Canadian Transportation Agency Symbol of the Government of Canada

Financial statements for the period ended March 31, 2010

Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2010 and all information contained in these statements rests with Agency management.  These financial statements have been prepared by management in accordance with Treasury Board Accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment and gives due consideration to materiality.  To fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Agency's financial transactions.  Financial information submitted to the Public Accounts of Canada and included in the Agency's Departmental Performance Report is consistent with these financial statements.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds.  Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the Agency.

The Agency has established an internal audit infrastructure consistent with Treasury Board policy, managed by a dedicated resource reporting directly to the Deputy Head.  The Agency's Audit Advisory Committee is chaired by the Deputy Head, with two other members, who are independent of operational functions.  The Audit Advisory Committee approves the annual risk-based internal audit plan, budgets and reports.

The financial statements of the Agency have not been audited.

Geoffrey Hare,
Chairman and Chief Executive Officer
Arun Thangaraj,
Chief Financial Officer

Gatineau, Canada
July 30th, 2010

Statement of Operations (unaudited) for the year ended March 31st

  2010
(in dollars)
2009
(in dollars)
Net Cost of Operations 33,188,914 31,152,696
Operating Expenses   
Salaries and employee benefits 26,057,339 23,929,373
Accommodation 2,027,557 2,027,622
Professional and special services 2,437,306 2,378,448
Transportation and telecommunication 705,979 839,119
Repair and maintenance 391,285 585,845
Information 338,330 245,958
Amortization of tangible capital assets 844,371 702,300
Rentals 161,936 211,930
Materials and supplies 230,083 212,864
Machinery and equipment 114,116 92,587
Loss on disposal of tangible capital assets 1,173 3,149
Loss on write-off of tangible capital assets 1,444 67
Interest on capital leases 1,732 -
Total Expenses 33,312,651 31,226,165
Revenues   
Sales of goods and services 20,065 15,030
Revenues from fines 103,447 58,115
Gains on disposal of tangible capital assets 225 324
Total Revenues 123,737 73,469

The accompanying notes form an integral part of these financial statements.

Statement of Financial Position (unaudited) at March 31st

  2010
(in dollars)
2009
(in dollars)
TOTAL 2,771,524 3,124,944
ASSETS   
Financial Assets   
Accounts receivable from external parties 10.638 5,007
Receivables from other federal government departments and agencies 46,219 351,463
Employee advances 7,700 8,700
Total financial assets 64,557 365,170
Non-Financial Assets   
Prepaid expenses 167,028 157,271
Inventory 93,579 90,661
Tangible capital assets (Note 4) 2,446,360 2,511,842
Total non-financial assets 2,706,967 2,759,774
TOTAL 3,771,524 3,124,944
LIABILITIES   
Accounts payable & accrued liabilities to external parties 1,588,551 2,733,233
Accounts payable to other federal government departments and agencies 281,508 35,037
Vacation pay and compensatory leave 1,018,792 936,798
Lease obligation for tangible capital asset (Note 5) 47,642 62,560
Employee severance benefits (Note 6) 5,156,447 3,667,170
  8,092,940 7,434,798
Equity of Canada (5,321,416) (4,309,854)

The accompanying notes form an integral part of these financial statements.

Statement of Equity of Canada (unaudited) at March 31st

  2010
(in dollars)
2009
(in dollars)
Equity of Canada, beginning of the year (4,309,854) (2,835,085)
Net cost of operations (33,188,914) (31,152,696)
Current year appropriations used (Note 3(a)) 28,041,298 26,985,663
Revenue not available for spending (123,737) (73,469)
Refund of previous years expenditures (62,918) (28,901)
Change in net position in the Consolidated Revenue Fund (Note 3(c)) (597,598) (988,971)
Services Provided without charge by other Federal Government departments and agencies (Note 8) 3,725,111 3,783,605
Equity of Canada, end of the year (5,321,416) (4,309,854)

The accompanying notes from an integral part of these financial statements.

