Topic:"Accounting Policies" in M13113

MANAGEMENT FINANCIAL OVERVIEW (UNAUDITED) As an independent system operator, IESO Nova Scotia, like our counterparts around the world, has been set up to be funded ultimately by electricity customers. IESO Nova Scotia is expected to submit...

AI summary IESO Nova Scotia submitted its first revenue requirement application in 2025-26, requesting $5.307 million to cover operational costs. Actual expenses were $4.963 million, resulting in a $0.344 million surplus. This surplus will be addressed in the next revenue application. The financial statements, prepared under IFRS, show total expenses of $8.217 million, with adjustments made for government grants and other revenues not included in the initial filing.

²IFRS adjustments are (1) to convert the accounting treatment of the long-term office lease to a cash basis ($0.021 million) and (2) to remove amortization charges that relate to assets not included on the revenue application ($0.085 milli...

AI summary IESO Nova Scotia faced a $3.169 million deficit in its 2025-26 financial statements due to the lack of an approved fee recovery mechanism, despite having a small surplus. An interim fee mechanism was approved in February 2026, providing $0.95 million per month. The revenue shortfall is being collected in fiscal year 2026-27, and a new revenue requirement application for 2026-27 was submitted to the NSEB.

Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, an...

AI summary The auditor's responsibilities include obtaining reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error. This involves assessing risks, evaluating internal controls, and ensuring the financial statements are presented fairly. The audit does not guarantee the detection of all material misstatements, especially those arising from fraud.

(b) Basis of measurement IESO Nova Scotia's financial statements are prepared on the historical cost basis except for certain financial instruments that are measured at fair value, as explained in the accounting policies below.

AI summary IESO Nova Scotia's financial statements are prepared using the historical cost basis, with exceptions for certain financial instruments that are measured at fair value, as detailed in the accounting policies.

3. Material accounting policies The financial statements have been prepared within the framework of the accounting policies summarized below.

AI summary The section outlines the material accounting policies used in preparing the financial statements, emphasizing their importance in ensuring consistency and transparency in financial reporting.

a) Revenue recognition In its inaugural period, IESO Nova Scotia's revenue is derived from the Province of Nova Scotia government grants, rate recovery revenue and interconnection revenues. IESO Nova Scotia recognizes government grants as...

AI summary IESO Nova Scotia's revenue recognition includes government grants, rate recovery revenue, and interconnection fees. Grants are recognized over the period they compensate for related costs, rate recovery revenue is recognized monthly as performance obligations are met, and interconnection fees are recognized as studies progress. Revenue is measured at fair value.

Asset Rate Perpetual 5 Software Years Intangible assets are retired when they are fully amortized and derecognized when no future benefits are expected to arise from their use.

AI summary The document discusses the retirement and derecognition of intangible assets when they are fully amortized and no future benefits are expected. It includes a table listing 'Perpetual' and 'Software' with associated rates and years.

i. Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated amortization and any accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of...

AI summary The text outlines the accounting treatment for property, plant, and equipment, including initial measurement at cost, amortization, impairment losses, and borrowing costs. It also covers derecognition upon disposal and the recognition of gains or losses on disposal.

ii. Non - financial assets (including receivables) The carrying amount of non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If such indication exists, then the asset's reco...

AI summary The text discusses the accounting treatment of non-financial assets, including the review of their carrying amounts for impairment, the estimation of recoverable amounts, and the recognition of impairment losses if the carrying amount exceeds the recoverable amount. The process involves assessing value in use and fair value less cost to sell.

g) Leases For any new contracts entered into, the Organization considers whether a contract is or contains a lease. A lease is defined as 'a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for...

AI summary The Organization evaluates whether new contracts contain leases based on specific criteria, including the presence of an identified asset, the right to economic benefits, and the right to direct the use of the asset.

iii. Lease Liabilities At the commencement date, the Organization measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily...

AI summary The document discusses the accounting treatment of lease liabilities, including initial measurement based on present value and subsequent adjustments. It outlines how lease liabilities are reduced by payments and increased by interest, and how they are remeasured under certain conditions. The Organization uses practical expedients for short-term and low-value leases, recognizing payments as expenses over the lease term.

h) Employee Benefits A liability is recognized as a present legal or constructive obligation to pay an amount as a result of past service provided by employees and the amount can be reliably estimated. Short-term employee benefits, includi...

