Financial statements for the period ended March 31, 2012

Statement of Management Responsibility Including Internal Control over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2012, and all information contained in these statements rests with the management of the Canadian Transportation Agency. These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.

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 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 and through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the Agency and through conducting an annual risk-based assessment of the effectiveness of the system of internal control over financial reporting (ICFR).

Management is also responsible for maintaining an effective system of ICFR 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.

The system of ICFR is also designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments. In accordance with the Treasury Board Policy on Internal Control, the Agency has undertaken a risk-based assessment of the system of ICFR for the year ended March 31, 2012 and the results and action plan are summarized in the annex.

The Agency will be subject to periodic Core Control Audits performed by the Office of the Comptroller General and will use the results of such audits to adhere to the Treasury Board Policy on Internal Control.

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 24, 2012

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

20122011
Departmental net financial position $(1,865) $(2,918)
Liabilities
Accounts payable and accrued liabilities (note 4) $1,308 $1,602
Vacation pay and compensatory leave 918 963
Lease obligation for tangible capital assets (note 5) 23 35
Employee future benefits (note 6) 2,756 4,247
Total net liabilities 5,005 6,847
Financial assets
Due from Consolidated Revenue Fund 1,202 1,587
Accounts receivable and advances (note 7) 136 64
Total net financial assets 1,338 1,651
Departmental net debt 3,667 5,196
Non-financial assets
Prepaid expenses 103 121
Inventory (note 8) 115 87
Tangible capital assets (note 9) 1,584 2,070
Total non-financial assets 1,802 2.278

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 24, 2012

Statement of Operations and Departmental Net Financial Position (Unaudited) for the Year Ended March 31 (in thousands of dollars)

  2012 Planned Results20122011 Restated (note 13)
Departmental net financial position - End of year    $(1,865)  $(2,918)
Expenses
Economic regulation  $13,700  $14,085  $13,505
Adjudication and alternative dispute resolution 9,008 8,686 8,712
Internal services 8,328 9,424 9,723
Total expenses 31,036 32,195 31,940
Revenues
Revenues from fines 100 19 93
Sales of goods and services 20 -   30
Miscellaneous revenues 10 -   1
Revenues earned on behalf of Government (130) (19) (124)
Total revenues -   -   -  
Net cost of operations before government funding and transfers 31,036 32,195 31,940
Government funding and transfers
Net cash provided by Government   29,610 28,967
Change in due from Consolidated Revenue Fund   (385) (274)
Services provided without charge by other government departments (note 11)   4,023 3,788
Net cost of operations after government funding and transfers   (1,053) (541)
Departmental net financial position - Beginning of year   (2,918) (3,459)

Segmented information (note 12)
The accompanying notes form an integral part of these financial statements.

Statement of Change in Departmental Net Debt (Unaudited) for the Year Ended March 31 (in thousands of dollars)

  20122011
Departmental net debt - End of year  $3,667  $5,196
Net cost of operations after government funding and transfers  $(1,053)  $(541)
Change due to tangible capital assets
Acquisition of tangible capital assets 632 618
Amortization of tangible capital assets (1,114) (988)
Proceeds from disposal of tangible capital assets -   (2)
Net (loss) or gain on disposal of tangible capital assets (4) (4)
Total change due to tangible capital assets (486) (376)
Change due to inventories 28 (7)
Change due to prepaid expenses (18) (46)
Net increase (decrease) in departmental net debt (1,529) (970)
Departmental net debt - Beginning of year 5,196 6,166

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

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

  20122011Restated (note 13)
Net cash provided by Government of Canada  $29,610  $28,967
Operating activities
Net cost of operations before government funding and transfers  $32,195  $31,940
Non-cash items:
Amortization of tangible capital assets (1,114) (988)
Gain (loss) on disposal of tangible capital assets (4) (4)
Gain (loss) on write-off of tangible capital assets -   (1)
Services provided without charge by other government departments (note 11) (4,023) (3,788)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances 72 (1)
Increase (decrease) in prepaid expenses (18) (46)
Increase (decrease) in inventory 28 (7)
Decrease (increase) in accounts payable and accrued liabilities 294 269
Decrease (increase) in vacation pay and compensatory leave 45 56
Decrease (increase) in future employee benefits 1,491 909
Cash used in operating activities 28,966 28,339
Capital investment activities:
Acquisitions of tangible capital assets 632 618
Proceeds from disposal of tangible capital assets -   (2)
Cash used in capital investment activities 632 616
Financing activities:
Lease payments for tangible capital assets 12 12
Cash used in financing activities 12 12

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 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 using the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

