Financial statements for the period ended March 31, 2011

Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2011, and all information contained in these statements rests with the management of the Canadian Transportation Agency.  These financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are based on 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 fulfill 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 in the preparation of the Public Accounts of Canada, and included in the Agency’s Departmental Performance Report, is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training, and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the agency.

The financial statements of the Canadian Transportation Agency have not been audited.

Geoffrey Hare
Chairman and Chief Executive Officer

Linda Harrison
Chief Financial Officer  

Gatineau, Canada
August 18, 2011

Statement of Financial Position (Unaudited) as at March 31 (in dollars)

 
  20112010
Restated
 (Note 13)
TOTAL LIABILITIES AND EQUITY OF CANADA $3,929,052  $4,633,883
ASSETS
Financial assets
Due from Consolidated Revenue Fund $1,587,082  $1,862,359
Accounts receivable and advances (note 4) 63,567 64,557
Total financial assets 1,650,649 1,926,916
Non-financial assets
Prepaid expenses 120,990 167,028
Inventory (note 5) 86,963 93,579
Tangible capital assets (note 6) 2,070,450 2,446,360
Total non-financial assets 2,278,403 2,706,967
TOTAL ASSETS  $3,929,052  $4,633,883
LIABILITIES AND EQUITY OF CANADA
Liabilities
Accounts payable and accrued liabilities (note 7) $1,601,523  $1,870,059
Vacation pay and compensatory leave 963,318 1,018,792
Lease obligation for tangible capital assets (note 8) 35,369 47,642
Employee future benefits (note 9) 4,247,170 5,156,447
Total Liabilities  6,847,380 8,092,940
Equity of Canada (2,918,328) (3,459,057)

Contractual obligations (note 10)

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

Geoffrey Hare
Chairman and Chief Executive Officer

Linda Harrison
Chief Financial Officer  

Gatineau, Canada
August 18, 2011

Statement of Operations (Unaudited) for the Year Ended March 31 (in dollars)

  20112010
Net cost of operations $31,815,955 $33,188,914
Expenses
Economic regulation $13,505,055 $14,306,575
Adjudication and alternative dispute resolution 8,712,180 8,512,637
Internal services 9,723,081 10,493,439
Total expenses 31,940,316 33,312,651
Revenues
Economic regulation 123,427 123,579
Adjudication and alternative dispute resolution 425 89
Internal services 509 69
Total revenues 124,361 123,737

Segmented information (note 12)

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

Statement of Equity of Canada (Unaudited) for the Year Ended March 31 (in dollars)

 
  20112010
Restated
 (Note 13)
Equity of Canada, end of the year (2,918,328) (3,459,057)
Equity of Canada, beginning of the year (3,459,057) (1,846,191)
Net cost of operations (31,815,955) (33,188,914)
Net cash provided by Government 28,844,343 28,452,241
Change in due from the Consolidated Revenue Fund (275,277) (601,304)
Services provided without charge by other government departments (note 11) 3,787,618 3,725,111

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

Statement of Cash Flows (Unaudited) for the Year Ended March 31 (in dollars)

  20112010
Net cash provided by Government of Canada  $28,844,343  $28,452,241
Operating activities
Net cost of operations  $31,815,955  $33,188,914
Non-cash items:
Amortization of tangible capital assets (987,993) (844,371)
Gain (loss) on disposal of tangible capital assets (4,292) (948)
Gain (loss) on write-off of tangible capital assets (500) (1,444)
Services provided without charge by other government departments (note 11) (3,787,618) (3,725,111)
Other -   (428)
Variations in Statement of Financial Position:  
Increase (decrease) in accounts receivable and advances (990) (300,613)
Increase (decrease) in prepaid expenses (46,038) 9,757
Increase (decrease) in inventory (6,616) 2,918
Decrease (increase) in accounts payable and accrued liabilities 268,536 898,211
Decrease (increase) in vacation pay and compensatory leave 55,474 (81,994)
Decrease (increase) in future employee benefits 909,277 (1,489,277)
Cash used in operating activities 28,215,195 27,655,614
Capital investment activities:
Acquisitions of tangible capital assets 618,327 781,934
Proceeds from disposal of tangible capital assets (1,452) (225)
Cash used in capital investment activities 616,875 781,709
Financing activities:
Lease payments for tangible capital assets 12,273 14,918
Cash used in financing activities 12,273 14,918

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

Notes to the Financial Statements (Unaudited) for the Year Ended March 31

  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 federal 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.

