Guideline for Accounting and Reporting of the Canada Emergency Wage Subsidy (CEWS) and other Funds Received for International Development Assistance Contribution Agreements
Updated: 31 January 2022
We recognize that the COVID-19 pandemic poses challenges to the delivery of international development assistance projects and, to support recipient organizations, Global Affairs Canada has, among other things, provided guidance on the eligibility of costs for situations that could be encountered due to the pandemic. One area that requires clarification is the interaction of wage subsidies, such as the Canada Emergency Wage Subsidy, with contribution agreements for international development assistance projects.
This Guideline sets out the applicable accounting method and subsequent reporting of wage subsidies for recipient organizations, clarifying the advice previously provided in the Questions and Answers - Guidelines on the eligibility of possible expenses for COVID-19.
We recognize that recipient organizations may be eligible for various COVID-19 financial relief measures, including the Canada Emergency Wage Subsidy (CEWS). For grants and contributions, the recipient organization is responsible to ensure that eligible costs under international development assistance projects are reimbursed only once, be it from government (federal, provincial and/or municipal) and/or other donor funds. The recipient organization is also responsible to report on all funds received from any emergency measures and/or government program related to COVID 19. Consistent with contribution agreements, in the event that a recipient organization has been reimbursed more than 100% of the cost of an eligible expense, the organization will be required to reimburse Global Affairs Canada (GAC) for the overpayment and adjust its financial reports accordingly.
The only applicable method of accounting for the CEWS (or any other wage subsidy/benefit) under contribution agreements in international assistance projects is as follows:
In the event that the recipient organization applies for the CEWS for a position funded under a development assistance project, the organization must claim compensation based on the level of effort after deducting amounts received as part of the CEWS or any other grant, rebate or subsidy.
Example:
| Method | |
|---|---|
| Total employee compensation | $10,000 |
| % CEWS claimed and received | 75% |
| Level of Effort - GAC Project | 45% |
| Amount received - CEWS | $7,500 |
| Amount claimed from GAC (45% of $2,500 (i.e., $10,000 - $7,500) | $1,125 |
| Total cost claimed | $8,625 |
Explanation: The CEWS (and any other grant, rebate or subsidy) must reduce the amount of eligible compensation costs. Therefore, compensation costs should be claimed based on the level of effort applied to the compensation amount after deducting any rebates/subsidies.
We are aware that some recipient organizations may have used alternative accounting methods; exceptionally, the following alternative method will be allowed for expenses incurred up to 31 January 2022.
The alternative method is as follows:
In the event that the recipient applied for the CEWS for a position funded under a development assistance project, the organization may claim compensation based on the level of effort without deducting the CEWS first, subject to the overall amount to be reimbursed not exceeding the total employee compensation.
Example:
| Alternative Method | |
|---|---|
| Total employee compensation | $10,000 |
| % CEWS claimed and received | 75% |
| Level of Effort - GAC Project | 45% |
| Amount received - CEWS | $7,500 |
| Amount claimed from GAC (45% of $10,000, capped at $2,500 so the total claim does not exceed total compensation) | $2,500 (max) |
| Total cost claimed | $10,000 |
Explanation: The amount claimed cannot be greater than the total compensation, so even though the level of effort is 45% for the project funded by GAC (totaling $4,500), the maximum that can be claimed is $2,500, which is the difference between the CEWS and the total employee compensation.
Beyond January 31, 2022 and in the event that the CEWS is renewed or other government programs (including foreign ones) are announced, the first accounting method listed above is the only applicable one.
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