Environment Canada's unaudited financial statements are a key public financial report and are published yearly in the fall as part of the Departmental Performance Report. They are produced on a basis consistent with the department's annual Public Accounts Volume II submissions, which are consolidated with the Government of Canada Public Accounts.

Public Accounts

Volume I of the Government of Canada Public Accounts presents the financial statements of the government, which represent a consolidation of all federal departments and agencies financial statements. The Government of Canada financial statements are presented on an accrual basis of accounting consistent with Canadian generally accepted accounting principles for the public sector.

Volume II of the Public Accounts is designed to reflect the form and content of Part II of the Main Estimates, which displays the source and disposition of Parliamentary Appropriation and spending authorities provided to departments and agencies, and is presented on a modified cash basis of accounting. Under the modified cash basis of accounting, certain specific payables and receivables are accrued while items such as inventories, prepaid expenses, and capital assets are recorded as expenditures used during the year.

Departmental Financial Statements

Treasury Board policy requires departmental financial statements to be included and published as part of their Departmental Performance Reports. The Office of the Comptroller General of Canada determines the presentation and format of the financial statements to ensure consistency across departments of the Government of Canada. Environment Canada's financial statements are presented on an accrual basis of accounting consistent with Canadian generally accepted accounting principles for the public sector. The departmental financial statements are derived from the-Department's Volume I and II Public Accounts submission, and the reconciliation between parliamentary Appropriations Used (modified cash basis) and the Net Cost of Operations (accrual basis) is set out in Note 3 to the financial statements.

For the fiscal year ended March 31, 2010, the format and presentation of Environment Canada's financial statements have changed in accordance with revisions to Treasury Board Accounting Standards, as disclosed in the accompanying notes to Environment Canada's Financial Statements.

Departmental Performance Report

Departmental Performance Reports are individual department and agency accounts of results achieved against planned performance expectations as set out in respective Reports on Plans and Priorities. The Departmental Performance Reports, which cover the most recently completed fiscal year, are tabled in Parliament in the fall by the President of the Treasury Board on behalf of ministers who preside over appropriation dependent departments and agencies identified in Schedules I, I.1 and II of the Financial Administration Act.

Performance and financial information disclosed in the Departmental Performance Report, other than the departmental financial statements, are presented on a modified cash basis as performance results are disclosed based upon the use of Parliamentary Appropriations.

Financial information submitted to the Public Accounts of Canada and included in the department's Departmental Performance Report is consistent with these financial statements.

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