Future-oriented Financial Statements For the Years Ending March 31, 2012 and March 31, 2013

Statement of Management Responsibility

Agency management is responsible for these future-oriented financial statements, including responsibility for the appropriateness of the assumptions on which these statements are prepared. These statements are based on the best information available and assumptions adopted as at November 30, 2011 and reflect the plans described in the Report on Plans and Priorities. Assumptions and estimates are based upon information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in departmental mandate and strategic objectives.

The actual results achieved for the fiscal years covered in the accompanying financial information will vary from the information presented, and the variations may be material.

The financial statements of the Agency have not been audited, however the Internal Audit Advisory Committee has reviewed and approved the issuance of these financial statements.

Geoffrey Hare
Chairman and Chief Executive Officer

Linda Harrison
Chief Financial Officer

Gatineau, Canada
March 5, 2012

Future-oriented Statement of Financial Position (Unaudited)
As at March 31 (in thousands of dollars)

  Estimated Results
2012
Planned Results
2013
ASSETS
Financial assets
Due from Consolidated Revenue Fund $ 1,725$ 1,656
Accounts receivable and advances (note 6) 5859
Total financial assets 1,783 1,715
Non-financial assets
Prepaid expenses 75 75
Inventory (note 7) 85 83
Tangible capital assets (note 8) 1,945 1,779
Total non-financial assets 2,105 1,937
  $ 3,888 $ 3,652
LIABILITIES AND EQUITY OF CANADA
Liabilities
Accounts payable and accrued liabilities (note 9) $ 1,736 $ 1,669
Vacation pay and compensatory leave 991 977
Lease obligation for tangible capital assets (note 10) 23 10
Employee future benefits (note 11) 2,298 1,029
  5,048 3,685
Equity of Canada (1,160) (33)
  $ 3,888 $ 3,652

Information for the year ending March 31, 2012 includes actual amounts from April 1, 2011 to November 30, 2011.

Contractual obligations (note 12)

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

Geoffrey Hare
Chairman and Chief Executive Officer

Linda Harrison
Chief Financial Officer

Gatineau, Canada
March 5, 2012

Future-oriented Statement of Operations (Unaudited)
For the Year Ending March 31 (in thousands of dollars)

  Estimated Results
2012
Planned Results
2013
Net cost of operations $ 31,809 $ 32,501
Expenses
Economic regulation $ 14,050 $ 14,042
Adjudication and alternative dispute resolution 9,239 9,539
Internal services 8,550 8,980
Total expenses 31,839 32,561
Revenues
Economic regulation 30 60
Total revenues 30 60

Information for the year ending March 31, 2012 includes actual amounts from April 1, 2011 to November 30, 2011.

Segmented information (note 14)

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

Future-oriented Statement of Equity of Canada (Unaudited)
For the Year Ending March 31 (in thousands of dollars)

  Estimated Results
2012
Planned Results
2013
Equity of Canada, end of the year $ (1,160) $ (33)
Equity of Canada, beginning of the year $ (2,918) $ (1,160)
Net cost of operations (31,809) (32,501)
Net cash provided by Government 29,441 29,753
Change in due from the Consolidated Revenue Fund 138 (69)
Services provided without charge by other government departments (note 13) 3,988 3,944

Information for the year ending March 31, 2012 includes actual amounts from April 1, 2011 to November 30, 2011.

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

Future-oriented Statement of Cash Flows (Unaudited)
For the Year Ending March 31 (in thousands of dollars)

  Estimated Results
2012
Planned Results
2013
Net cash provided by Government of Canada $ 29,441 $ 29,753
Operating activities
Net cost of operations $ 31,808 $ 32,501
Non-cash items:
Amortization of tangible capital assets (848) (892)
Gain (loss) on disposal of tangible capital assets (4) (4)
Services provided without chargeby other government departments (note 13) (3,988) (3,944)
Variations in Future-oriented Statement of Financial Position:
Increase (decrease) in accounts receivable and advances (5) -
Increase (decrease) in prepaid expenses (46) -
Increase (decrease) in inventory (2) (2)
Decrease (increase) in accounts payable and accrued liabilities (134) 67
Decrease (increase) in vacation pay and compensatory leave (28) 14
Decrease (increase) in future employee benefits 1,949 1,269
Cash used in operating activities 28,702 29,009
Capital investment activities:
Acquisitions of tangible capital assets 726 731
Cash used in capital investment activities 726 731
Financing activities:
Lease payments for tangible capital assets 1313
Cash used in financing activities 1313

Information for the year ending March 31, 2012 includes actual amounts from April 1, 2011 to November 30, 2011.

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

Notes to the Future-oriented Financial Statements (Unaudited) For the Year Ending 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. Methodology and significant assumptions

The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of the department as described in the Report on Plans and Priorities.

