Future-oriented Statement of Operations for the Periods Ended March 31, 2011 and March 31, 2012
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 December 3, 2010 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 Audit Advisory Committee has reviewed and approved the issuance of these financial statements.
The paper version was signed by:
Chairman and Chief Executive Officer
Chief Financial Officer
January 19, 2011
Future-oriented Statement of Operations
|Estimated Results 2011||Forecast 2012|
|Salaries and employee benefits||23,184,828||23,699,477|
|Professional and special services||2,425,667||2,391,169|
|Transportation and telecommunication||817,274||822,380|
|Repair and maintenance||452,605||454,340|
|Amortization of tangible capital assets||755,105||767,259|
|Materials and supplies||226,106||223,961|
|Machinery and equipment||104,105||104,504|
|Interest on capital leases||1,047||738|
|Sales of goods and services||40,000||20,000|
|Revenues from fines||100,000||100,000|
|Gains on disposal of tangible capital assets||10,000||10,000|
|Net Cost of Operations||30,357,947||30,905,625|
The accompanying notes form an integral part of these financial statements.
Notes to the Financial Statements (unaudited)
Authority and objectives
The Canadian Transportation Agency (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 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:
- The Agency's activities will remain substantially the same as for the previous year.
- 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.
- Base on resources provided, the Agency will deliver the expected results specified in the Report on Plans and Priorities.
- Estimated information is based on the parliamentary appropriations granted to the Canadian Transportation Agency though its 2011-2012 Main Estimates.
These assumptions are adopted as at December 3, 2010.
Variations and changes to the forecast financial information
While every attempt has been made to accurately forecast final results for the remainder of 2010-2011 and for 2011-2012, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.
In preparing these financial statements the Agency has made estimates and assumptions concerning the future. These estimates and judgements may differ from the subsequent actual results. Estimates and judgements 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:
- The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.
- Economic conditions may affect both the amount of revenue earned and the collectability of loan receivables.
- 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 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.
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:
- 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 is not necessarily the same as those provided through appropriations from Parliament. Note 5 provides a high-level reconciliation between the bases of reporting.
- 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 Consolidated Revenue Fund. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the Government.
- Revenues are presented on an accrual basis:
- Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
- Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
- Expenses are presented on an accrual basis:
- Expenses are recorded on the accrual basis.
- Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
- 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.
- Employee future benefits:
- 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 Agency to make contributions for any actuarial deficiencies of the Plan.
- 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.
- Receivables: These are stated at amounts expected to be ultimately realized. A provision is made for receivables where recovery is considered uncertain.
- 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.
- 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.
Tangible capital assets Useful life Threshold (initial cost equal/or more than) Asset categories Non-LAN LAN Non-LAN LAN 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 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
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:
Authorities requested (in dollars) 2011 2012 Operating expenditures (Vote 30) 25,382,245 23,986,376 Statutory amounts 3,245,944 3,385,688 Less: Appropriations available for future years - - Forecast authorities available 28,628,189 27,372,064
Forecast authorities requested for the year ending March 31, 2012 are the planned spending amounts presented in the 2011-2012 Report on Plans and Priorities. Estimated authorities requested for the year ending March 31, 2011 include amounts presented in the 2010-2011 Main Estimates and Supplementary Estimates (A) and (B), but excludes amounts not yet approved by Treasury Board at the time of the preparation of the Future-oriented Statement of Operations.