    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 Departmental Net Financial Position and in 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. The planned results amounts in the Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2011-12 Report on Plans and Priorities. The future-oriented financial statements for 2011-2012 have been restated to reflect the revenue net of non-respendable amounts. This restatement resulted in a $130,000 increase in net costs of operations before government funding and transfers. In addition, the future-oriented financial statements have also been reclassified to conform to the current year presentation.
    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 or 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.
      3. Revenues that are non-respendable are not available to discharge the Agency's liabilities. While the deputy head (DH) is expected to maintain accounting control, he or she has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the entity's gross revenues.
    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. The Agency's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognised in the financial statements of the Government of Canada, as the Plan's sponsor.
      2. Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. 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 accounts receivable where recovery is considered uncertain.
    8. Inventory – Inventory consists 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 valued at the lower of cost or net realisable value.
    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 Agency 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:

    Tangible Capital Asset Class
    Asset ClassAmortization PeriodThreshold
    (initial cost equal/or more than)
    In dollars
    Leased tangible capital assets Over term of lease/useful life $5,000
    Machinery and equipment 5-15 years $5,000
    Furniture 10-15 years $1,000
    Vehicles 7 years $10,000
    Computer Hardware 3-10 years $1
    Computer Software 3-10 years $500

    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 future 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 (in thousands of dollars)

    The Agency receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net 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

        20122011
      Current year authorities used  $29,308  $28,790
      Net cost of operations before government funding and transfers  $32,195  $31,940
      Adjustments for items affecting net cost of operations, but not affecting authorities:
      Amortization of tangible capital assets (1,114) (988)
      Gain (loss) on disposal of tangible capital assets (4) (4)
      Gain (loss) on write-off of tangible capital assets -   (1)
      Services provided without charge by other federal government departments and agencies (4,023) (3,788)
      Decrease (increase) in vacation pay and compensatory leave 45 56
      Decrease (increase) in employee future benefits 1,491 909
      Refunds of prior years' expenditures 64 89
      Total items affecting net cost of operations but not affecting authorities (3,541) (3,727)
      Adjustment for items not affecting net cost of operations but affecting authorities:
      Acquisitions of tangible capital assets 632 618
      Decrease in lease obligations for tangible capital assets 12 12
      Increase (decrease) in inventory 28 (7)
      Increase (decrease) in prepaid expenses (18) (46)
      Total items not affecting net cost of operations but affecting authorities 654 577
    2. Authorities provided and used

        20122011
      Current year authorities used  $29,308  $28,790
      Authorities provided:
      Vote 25 - Operating expenditures  $27,020  $25,863
      Statutory amounts 3,461 3,490
      Less:
      Authorities available for future years -   (1)
      Lapsed: Operating (1,173) (562)
  4. Accounts payable and accrued liabilities (in thousands of dollars)

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

      20122011
    Total accounts payable and accrued liabilities  $1,308  $1,602
    Accounts payable - Other government departments and agencies  $20  $188
    Accounts payable - External parties 756 678
    Total accounts payable 776 866
    Accrued liabilities 532 736
  5. Lease obligation for tangible capital assets 

    The Agency has entered into agreements to lease photocopiers under capital leases with a cost of $62,560 and accumulated amortization of $40,664 as at March 31, 2012 ($62,560 and $28,151 respectively as at March 31, 2011). The obligations related to the upcoming years include the following:

      20122011
    Balance of obligations under leased tangible capital assets  $23  $35
      (in thousands of dollars)
    2012  $ -    $13
    2013 13 13
    2014 10 10
    Total future minimum lease payments 23 36
    Less: imputed interest (2.49%) -   1

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

  6. 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 Agency contribute to the cost of the Plan. The 2011-2012 expense amounts to $3,460,547 ($3,487,195 in 2010-2011), which represents approximately 1.8 times (1.9 times in 2010-2011) 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 thousands of dollars)

      The Agency provides severance benefits to its employees based on eligibility, years of service and salary at termination of employment. 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:

        20122011
      Accrued benefit obligation-End of year  $2,756  $4,247
      Accrued benefit obligation-Beginning of year  $4,247  $5,156
      Expense (adjustment) for the year 581 (335)
      Benefits paid during the year (2,072) (574)

      As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

  7. Accounts receivable and advances (in thousands of dollars)

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

      20122011
    Net accounts receivable  $136  $64
    Receivables - Other government departments and agencies  $135  $44
    Receivables - External parties -   14
    Employee advances 1 6
  8. Inventory

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

      2012 (in thousands of dollars)2011 (in thousands of dollars)
    Brochures $115 $87

    The cost of consumed inventory recognized as an expense in the Statement of Operations and Departmental Net Financial Position is -$28,209 in 2011-2012 ($6,616 in 2010-2011).