AI summary The text discusses the recognition of liabilities related to employee benefits, including short-term benefits and pension benefits. It explains that short-term benefits are measured on an undiscounted basis and recognized as expenses when services are provided, while pension benefits are expensed as incurred.

5. Use of estimates and judgements The preparation of the financial statements requires the organization's management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent...

AI summary The preparation of financial statements involves management making estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates may differ from actual results.

5. Use of estimates and judgements (continued) Estimates and underlying assumptions are reviewed on an ongoing basis. Any revisions to accounting estimates are recognized in the period in which the estimate was revised and any future perio...

AI summary The document discusses the ongoing review of estimates and assumptions used in financial reporting, emphasizing that revisions to accounting estimates are recognized in the period they are revised and any future periods affected. These judgments and estimates are considered material to IESO Nova Scotia's financial statements.

8. Prepaid Expense 2026 Cybersecurity subscriptions Application software Other $ 74 347 56 Total prepaid expense 477 Less: Current portion (333) Long-term Prepaid Expense $ 144 Total prepaid expense of $477 include a portion that relates t...

AI summary The section discusses prepaid expenses in 2026, including cybersecurity subscriptions, application software, and long-term licenses related to power system simulation and cybersecurity. The total prepaid expense is $477, with $144 classified as long-term.

10. Intangible Assets 2026 Balance, February 18, 2025 Addition Amortization $ — 398 (20) Balance, March 31, 2026 $ 378 Perpetual Software licenses are recognized as an intangible asset as they provide permanent usage rights to certain soft...

AI summary The document discusses the accounting treatment of perpetual software licenses as intangible assets for IESO Nova Scotia. These licenses are amortized over five years due to expected future changes in requirements, with an annual amortization expense of $20.

11. Right-of-use-asset 2026 Balance, February 18, 2025 Addition Amortization $ — 2,682 (67) Balance, March 31, 2026 $ 2,615 The right-of-use asset arises from a lease contract for office space where IESO Nova Scotia is the lessee for a ter...

AI summary The right-of-use asset related to a ten-year lease for office space by IESO Nova Scotia is reported with a balance of $2,615 as of March 31, 2026, following an addition of $2,682 and amortization of $67 in 2025.

12. Accounts payable, accrued and other liabilities 2026 Accounts payable Accrued liabilities Compensation liabilities $ 1,546 1,571 243 $ 3,360 The carrying value of accounts payable, accrued liabilities and compensation liabilities appro...

AI summary The section outlines the accounts payable, accrued liabilities, and compensation liabilities for 2026, with a total carrying value of $3,360 million. It notes that the carrying value approximates fair value.

13. Lease liability 2026 Balance, February 18, 2025 $ — Addition 2,912 Interest expense 41 Lease payments (87) Balance, March 31, 2026 2,866 Less: current portion (192) Non-current portion $ 2,674 The estimated future lease payments associ...

AI summary This section details the lease liability for the period February 18, 2025, to March 31, 2026. It outlines the balance, additions, interest expense, and lease payments, as well as the estimated future lease payments and expenses recognized in the statement of loss for the period.

15. Pension plan – defined contribution IESO Nova Scotia sponsors a defined contribution pension plan for all permanent employees. As a defined contribution plan, IESO Nova Scotia's obligation is limited to pay the employers share of contr...

AI summary IESO Nova Scotia sponsors a defined contribution pension plan for its permanent employees. The company's obligation is limited to paying the employer's share of contributions, with no further legal or constructive obligations. For the period ended March 31, 2026, an expense of $44 was recorded for pension costs.

President and CEO Pay Framework The pay framework for the President and CEO includes fixed and variable pay. The fixed pay is set by the Board, having received external advice from specialized compensation consultants that considered curre...

AI summary The President and CEO pay framework includes fixed and variable components. Fixed pay is determined by the Board with external consulting input, while variable pay is capped at 15% of fixed pay and tied to performance metrics evaluated annually by the Human Resources and Governance Committee.