Reconciliation of net cost of operations to current year appropriations used (in dollars) 2011 2012 Net cost of operations 30,357,947 30,905,625 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 (3,748,573) (3,707,405) Amortization of tangible capital assets (755,105) (767,259) Revenue not available for spending 150,000 130,000 Refunds of previous years expenditures 40,000 40,000 (Increase) Decrease vacation pay and compensatory leave 86,785 - (Increase) Decrease employee severance benefits 646,300 70,735 Other - - Total of items affecting net cost of operations (3,580,593) (4,233,929) Adjustment for items not affecting net cost of operations but affecting appropriations Add (Less): Acquisitions of tangible capital assets (Note 4) 694,611 687,468 Decrease (Increase) capital lease obligation 12,582 12,899 Increase (Decrease) in inventory (3,000) - Forecast current year lapse 1,146,642 - Forecast authorities available 28,628,189 27,372,064
Tangible capital assets
Tangible capital assets (in dollars) Cost Capital asset class Opening balance Acquisitions Disposals and write-offs Closing balance Informatics Hardware 2,465,106 295,536 331,073 2,429,569 Software 3,780,046 313,557 - 4,093,603 Furniture 1,438,966 85,079 10,379 1,513,666 Car 30,737 - - 30,737 Assets under construction 103,098 272,076 278,780 96,394 Leased tangible capital assets 62,560 - - 62,560 Total 7,880,513 966,248 620,232 8,226,528
Accumulated amortization (in dollars)
Capital asset class Opening balance Amortization Disposals and write-offs Closing balance Informatics Hardware 1,746,889 233,059 329,849 1,650,099 Software 2,732,005 428,468 - 3,160,473 Furniture 1,008,510 101,525 7,480 1,102,555 Car 10,834 4,207 839 14,202 Assets under construction - - - - Leased tangible capital assets - - - - Total 5,498,238 767,259 338,167 5,927,329
Net book value (in dollars)
Capital asset class 2012 2011 Informatics Hardware 779,469 718,217 Software 933,130 1,048,041 Furniture 411,111 430,457 Car 16,535 19,903 Assets under construction 96,394 103,098 Leased tangible capital assets 62,560 62,560 Total 2,299,199 2,382,275
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:
Lease obligation for tangible capital assets (in dollars) Maturing year 2011 2012 2013 13,320 13,320 2014 9,990 9,990 Total future minimum lease payments 23,310 23,310 Less: imputed interest (2.49%) 580 580 Balance of obligations under leased tangible capital assets 22,730 22,730
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 department contribute to the cost of the plan. The forecast expenses are $3,245,944 in 2010-11 and $3,385,688 in 2011-12, representing approximately 2.0 times the contributions of 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.
- 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.
Employee benefits (in dollars) 2011 2012 Accrued benefit obligation, beginning of year 5,156,447 4,510,147 Expense for the year 27,304 638,354 Benefits paid during the year (673,604) (709,089) Accrued benefit obligation, end of year 4,510,147 4,439,412
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 the following services without charge from other departments - accommodation, legal services, the employer's contribution to the health and dental insurance plans and workman's compensation coverage. These services without charge have been estimated in the Agency's Statement of Operations as follows:
Related party transactions (in dollars) 2011 2012 Total 3,748,573 3,707,405 Accomodation 2,056,160 2,084,844 Employer's contribution to the health and dental insurance plans 1,620,831 1,598,797 Workman's compensation coverage 12,491 8,242 Legal services 59,091 15,522
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.
Segmented information (in dollars) 2012 Estimated Results 2011 Economic Regulation Adjudication and Alternative
Internal Services Forecast 2012 Operating Expenses Salaries and employee benefits 23,184,828 10,461,052 6,878,774 6,359,650 23,699,477 Accommodation 2,056,160 920,259 605,126 559,459 2,084,844 Professional and special services 2,425,667 1,055,472 694,037 641,660 2,391,169 Transportation and telecommunication 817,274 363,002 238,696 220,682 822,380 Repair and maintenance 452,605 200,548 131,872 121,920 454,340 Information 293,254 129,940 85,443 78,995 294,378 Amortization of tangible capital assets 755,105 338,671 222,697 205,890 767,259 Rentals 191,435 84,844 55,790 51,580 192,213 Materials and supplies 226,106 98,857 65,005 60,099 223,961 Machinery and equipment 104,105 46,128 30,332 28,043 104,504 Interest on capital leases 1,047 326 214 198 738 Other 362 160 105 97 363 Total Expenses 30,507,947 13,699,260 9,008,092 8,328,273 31,035,625 Revenues Sales of goods and services 40,000 20,000 - - 20,000 Revenues from fines 100,000 100,000 - - 100,000 Gains on disposal of tangible capital assets 10,000 - - 10,000 10,000 Total Revenues 150,000 120,000 - 10,000 130,000 Net Cost of Operations 30,357,947 13,579,260 9,008,092 8,318,273 30,905,625
The accompanying notes form an integral part of these financial statements.