  9. Tangible capital assets (in thousands of dollars)

    Cost
    Capital Asset ClassOpening BalanceAcquisitionsAdjustmentsNote 1Disposals and Write-offsClosing Balance
    Total  $7,742  $632  $ -    $552  $7,822
    Furniture  $1,402  $22  $ -    $39  $1,385
    Vehicles 31 -   -   -   31
    Leased tangible capital assets 62 -   -   -   62
    Computer hardware 2,560 400 -   513 2,447
    Computer software 3,669 47 171 -   3,887
    Assets under construction 18 163 (171) -   10
    Accumulated Amortization
    Capital Asset ClassOpening BalanceAmortizationDisposals and Write-offsClosing Balance
    Total  $5,672  $1,114  $548  $6,238
    Furniture  $1,009  $84  $35  $1,058
    Vehicles 14 4 -   18
    Leased tangible capital assets 28 13 -   41
    Computer hardware 1,746 357 513 1,590
    Computer software 2,875 656 -   3,531
    Assets under construction -   -   -   -  
    Net Book Value
    Capital Asset Class20122011
    Total  $1,584  $2,070
    Furniture  $327  $393
    Vehicles 13 17
    Leased tangible capital assets 21 34
    Computer hardware 857 814
    Computer software 356 794
    Assets under construction 10 18
  10. Contractual obligations (in thousands of dollars)

    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:

      20132014201520162017 and thereafterTotal
    Total  $976  $220  $72  $8  $ -    $1,276
    Professional and special services  $352  $192  $57  $ -    $ -    $601
    Other goods and services 398 9 -   -   -   407
    Operating leases and rental of storage 128 19 15 8 -   170
    Software maintenance agreements 98 -   -   -   -   98
  11. Related party transactions (in thousands of 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

      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 Statement of Operations and Departmental Net Financial Position as follows:

        20122011
      Total  $4,023  $3,788
      Accommodation  $2,070  $2,042
      Employer's contribution to the health and dental insurance plans 1,943 1,719
      Worker's Compensation 9 8
      Legal services 1 19

      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 and Departmental Net Financial Position.

    2. Other transactions with related parties

        20122011
      Accounts receivable - Other government departments and agencies  $135  $44
      Accounts payable - Other government departments and agencies 20 188
      Expenses - Other government departments and agencies 4,280 4,617
      Revenues - Other government departments and agencies -   1

      Expenses and revenues disclosed in (b) exclude common services provided without charges, which are already disclosed in (a).

  12. Segmented information (in thousands of 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 expense and by major type of revenue. The segment results for the period are as follows:

      Economic RegulationAdjudication and Alternative Dispute ResolutionInternal Services2012 Total2011 Total
    Restated (note 13)
    Net cost from operations  $14,085  $8,686  $9,424  $32,195  $31,940
    Operating expenses
    Salaries and employee benefits  $11,526  $7,292  $6,775  $25,593  $24,898
    Accommodation 940 576 554 2,070 2,042
    Professional and special services 545 308 642 1,495 2,088
    Amortization of tangible capital assets 122 60 932 1,114 988
    Transportation and telecommunication 301 100 116 517 616
    Repair and maintenance 349 4 51 404 347
    Information 3 292 17 312 299
    Utilities, materials and supplies 55 17 165 237 274
    Rentals 197 25 7 229 280
    Claims against the Crown -   2 143 145 -  
    Machinery and equipment 47 5 17 69 98
    Other -   5 5 10 10
    Total expenses 14,085 8,686 9,424 32,195 31,940
    Revenues
    Revenues from fines 19 -   -   19 93
    Sales of goods and services -   -   -   -   30
    Miscellaneous revenues -   -   -   -   1
    Revenues earned on behalf of Government (19) -   -   (19) (124)
    Total revenues -   -   -   -   -  
  13. Accounting Changes

    During 2011, amendments were made to Treasury Board Accounting Standard 1.2 – Departmental and Agency Financial Statements to improve financial reporting by government departments and agencies. The amendments are effective for financial reporting of fiscal years ending March 31, 2012, and later. The significant changes to the Agency's financial statements are described below. These changes have been applied retroactively, and comparative information for 2010-11 has been restated.

    Net debt (calculated as liabilities less financial assets) is now presented in the Statement of Financial Position . Accompanying this change, the Agency now presents a Statement of Change in Departmental Net Debt and no longer presents a Statement of Equity.

    Revenue and related accounts receivable are now presented net of non-respendable amounts in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position . The effect of this change was to increase the net cost of operations before government funding and transfers by $19,000 for 2012 ($124,000 for 2011).