Statement of Cash Flow (unaudited) for the year ended March 31st

  2010
(in dollars)
2009
(in dollars)
Operating Activities   
Net cost of operations 33,188,914 31,152,696
Non-cash items:   
Amortization of tangible capital assets (844,371) (702,300)
Loss on disposal and write-down of tangible capital assets (2,617) (3,216)
Services provided without charge by other Federal Government department and agencies (3,725,111) (3,783,605)
Other (428) -
Variations in Statement of Financial Position:   
Increase (decrease) in accounts receivable (299,613) (89,004)
Increase (decrease) in employee advances (1,000) (4,150)
Increase (decrease) in prepaid expenses 9,757 (47,923)
Increase (decrease) in inventory 2,918 9,866
(Increase) Decrease in vacation pay and compensatory leave (81,994) (96,366)
(Increase ) Decrease in employee severance benefits (1,489,277) (303,414)
(Increase) in accounts payable & accrued liabilities 898,211 (895,817)
Cash used by operating activities 27,655,389 25,236,767
Capital investment activities   
Net acquisitions of tangible capital assets 781,934 657,555
Cash used by capital investment activities 781,934 657,555
Financing activities   
Decrease in capital lease obligation 14,918 -
Cash used in financing activities 14,918 -
Net Cash provided by Government of Canada 28,452,241 25,894,322

The accompanying notes form an integral part of these financial statements.

Notes to the Financial Statements (unaudited) Year ended March 31, 2010

  1. Authority and Objectives

    The Canadian Transportation Agency (the Agency) was established on July 1, 1996, under the Canada Transportation Act, (S.C. 1996, c. 10), as the continuation of the National Transportation Agency.  Under the Act and related legislation, it has various powers to help implement the federal government's transportation policy.  The Chairman and Chief Executive Officer is appointed by the Governor-in-Council.  The Agency pursues one objective: transparent, fair and efficient economic regulation of the federal transportation system.

    As an independent, quasi judicial, administrative tribunal of the Government of Canada, the Agency is responsible for:

    • Dispute Resolution, to resolve complaints about transportation services, rates, fees and charges;
    • Accessibility, to ensure that the national transportation system is accessible, particularly to persons with disabilities; and
    • Economic Regulation, to provide approvals, licences, and make decisions on matters involving federally-regulated air, rail and marine transportation.

    In exercising its court-like powers, the Agency employs processes that are responsive, fair, and transparent, and considers the interests of all parties to disputes involving the national transportation system. Its adjudicative formal decision-making process is governed by the rules of natural justice and fairness.

    Through its actions, and by working closely with Transport Canada, other departments, its clients and stakeholder groups, the Agency supports the goal of a Canadian transportation system that is competitive, efficient and accessible – and that meets the needs of those who provide or use transportation services.

  2. Summary of Significant Accounting Policies

    The financial statements have been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

    Significant accounting policies are as follows:

    1. Parliamentary appropriations – the Agency is financed by the Government of Canada through Parliamentary appropriations.  Appropriations provided to the Agency do not parallel financial reporting according to Canadian generally accepted accounting principles since appropriations are primarily based on cash flow requirements.  Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament.  Note 3 provides a high-level reconciliation between the bases of reporting.
    2. Net Cash Provided by Government - The Agency operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada.  All cash received by the Agency is deposited to the CRF and all cash disbursements made by the Agency are paid from the CRF.  The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments.
    3. Change in net position in the Consolidated Revenue Fund is the difference between the net cash provided by government and appropriations used in a year, excluding the amount of non-respendable revenue recorded by the Agency.  It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.
    4. Revenues:
      1. Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
      2. Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
    5. Expenses:
      1. Expenses are recorded on the accrual basis.
      2. Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
      3. Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans and legal services are recorded as operating expenses at their estimated cost.
    6. Employee future benefits:
      1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada.  The Agency's contributions to the Plan are charged to expenses in the year incurred and represent the total Agency obligation to the Plan.  Current legislation does not require the department to make contributions for any actuarial deficiencies of the Plan.
      2. Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment.  These benefits are accrued as employees render the services necessary to earn them.  The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
    7. Receivables – these are stated at amounts expected to be ultimately realized.  A provision is made for receivables where recovery is considered uncertain.
    8. Contingent liabilities - Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur.  To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded.  If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.
    9. Inventories not for re-sale – These are comprised of brochures that are held for future program delivery and are not intended for re-sale.  They are valued at cost. If they no longer have service potential, they are written-off as there are no realizable values for these items.
    10. Tangible capital assets – All tangible capital assets and leasehold improvements are recorded at their acquisition cost (refer to the following table for the initial cost threshold).  The capitalization of software and leasehold improvements has been done on a prospective basis from April 1, 2001. Amortization of capital assets is done on a straight-line basis over the estimated useful life of the capital asset as identified in the table below.  Two categories have been established for equipment, LAN and Non-LAN.  The category LAN is for all equipment purchased for the Agency's local area network and the category Non-LAN is for all other equipment.
      Agency Asset CategoriesAgency Useful LifeThreshold (initial cost equal/or more than)
      Non-LANLANNon-LANLAN
      Informatics Hardware 3–5 years 3-10 years $1 $1
      Software 3 years Based on business case $500 $1
      Furniture 15 years 10 years $1,000 $1
      Accommodation  improvements Assessed on a case by case basis Assessed on a case by case basis $10,000 $1
      Car 7 years N/A $10,000 N/A
      Assets under construction Not  amortized until in service.  Once in service, in accordance with asset category
      Leased Capital Assets 5 years N/A $5,000 N/A
    11. Measurement uncertainty - The preparation of these financial statements in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements.  At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable.  The most significant items where estimates are used are contingent liabilities, the liability for employee severance benefits and the useful life of tangible capital assets.  Actual results could significantly differ from those estimated.  Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.
  3. Parliamentary Appropriations