    The Program Activity Architecture explains how the program activities and allocation of resources contribute to the Agency's strategic outcome.

    Transparent, fair and timely dispute resolution and economic regulation of the national transportation system.

    This is achieved through three program activities:

     
    Program ActivityExpected Result
    Economic Regulation Economic and other interests of transportation users, service providers and other affected parties are protected.
    Adjudication and Alternative Dispute Resolution Access to a specialized dispute resolution system that is cost-effective, responsive, fair and timely, and serves the needs of users, service providers and other affected parties within the national transportation system.
    Internal Services Support the needs of programs and other corporate obligations of the Agency.
  2. Summary of Significant Accounting Policies

    These financial statements have been prepared in accordance with the Treasury Board accounting policies stated below, which are based on Canadian generally accepted accounting principles for the public sector.  The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

    Significant accounting policies are as follows:

    1. Parliamentary authorities - the Agency is financed by the Government of Canada through Parliamentary authorities.  Financial reporting of authorities provided to the Agency do not parallel financial reporting according to generally accepted accounting principles since authorities 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 authorities from Parliament.  Note 3 provides a 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 of the Government. 
    3. Amounts due from/to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF.  Amounts due from the CRF represent the net amount of cash that the Agency is entitled to draw from the CRF without further appropriations to discharge its liabilities.
    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 that gave rise to the revenue takes place.
    5. Expenses - Expenses are recorded on the accrual basis:
      1. Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
      2. Services provided without charge by other government departments for accommodation, employer contributions to the health and dental insurance plans, legal services and workers' compensation 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 multiemployer pension plan administered by the Government.  The Agency's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan.  Current legislation does not require the Agency 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. Accounts receivables are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain.
    8. Inventory - Inventory is comprised of brochures held for future program delivery and not intended for resale.  Inventory is valued at cost using the average cost method.  If there is no longer any service potential, inventory is written-off as there are no realizable values for these items. 
    9. 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 department does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.    

    The capitalization of software and leasehold improvements has been done on a prospective basis from April 1, 2001.  Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the capital asset as identified in the table below:

     
    Asset ClassAmortization PeriodThreshold (initial cost equal/or more than)
    Machinery and equipment 5-15 years $5,000
    Furniture 10-15 years $1,000
    Vehicles years $10,000
    Computer Hardware 3-10 years $1
    Computer Software 3-10 years $500
    Leased tangible capital assets Over term of lease/useful life $5,000

    Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.

    j) Measurement uncertainty - The preparation of these financial statements 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 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 Authorities

    The Agency receives most of its funding through annual Parliamentary authorities.  Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary authorities 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 authorities used (in dollars)

        20112010
      Current year authorities used $28,789,622 $28,041,298
      Net cost of operations  $31,815,955  $33,188,914
      Adjustments for items affecting net cost of operations, but not affecting authorities :  
      Amortization of tangible capital assets (987,993) (844,371)
      Gain (loss) on disposal of tangible capital assets (4,292) (948)
      Gain (loss) on write-off of tangible capital assets (500) (1,444)
      Services provided without charge by other federal government departments and agencies (3,787,618) (3,725,111)
      Decrease (increase) in vacation pay and compensatory leave 55,474 (81,994)
      Decrease (increase) in employee future benefits 909,277 (1,489,277)
      Refunds of prior years' expenditures 88,418 62,918
      Revenue not available for spending 122,955 123,512
      Other -   2,270
      Total (3,604,279) (5,954,445)
      Adjustment for items not affecting net cost of operations but affecting authorities:  
      Acquisitions of tangible capital assets 618,327 781,934
      Decrease in lease obligations for tangible capital assets 12,273 12,220
      Increase (decrease) in inventory (6,616) 2,918
      Increase (decrease) in prepaid expenses (46,038) 9,757
      Total 577,946 806,829
    2. Authorities provided and used (in dollars)

        20112010
      Current year authorities used  $28,789,622 $28,041,298
      Authorities Provided:  
      Vote 25-Operating expenditures  $25,863,213 $26,128,490
      Statutory amounts 3,489,641 3,415,166
      Less:  
      Authorities available for future years (768) (225)
      Lapsed: Operating (562,464) (1,502,133)
  4. Accounts receivable and advances (in dollars)

    The following table presents details of the Agency’s accounts receivable and advances balances:

     
      20112010
    Total  $63,567 $64,557
    Receivables from other government departments and agencies $44,333 $46,219
    Receivables from external parties   13,634   10,638
    Employee advances 5,600 7,700
  5. Inventory (in dollars)

    The following table presents details of the inventory, measured at cost using the average cost method.