The main assumptions are as follows:

  1. The Agency's activities will remain substantially the same as for the previous year.
  2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
  3. Based on resources provided, the Agency will deliver the expected results specified in the Report on Plans and Priorities.
  4. Estimated information is based on the parliamentary appropriations granted to the Canadian Transportation Agency though its 2012-2013 Main Estimates
  5. Estimated year end information for 2011-2012 is used as the opening position for the 2012-2013 planned results.

These assumptions are adopted as at November 30, 2011.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2011-2012 and for 2012-2013, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these future-oriented financial statements, the Canadian Transportation Agency has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the future-oriented financial statements and the historical financial statements include:

  1. The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.
  2. Implementation of new collective agreements.
  3. Economic conditions may affect both the amount of revenue earned and the collectability of loan receivables.
  4. Interest rates in effect at the time of issue will affect the net present value of non-interest bearing leans.
  5. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, the Canadian Transportation Agency will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of Significant Accounting Policies

These future-oriented financial statements have been prepared in accordance with the Treasury Board accounting policies in effect for the 2010-2011 fiscal year. These accounting policies, stated below, 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 Future-oriented Statement of Operations and the Future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 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 parliamentary authorities to discharge its liabilities.
  4. Revenues - are recorded on an accrual basis:
    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 - are recorded on the accrual basis:
    1. Vacation pay and compensatory leave are accrued as the benefits are earned under their respective terms of employment.
    2. Services provided without charge by other government departments for accommodation, the employer's contributions to the health and dental insurance plans, legal services and workers' compensation are reported 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 established for receivables 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 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:

    Tangible Capital Asset Class
    Asset ClassAmortization PeriodThreshold (initial cost equal/or more than)
    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
    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.

  10. Measurement uncertainty - The preparation of these future-oriented financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the future-oriented financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Actual results could significantly differ from those estimated.

5. Parliamentary Authorities

The Agency receives most of its funding through annual expenditure authorities provided by Parliament. Items recognized in the Future-oriented Statement of Operations and 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:

a) Authorities requested

  Estimated Results
2012 (in dollars)
Planned Results
2013 (in dollars)
Forecast authorities available $ 30,491,442 $ 29,774,434
Authorities requested:
Vote 25-Operating expenditures $ 26,925,754 $ 26,289,997
Statutory amounts 3,565,688 3,484,437

Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in estimates documents and, when reasonable estimates can be made, estimate of amounts to be allocated from Treasury Board central votes.

b) Reconciliation of net cost of operations to requested authorities

Severance benefits
  Estimated Results
2012 (in dollars)
Planned Results
2013 (in dollars)
Forecast authorities available $ 30,491,442 $ 29,774,434
Net cost of operations $ 31,808,457 $ 32,500,610
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (848,016) (892,417)
Gain (loss) on disposal of tangible capital assets (3,976) (4,198)
Services provided without charge by other federal government departments and agencies (3,988,098) (3,943,788)
Decrease (increase) in vacation pay and compensatory leave (27,737) 13,869
Decrease (increase) in employee future benefits 1,949,225 1,268,737
Refunds of prior years' expenditures 63,963 29,000
Revenue not available for spending 30,120 60,120
  (2,824,519) (3,468,677)
Adjustment for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets 726,162 731,206
Decrease in lease obligations for tangible capital assets 12,583 12,899
Increase (decrease) in inventory (1,963) (2,000)
Increase (decrease) in prepaid expenses (46,386) 396
  690,396 742,501
Forecast current year lapse 817,108 -

6. Accounts receivable and advances

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

  Estimated Results
2012 (in dollars)
Planned Results
2013 (in dollars)
Receivables from other government departments and agencies $ 45,276$ 44,805
Receivables from external parties 12,136 12,885
Employee advances 900 900
  $ 58,312 $ 58,590

7. Inventory

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

  Estimated Results
2012 (in dollars)
Planned Results
2013 (in dollars)
Brochures $ 85,000 $ 83,000

The cost of consumed inventory recognized as an expense in the Future-oriented Statement of Operations is $1,963 in 2012.

8. Tangible capital assets

Cost (in dollars)
Capital asset classOpening balanceAcquisitionsDisposals and
write-offs
Closing balance
Total $ 8,106,352 $ 831,206 $ 521,456 $ 8,416,102
Machinery and equipment $ 1,464,196 $ 90,969 $ 28,777 $ 1,526,388
Vehicles 30,737 - - 30,737
Leased tangible capital assets 62,560 - - 62,560
Computer hardware 2,580,209 340,602 392,679 2,528,132
Computer software 3,955,666 294,635 - 4,250,301
Assets under construction 12,984 105,000 100,000 17,984
Accumulated amortization (in dollars)
Capital asset classOpening balanceAmortizationDisposals and
write-offs
Closing balance
Total $ 6,161,782 $ 892,418 $ 417,161 $ 6,637,039
Machinery and equipment $ 1,102,355 $ 121,484 $ 24,972 $ 1,198,867
Vehicles 18,295 4,391 - 22,686
Leased tangible capital assets 40,663 12,512 - 53,175
Computer hardware 1,648,911 245,276 392,189 1,501,998
Computer software 3,351,558 508,755 - 3,860,313
Assets under construction - - - -
Net book value (in dollars)
Capital asset class20132012
Total $ 1,779,063 $ 1,944,570
Machinery and equipment $ 327,521 $ 361,841
Vehicles 8,051 12,442
Leased tangible capital assets 9,385 21,897
Computer hardware 1,026,134 931,298
Computer software 389,988 604,108
Assets under construction 17,98412,984

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.