    The Agency receives most of its funding through annual Parliamentary appropriations.  Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years.  Accordingly, the Agency has different net results of operations for the year on a government funding basis than on an accrual accounting basis.  The differences are reconciled in the following tables:

    1. Reconciliation of net cost of operations to current year appropriations used
        2010
      (in dollars)
      2009
      (in dollars)
      Current year appropriations used 28,041,298 26,985,663
      Net cost of operations 33,188,914 31,152,696
      Adjustments for items affecting net cost of operations but not affecting appropriations:   
      Add (Less) :   
      Services provided without charge by other Federal Government departments and agencies (3,725,111) (3,783,605)
      Amortization of tangible capital assets (844,371) (702,300)
      Revenue not available for spending 123,737 73,469
      Refunds of previous years expenditures 62,918 28,901
      (Loss) on disposals and write-offs of tangible capital assets (2,617) (3,216)
      Capital lease interest and adjustments 2,698 -
      (Increase) Decrease vacation pay and compensatory leave (81,944) (96,366)
      (Increase) Decrease employee severance benefits (1,489,277) (303,414)
      Other (428) -
        (5,954,445) (4,786,530)
      Adjustment for items not affecting net cost of operations but affecting appropriations   
      Add (Less):
      Acquisitions of tangible capital assets (Note 4) 781,934 657,555
      Decrease capital lease obligation 12,220 -
      (Decrease) Increase prepaid expenses 9,757 (47,924)
      Increase (Decrease) in inventory 2,918 9,866
    2. Appropriations provided and used
        2010
      (in dollars)
      2009
      (in dollars)
      Current year appropriation used 28,041,298 26,985,663
      Operating expenditures (Vote 25) 26,128,490 26,128,663
      Statutory amounts 3,415,166 3,066,565
      Less:   
      Appropriations available for future years (225) -
      Lapsed appropriations - Operating (1,502,133) (2,209,565)
    3. Reconciliation of net cash provided by Government to current year appropriation used
        2010
      (in dollars)
      2009
      (in dollars)
      Current year appropriations used 28,041,298 26,985,663
      Net cash provided by Government 28,452,241 25,894,322
      Revenues not available for spending 123,737 73,469
      Refund of previous years expenditures 62,918 28,901
      Change in net position in the Consolidated Revenue Fund    
      Variation in accounts receivable and advances 299,613 89,004
      Variation in employee advances 1,000 4,150
      Variation in accounts payable and accrued liabilities (898,211) 895,817
        (597,598) 988,971
  4. Tangible Capital Assets (in dollars)