      20112010
    Brochures  $86,963  $93,579

    The cost of consumed inventory recognized as an expense in the Statement of Operations is $6,616 in 2010-2011 (-$2,918 in 2009-2010).

  6. Tangible capital assets (in dollars)

     
    Capital Asset ClassCost
    Opening BalanceAcquisitionsDisposals and
    Write-offs
    Closing Balance
    Total $7,574,757  $816,964  $649,539 $7,742,182
    Machinery and equipment $1,383,757  $72,182  $54,075 $1,401,864
    Vehicles 30,737 -   -   30,737
    Leased tangible capital assets 62,560 -   -   62,560
    Computer hardware 2,558,505 398,485   396,828 2,560,162
    Computer software 3,445,022 223,853 -   3,668,875
    Assets under construction  94,176 122,444 198,636 17,984
     
    Capital Asset ClassAccumulated Amortization
    Opening BalanceAmortizationDisposals and 
    Write-offs
    Closing Balance
    Total $5,128,397  $987,993  $444,658 $5,671,732
    Machinery and equipment  $899,268  $156,967  $47,875 $1,008,360
    Vehicles 9,513 4,391 -   13,904
    Leased tangible capital assets 15,646 12,505 -   28,151
    Computer hardware 1,874,570 268,211   396,783 1,745,998
    Computer software   2,329,400 545,919 -   2,875,319
    Assets under construction -   -   -   -  
     
    Capital Asset ClassNet Book Value
    20112010
    Total $2,070,450 $2,446,360
    Machinery and equipment  $393,504  $484,489
    Vehicles 16,833 21,224
    Leased tangible capital assets 34,409 46,914
    Computer hardware 814,164 683,935
    Computer software 793,556 1,115,622
    Assets under construction 17,984 94,176

    Disposals of assets under construction represent assets that were put into use in the year and have been transferred to the other capital asset classes as applicable.

  7. Accounts payable and accrued liabilities (in dollars)

    The following table presents details of the Agency's accounts payable and accrued liabilities:

     
      20112010
    Total 865,589   1,045,606
    Accounts payable to other government departments and agencies  $188,229  $281,508
    Accounts payable to external parties 677,360 764,098
    Total $1,601,523 $1,870,059
    Accrued liabilities 735,934 824,453
  8. Lease obligation for tangible capital assets (in dollars)

    The Agency has entered into agreements to lease photocopiers under capital leases with a cost of $62,560 and accumulated amortization of $28,151 as at March 31, 2011 ($62,560 and $15,646 respectively as at March 31, 2010).  The obligations related to the upcoming years include the following:

     
      20112010
    Balance of obligations under leased tangible capital assets  $35,369  $47,642
    2011  $ -       $13,320
    2012 13,320 13,320
    2013 13,320 13,320
    2014 9,990 9,990
    Total future minimum lease payments 36,630 49,950
    Less: imputed interest (2.49%) 1,261 2,308

    Note: The lease contracts for capital asset will expire in 2014.

  9. Employee future benefits

    1. Pension benefits

      The Agency's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government.  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 department contribute to the cost of the Plan.  The 2010-2011 expense amounts to $3,488,873 ($3,414,941 in 2009-2010), which represents approximately 1.9 times (1.9 times in 2009-2010) 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.