    Government funding and transfers, as well as the credit related to services provided without charge by other government departments, are now recognized in the Statement of Operations and Departmental Net Financial Position below "Net cost of operations before government funding and transfers." In previous years, the Agency recognized these transactions directly in the Statement of Equity of Canada. The effect of this change was to decrease the net cost of operations before government funding and transfers by $33,248,000 for 2012 ($32,481,000 for 2011).

      2011
    As previously stated
    (in thousands of dollars)
    Effect of changes
    (in thousands of dollars)
    2011Restated
    (in thousands of dollars)
    Statement of Operations and Departmental Net Financial Position:
    Revenues  $124  $(124)  $ -  
    Government funding and transfers
    Net cash provided by Government -   28,968 28,968
    Change in due from Consolidated Revenue Fund -   (275) (275)
    Services provided without charge by other government department -   3,788 3,788
  14. Comparative information

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

Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting of the Canadian Transportation Agency for the Fiscal Year 2011-2012 (Unaudited)

  1. Introduction

    Under the Treasury Board Policy on Internal Control, departments are required to demonstrate the measures they are taking to maintain an effective system of internal control over financial reporting (ICFR). As such, departments are expected to conduct annual assessments of their system of ICFR, establish action plans to address any necessary adjustments, and to attach to their Statements of Management Responsibility a summary of their assessment results and action plan.

    The Canadian Transportation Agency (Agency) will use the results of the periodic Core Control Audit performed by the Office of the Comptroller General to adhere to the Treasury Board Policy on Internal Control. Until such audit takes place, the Agency will proceed with a risk-based assessment of the system of ICFR. Below is a summary of the results of the assessment conducted as at March 31, 2012.

  2. Assessment Results as of March 31, 2012

    Design effectiveness aims to identify and document key controls, to ensure that they are in place and aligned with the risks they aim to mitigate, and that required remediation is addressed appropriately and in a timely manner.

    The Agency is well on the way in the design of its system of ICFR. Early in the 2011-2012 fiscal year, the Agency began identifying the main accounts at risk from the financial statements, having a significant impact on its financial reports using a risk analysis, based on the audit assertions, materiality and sensitivity. Important control points were then determined within the major processes that are in place in the organization.  As a result, the control points were adjusted to the proportion of risk they intend to mitigate. Finally, except for the entity-level controls as well as IT general controls, the Agency has identified four areas in which fourteen key business processes will be documented and made part of the organization's ICFR.

    The acquisition card key business process documentation was completed in March 2012. The thirteen other key business processes as well as the entity-level control and IT general control will be documented based on their priority during the next two years. See action plan below.

    Operating effectiveness aims to ensure that key controls are working as intended over a defined period, and that required remediation is addressed appropriately and in a timely manner.

    The assessment of the operating effectiveness has not yet begun. It will begin after the design effectiveness has been tested. The Agency must ensure that its key controls are well documented and that they are in the right place in the main processes.

  3. Action Plan

    The Agency wishes to complete the documentation of entity-level controls as well as the IT general controls by the end of the 2012-2013 fiscal year.

    With respect to documentation of the other ICFR business processes, the Chairman and Chief Executive Officer as well as the Chief Financial Officer have approved the action plan below:

    By end of 2012-2013 the Agency plans to:

    • Document entity-level control, general IT control and ten business processes as indicated in below table.
    • Complete the assessment of design effectiveness for payroll processing, travel, hospitality, acquisition card, payments, Delegation of Authority for specimen cards, procurement, user management, coding table, vendor and entity level controls.

    By end of 2013-2014 the Agency plans to:

    • Document three remaining business processes as indicated in below table.
    • Complete the assessment of design effectiveness for amortization, interdepartmental settlements, payments, financial close, asset management and general IT controls.
    • Substantially complete the assessment for the operating effectiveness for the processes for which the design effectiveness will have been completed in 2012-2013.

    By the end of 2014-2015 the Agency plans to:

    • Complete the assessment for the operating effectiveness for all processes.
    • Begin an ongoing monitoring program to ensure internal controls over financial reporting are maintained and updated as required.
    FieldProcessFY 2011-2012FY 2012-2013FY 2013-2014
    Entity Level Control     X  
    General IT Control     X  
    Expenditure Management Payroll Processing   X  
      Travel   X  
      Hospitality   X  
      Amortization     X
      Interdepartmental Settlements     X
      Payments   X  
      Delegation Specimen Cards   X  
      Financial Close (YE Adjustment)     X
      Acquisition Card X    
    Contracting Procurement   X  
    Assets Asset Management   X  
    Financial System User Management   X  
      Coding Table   X  
      Vendor   X  
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