Schedule 10.7 - Liabilities for Contaminated Sites

This schedule is for school boards to report the transactions and liability values related to contaminated sites under PSAB standard 3260. Please refer to the Contaminated Sites Accounting Policies and Implementation Guide stored in the EFIS Reference Data folder for further details.

Because any contaminated site liabilities as at September 1, 2014 are excluded from a school board’s accumulated surplus/(deficit) for compliance purposes, there are separate lines to track transactions related to the liabilities before and after that date. In the Financial Statements cycle, the liabilities should be included on Schedule 7 Statement of Financial Position at item 2.4 (Liabilities - Other).

Column 1: Contaminated Site Liability as at Sept. 1

The opening liabilities are loaded from the closing liabilities in the board-submitted 2024-25 Revised Estimates; the amount could be updated with latest data.

• Where the contaminated site liabilities opening balances have not been updated to reflect current costs and where discounting is not applied, at minimum, a cost escalation rate should be applied for each year since the last revaluation and the calculated cumulative inflation adjustment should be inputted in this column to adjust the opening balance. It is recommended that school boards use the actual August calendar Consumer Price Index (CPI) rate published on the Bank of Canada website to update their contaminated site liabilities opening balance, if needed.

Column 2.1: Contaminated Site Liability Changes in the Estimate

This column is used to report changes in the liability estimate due to new information or reassessment during the year.

• Any increase in the estimated contaminated site liability should be recorded as an expense on Schedule 10, item 78 (Other Non-Operating Expenses), column 10 (Other Expenses), and should have a corresponding positive entry here to increase the liability.

• Any decrease in the estimated contaminated site liability should be recorded as a revenue recovery on Schedule 9, item 8.52 (Revenue Recovery on Contaminated Sites), and should have a corresponding negative entry here to reverse the liability.

• School boards should also include in this column, where discounting is not applied, their inflation adjustment of their contaminated site liabilities for the current period. It is recommended that school boards use the actual August calendar CPI rate (if available) published on the Bank of Canada website to revalue the contaminated sites liabilities estimates in circumstances where neither current costs nor an updated environment site assessment are available.

Column 2.2: Contaminated Sites Expenses

Input contaminated expenses in 2025-26, including accretion expenses, if any. All amounts are included in the school board’s expenses for compliance purposes. Note that only positive values can be entered in this column.

• School boards are to report accretion expense if they decide to use the present value method for contaminated sites. Accretion expense is the increase in the carrying amount of a liability for contaminated sites due to the passage of time.

• Discounted cash flow (DCF) is a technique that determines the present value of future cash flows. Under the DCF method, one applies a discount rate to each periodic cash flow. Multiplying this discount by each future cash flow results in an amount that is, in aggregate, the present value of all future cash flows.

• The foundation of discounted cash flow analysis is the concept that cash received today is more valuable than cash received at some point in the future.

• With the effort involved, the province set out the following factors in consideration of the use of discounting in reporting to the province. Discounting is to be used in situations where:

  • The liability is material (threshold for reporting to province is > $10 million per liability/asset/type),
  • The cash flows are reasonably set in both amount and timing (e.g. defined by contract), and
  • The cash flow settlement period extends beyond five years from the initial recognition date of the liability.

• School boards should determine, in discussion with their auditors, if they will use the present value method for their own reporting as it may be different than what is used in reporting to the ministry.

• Where discounting is applied, the discount rates, as well as guidance on the long-term inflation rate, can be found in the document titled OFA Effective Annual Rates in EFIS under the Reference Material folder. The Office of the Provincial Controller Division worked with the Ontario Financing Authority (OFA) to determine sector level discount rates within the document. It will be updated with the most current rates as they become available.

• Because item 1.1 is only used to record the value of contaminated site liabilities identified by August 31, 2014, and excluded from compliance, any increase related to these sites should be recorded at item 1.2.

Column 2.3: Contaminated Site Liability Disposal

This column is used to report decreases in the liability when a school board has disposed of the asset with the contaminated site (no abatement). Note that only negative values can be entered in this column. A corresponding positive amount should be recorded as a revenue recovery on Schedule 9, item 8.52 (Revenue Recovery on Contaminated Sites).

Column 3: Contaminated Sites Abatements

Input any decreases that occur when a school board has settled all or a portion of a contaminated site liability through abatement activity. Note that only negative values can be entered in this column.

• Note that the payments recorded at item 1.1, column 3, may be different from the amount recorded on Schedule 5, item 4.8, column 3. This is because an amount recorded on Schedule 5 is to address the liability by setting aside a portion of the accumulated surplus. It does not necessarily agree to any cash payments made against the liability. There may be a timing difference between the school board setting aside accumulated surplus to address the liability, and reducing the liability in cash.

Number of contaminated sites as of August 31, 2026 is also reported on this schedule, at item 2.1.