9. Accounts payable and accrued liabilities

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

  Estimated Results
2012
Planned Results
2013
Accounts payable to other government departments and agencies $ 234,869 $ 211,549
Accounts payable to external parties 720,729 699,045
  955,598 910,594
Accrued liabilities 780,194 758,064
  $ 1,735,792 $ 1,668,658

10. 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 $28,151 as at March 31, 2011. The obligations related to the upcoming years include the following:

  Estimated Results
2012 (in dollars)
Planned Results
2013 (in dollars)
Balance of obligations under leased tangible capital assets $ 22,786 $ 9,887
2013 $ 13,320 $-
2014 9,990 9,990
Total future minimum lease payments 23,310 9,990
Less: imputed interest (2.49%) 524 103

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

11. Employee future benefits

a) 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 forecast expenses are $3,565,688 in 2011-2012 and $3,424,437 in 2012-2013, representing approximately 1.9 times 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 authorities. Information about the severance benefits, measured as at the date of these statements, is as follows:

  Estimated Results
2012 (in dollars)
Planned Results
2013 (in dollars)
Accrued benefit obligation, end of year $ 2,297,945 $ 1,029,208
Accrued benefit obligation, beginning of year $ 4,247,170 $ 2,297,945
Expense (adjustment) for the year 50,853 155,976
Expected benefits payments during the year (2,000,078) (1,424,713)

12. Contractual Obligations

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 $ 390,312 $ 754,667 $ 172,450 $ 70,048 $ 8,192 $ 1,395,669
Professional and special services $ 182,755 $ 304,667 $ 148,309 $ 56,738 $ - $ 692,469
Other goods and services 165,010 221,667 8,790 246 - 395,713
Operating leases and rental of storage 36,963 132,000 15,351 13,064 8,192 205,570
Software maintenance agreements 5,584 96,333 - - - 101,917

13. Related Party Transactions

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.

a) 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 Agency's Future-oriented Statement of Operations as follows:

Common services provided without charge by other government departments
  Estimated Results
2012 (in dollars)
Planned Results
2013 (in dollars)
Total $ 3,988,098 $ 3,943,788
Employer's contribution to the health and dental insurance plans $ 1,879,490 $ 1,825,451
Accommodation 2,084,844 2,095,134
Legal services 15,522 15,755
Workman's compensation 8,242 7,449

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 Future-oriented Statement of Operations.

b) Other transactions with related parties

  Estimated Results
2012 (in dollars)
Planned Results
2013 (in dollars)
Accounts receivable from other government departments and agencies $ 45,276 $ 44,805
Accounts payable from other government departments and agencies 234,869 211,549
Expenses-Other Government departments and agencies 4,435,881 4,526,313
Revenues-Other Government departments and agencies 802 1,091

14. Segmented information

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 4. The following table presents the forecasted expenses incurred and forecasted 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:

Segmented information
  20122013
  TotalEconomic RegulationAdjudication and Alternative Dispute ResolutionInternal ServicesTotal
Net Cost of Operations $ 31,808,457 $ 13,982,054 $ 9,538,679 $ 8,979,877 $ 32,500,610
Operating Expenses
Salaries and employee benefits $ 25,587,093 $ 10,993,080 $ 7,467,494 $ 7,030,046 $ 25,490,620
Professional and special services 1,750,202 940,769 639,056 601,620 2,181,445
Accommodation 2,084,844 903,547 613,771 577,816 2,095,134
Amortization of tangible capital assets 848,016 384,864 261,434 246,119 892,417
Transportation and telecommunication 545,228 293,513 199,380 187,701 680,594
Information 221,288 119,126 80,921 76,181 276,228
Rentals 152,356 83,229 56,537 53,225 192,991
Utilities, materials and supplies 183,491 98,585 66,968 63,045 228,598
Repair and maintenance 380,476 179,680 122,055 114,905 416,640
Machinery and equipment 76,977 41,439 28,149 26,500 96,088
Other 8,606 4,388 2,981 2,806 10,175
Total Expenses 31,838,577 14,042,220 9,538,746 8,979,964 32,560,930
Revenues
Sales of goods and services 120 30,100 - 20 30,120
Revenues from fines 30,000 30,000 - - 30,000
Miscellaneous revenues - 66 67 67 200
Total Revenues 30,120 60,166 67 87 60,320
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