Canadian Heritage financial statements for the year ended March 31, 2018
On this page:
- Statement of management responsibility including internal control over financial reporting
- Notes to the financial statements (Unaudited) for the year ended March 31, 2018
- 1. Authority and objectives
- 2. Summary of significant accounting policies
- 3. Parliamentary authorities
- 4. Accounts payable and accrued liabilities
- 5. Employee future benefits
- 6. Accounts receivable and advances
- 7. Inventory
- 8. Tangible capital assets
- 9. Contractual obligations
- 10. Contingent liabilities
- 11. Non-monetary transactions
- 12. Related party transactions
- 13. Comparative Information
- 14. Segmented information
List of acronyms
- PCH
- Department of Canadian Heritage
- ICFM
- Internal control over financial management
- ICFR
- Internal control over financial reporting
- OLMCs
- Official-language minority communities
- CRF
- Consolidated Revenue Fund
- EAP
- Educational assistance payment
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, 2018, and all information contained in these statements rests with the senior management of the Department of Canadian Heritage (PCH). These financial statements have been prepared using the Government of Canada Accounting Handbook, which is based on Canadian public sector accounting standards.
Some of the information in these 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 PCH's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in PCH's Departmental Results Report, is consistent with these financial statements.
Management is also responsible for maintaining an effective system of internal control over financial management (ICFM), including internal control over financial reporting (ICFR), which is 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 PCH and through conducting an annual risk assessment of the effectiveness of the system of ICFM.
The system of ICFM, including ICFR, is designed to mitigate risks to a reasonable level based on the ongoing monitoring of the key risks, to assess the effectiveness of associated key controls and to make any necessary adjustments.
A risk-based assessment of the system of ICFM, including ICFR, for the year ended March 31, 2018 was completed in accordance with the Treasury Board Policy on Financial Management and the results and action plans are summarized in the annex.
The effectiveness and adequacy of PCH's system of internal control is reviewed by the work of internal control and internal audit staff, who conduct periodic reviews and audits of different areas of PCH's operations. Additionally, the Departmental Audit Committee oversees management responsibilities for maintaining adequate control systems and the quality of financial reporting.
The financial statements of the Department of Canadian Heritage have not been audited.
Original signed
Graham Flack
Deputy Minister
Andrew Francis
Chief Financial Officer
Gatineau, Canada
Date: September 4, 2018
| 2018 | 2017 | |
|---|---|---|
| Liabilities | ||
| Accounts payable and accrued liabilities (note 4) | 485,572 | 326,801 |
| Vacation pay | 8,225 | 7,099 |
| Employee future benefits (note 5) | 8,112 | 7,687 |
| Other liabilities | 1,011 | 1,030 |
| Total net liabilities | 502,920 | 342,617 |
| Financial assets | ||
| Due from the Consolidated Revenue Fund (note 2) | 479,253 | 323,243 |
| Accounts receivable and advances (note 6) | 9,417 | 9,031 |
| Total gross financial assets | 488,670 | 332,274 |
| Financial assets held on behalf of Government | ||
| Accounts receivable and advances (note 6) | (16) | (106) |
| Total financial assets held on behalf of Government | (16) | (106) |
| Total net financial assets | 488,654 | 332,168 |
| Departmental net debt | 14,266 | 10,449 |
| Non-financial assets | ||
| Prepaid expenses | 1,255 | 1,123 |
| Inventory (note 7) | 720 | 2,129 |
| Tangible capital assets (note 8) | 16,888 | 10,741 |
| Total non-financial assets | 18,863 | 13,993 |
| Departmental net financial position | 4,597 | 3,544 |
Contractual Obligations (note 9)
Contingent Liabilities (note 10)
The accompanying notes form an integral part of these financial statements.