    Capital asset classCost 
    Opening balanceAcquisitionsDisposals and write-offsClosing balance
    Total 7,244,726 1,128,297 798,266 7,574,757
    Informatics Hardware 2,648,579 354,036 444,110 2,558,505
    Software 3,072,187 373,263 428 3,445,022
    Furniture 1,277,622 113,500 7,365 1,383,757
    Car 30,737 - - 30,737
    Assets under construction 153,041 287,498 346,363 94,176
    Leased tangible capital assets 62,560 - - 62,560

    Capital asset classAccumulated amortization 2010
    Net book value
    2009
    Net book value
    Opening balanceAmortizationDisposals and write-offsClosing balance
    Total 4,732,884 844,371 448,858 5,128,397 2,446,360 2,511,842
    Informatics Hardware 2,089,650 227,988 443,068 1,874,570 683,935 558,929
    Software 1,825,293 504,107 - 2,329,400 1,115,622 1,246,894
    Furniture 812,819 92,239 5,790 899,268 484,489 464,803
    Car 5,122 4,391 - 9,513 21,224 25,615
    Assets under construction - - - - 94,176 153,041
    Leased tangible capital assets - 15,646 - 15,646 46,914 62,560

    Amortization expense for the year ended March 31, 2010 is $844,371 (2009 was $702,300).

    During the year, $346,363 of assets under construction was transferred to software and furniture.  The net acquisition of tangible capital assets is therefore, $781,934.

  5. Lease Obligation for Tangible Capital Assets

    The Agency has entered into agreements to rent office and electronic machine equipment under capital lease with a cost of $62,560 (Note 4).  The obligations for the upcoming years include the following:

    Maturing year2010
    (in dollars)
    2009
    (in dollars)
    2011 13,320 13,320
    2012 13,320 13,320
    2013 13,320 13,320
    2014 9,990 9,990
    Total future minimum lease payments 49,950 49,950
    Less: imputed interest (2.49%) 2,308 2,308
    Balance of obligations under leased tangible capital assets 47,642 47,642
  6. Employee Benefits

    (a)  Pension benefits: The Agency's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada.  Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings.  The benefits are integrated with Canada/Québec Pension Plans benefits and they are indexed to inflation.

    Both the employees and the Agency contribute to the cost of the Plan.  The 2009-2010 expense for the Agency amounts to $3,414,941 ($3,048,390 in 2008-2009), which represents approximately 1.9 times (2.0 in 2008-2009) the contributions by employees.

    The Agency's responsibility with regard to the Plan is limited to its contributions.  Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

    (b) Severance benefits: The Agency provides severance benefits to its employees based on eligibility, years of service and final salary.  These severance benefits are not pre-funded.  Benefits will be paid from future appropriations.  Information about the severance benefits, measured as at March 31, is as follows:

      2010
    (in dollars)
    2009
    (in dollars)
    Accrued benefit obligation, beginning of year 3,667,170 3,363,756
    Expense for the year 2,100,697 1,145,657
    Benefits paid during the year (611,420) (842,243)
    Accrued benefit obligation, end of year 5,156,447 3,667,170
  7. Contractual Obligations

    The nature of the Agency's activities can result in some large multi-year contracts and obligations whereby the Agency will be obligated to make future payments when the services/goods are received.  Significant contractual obligations that can be reasonably estimated are summarized as follows:

    (in thousands of dollars)
      2010-112011-122012-132013-14 ThereafterTotal
    Total 899 262 110 4 1,275
    Professional and special services 350 2 - - 352
    Operating leases and rental of storage 296 48 - - 344
    Other goods and services 152 189 110 4 455
    Software maintenance agreements 101 23 - - 124
  8. Related party transactions

    The Agency is related as a result of common ownership to all Government of Canada departments, agencies and Crown corporations.  The Agency enters into transactions with these entities in the normal course of business and on normal trade terms.

    During the year the Agency received without charge from other departments, accommodation, the employer's contribution to the health and dental insurance plans, workman's compensation coverage, and legal services. These services without charge have been recognized in the Agency's Statement of Operations as follows:

      2010
    (in dollars)
    2009
    (in dollars)
    Total 3,725,111 3,783,605
    Accommodation 2,027,557 2,027,622
    Employer's contribution to the health and dental insurance plans 1,673,022 1,622,293
    Workman's compensation coverage 9,133 13,840
    Legal services 15,399 119,850

    The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General, are not included as an expense in the Agency's Statement of Operations.