    2. Severance benefits (in dollars)

      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 authorities.  Information about the severance benefits, measured as at March 31, is as follows:

       
        20112010
      Accrued benefit obligation, end of year $4,247,170  $5,156,447
      Accrued benefit obligation, beginning of year $5,156,447  $3,667,170
      Expense (adjustment) for the year (335,160) 2,100,697
      Benefits paid during the year (574,117) (611,420)
  10. Contractual Obligations (in dollars)

    The nature of the Agency’s activities can result in some large multi-year contracts and obligations whereby the department 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:

     
      20122013201420152016 and thereafterTotal
    Total $718,551 $225,941 $11,925 $9,553 $ -     $965,970
    Professional and special services $227,348  $27,605  $893 $ -   $ - $255,846
    Other goods and services   257,663 84,867 926 246 -     343,702
    Operating leases and rental of storage   120,743   113,469   10,106   9,307 -     253,625
    Software maintenance agreements   112,797 -   -   -   -     112,797
  11. Related Party Transactions (in dollars)

    The Agency is related as a result of common ownership to all Government 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 common services which were obtained without charge from other Government departments as disclosed below.

    1. Common services provided without charge by other government departments (in dollars)

      During the year the Agency received services without charge from certain common service organizations, related to accommodation, legal services, the employer's contribution to the health and dental insurance plans and workers' compensation coverage.  These services provided without charge have been recorded in the Agency's Statement of Operations as follows:

        20112010
      Total $3,787,618 $3,725,111
      Employer's contribution to the health and dental insurance plans $1,718,696 $1,673,022
      Accommodation 2,042,282 2,027,557
      Legal services 18,386 15,399
      Worker's Compensation 8,254 9,133

      The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public.  As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge.  The costs of these services, such as the 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 in the Agency's Statement of Operations.

    2. Other transactions with related parties (in dollars)

       
        20112010
      Accounts receivable from other government departments and agencies  $44,333  $46,219
      Accounts payable from other government departments and agencies 188,229 764,098
      Expenses-Other Government departments and agencies 4,616,745 4,255,017
      Revenues-Other Government departments and agencies 1,379 225
  12. Segmented information (in dollars)

    Presentation by segment is based on the Agency's program activity architecture.  The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2.  The following table presents the expenses incurred and revenues generated for the main program activities, by major object of expenses and by major type of revenues.  The segment results for the period are as follows:

      Economic RegulationAdjudication and Alternative Dispute ResolutionInternal Services2011 Total2010 Total
    Net cost from continuing operations $13,381,628  $8,711,755 $9,722,572 $31,815,955 $33,188,914
    Operating expenses
    Salaries and employee benefits $10,950,028  $7,235,555 $6,712,428 $24,898,011 $26,057,339
    Professional and special services 677,389 506,762 904,240 2,088,391 2,437,306
    Accommodation 855,242 479,231 707,809 2,042,282 2,027,557
    Amortization of tangible capital assets 93,647 47,896 846,450 987,993 844,371
    Transportation and telecommunication 350,882 97,505 167,245 615,632 705,979
    Information 14,992 250,382 27,301 292,675 338,330
    Rentals 237,989 26,436 15,361 279,786 161,936
    Utilities, materials and supplies 64,454 35,313 180,679 280,446 227,449
    Repair and maintenance 211,270 11,916 123,678 346,864 391,285
    Machinery and equipment 48,012 19,245 31,097 98,354 114,116
    Other 1,150 1,939 6,793 9,882 6,983
    Total expenses 13,505,055 8,712,180 9,723,081 31,940,316 33,312,651
    Revenues
    Sales of goods and services 30,015 -   30 30,045 20,065
    Revenues from fines 92,909 -   -   92,909 103,447
    Miscellaneous revenues 503 425 479 1,407 225
    Total revenues 123,427 425 509 124,361 123,737
  13. Adoption of new accounting policies (in dollars)

    During the year, the Agency adopted the revised Treasury Board accounting policy TBAS 1.2: Departmental and Agency Financial Statements which is effective for the Agency for the 2010-2011 fiscal year.  The major change in the accounting policies of the Agency required by the adoption of the revised TBAS 1.2 is the recording of amounts due from the Consolidated Revenue Fund as an asset on the Statement of Financial Position. 

    The adoption of the new Treasury Board accounting policies has been accounted for retroactively with the following impact on the comparatives for 2009-2010:

     
      2010
    As previously stated
    Effect of changes2010
    Restated
    Assets  $2,771,524  $1,862,359  $4,633,883
    Equity of Canada (5,321,416) 1,862,359 (3,459,057)
  14. Comparative information

    Comparative figures have been reclassified to conform to the current year's presentation.

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