Original signed
Graham Flack
Deputy Minister
Andrew Francis
Chief Financial Officer
Gatineau, Canada
Date: September 4, 2018
| Planned Results | 2018 | 2017 | |
|---|---|---|---|
| Expenses | |||
| Official Languages | 363,255 | 363,875 | 367,032 |
| Cultural Industries | 313,971 | 317,892 | 311,625 |
| Sport | 206,189 | 220,238 | 211,413 |
| Arts | 206,827 | 203,054 | 195,756 |
| Attachment to Canada | 164,281 | 205,779 | 155,850 |
| Heritage | 32,596 | 39,982 | 33,849 |
| Engagement and Community Participation | 101,145 | 85,313 | 62,802 |
| Internal Services | 82,635 | 94,732 | 82,960 |
| Total expenses | 1,470,899 | 1,530,865 | 1,421,287 |
| Revenues | |||
| Revenue from the 1979 Federal-provincial Lottery-agreement | 74,400 | 74,062 | 73,013 |
| Miscellaneous revenues | 6,802 | 6,359 | 6,025 |
| Sale of goods and services | 5,921 | 4,753 | 3,987 |
| Revenues earned on behalf of Government | (74,469) | (74,287) | (73,355) |
| Total revenues | 12,654 | 10,887 | 9,670 |
| Net cost from continuing operations | 1,458,245 | 1,519,978 | 1,411,617 |
| Government funding and transfers | |||
| Net cash provided by Government of Canada | 1,335,648 | 1,534,185 | |
| Increase (reduction) in amounts due from the Consolidated Revenue Fund | 156,010 | (147,506) | |
| Services provided without charge by other government departments (note 12) | 29,376 | 27,958 | |
| Transition payments for implementing salary payments in arrears | (3) | (2) | |
| Net cost of operations after government funding | (1,053) | (3,018) | |
| Departmental net financial position - Beginning of year | 3,544 | 526 | |
| Departmental net financial position - End of year | 4,597 | 3,544 | |
Non-monetary transactions (note 11)
Segmented information (note 14)
The accompanying notes form an integral part of these financial statements.
| 2018 | 2017 | |
|---|---|---|
| Net cost of operations after government funding and transfers | (1,053) | (3,018) |
| Change due to tangible capital assets (note 8) | ||
| Acquisition of tangible capital assets | 8,425 | 5,398 |
| Amortization of tangible capital assets | (2,245) | (2,522) |
| Proceeds from disposal of tangible capital assets | (12) | (12) |
| Net gain (loss) on disposal of tangible capital assets including adjustments | (21) | (2) |
| Total change due to tangible capital assets | 6,147 | 2,862 |
| Change due to inventories | (1,409) | 54 |
| Change due to prepaid expenses | 132 | 783 |
| Net increase (decrease) in departmental net debt | 3,817 | 681 |
| Departmental net debt – Beginning of year | 10,449 | 9,768 |
| Departmental net debt – End of year | 14,266 | 10,449 |
The accompanying notes form an integral part of these financial statements.
| 2018 | 2017 | |
|---|---|---|
| Operating activities | ||
| Net cost of operations before government funding and transfers (note 3) | 1,519,978 | 1,411,617 |
| Non-cash items: | ||
| Amortization of tangible capital assets | (2,245) | (2,522) |
| Gain (loss) on disposal of tangible capital assets | 10 | (2) |
| Services provided without charge by other government departments (note 12) | (29,376) | (27,958) |
| Adjustments to tangible capital assets (note 8) | (31) | - |
| Transition payments for implementing salary payments arrears | 3 | 2 |
| Variations in Statement of Financial Position: | ||
| Increase (decrease) in accounts receivable and advances | 476 | 2,544 |
| Increase (decrease) in prepaid expenses | 132 | 783 |
| Increase (decrease) in inventory | (1,409) | 54 |
| Decrease (increase) in accounts payable and accrued liabilities | (158,771) | 142,341 |
| Decrease (increase) in vacation pay | (1,126) | (519) |
| Decrease (increase) in employee future benefits | (425) | 2,778 |
| Decrease (increase) in other liabilities | 19 | (319) |
| Cash used in operating activities | 1,327,235 | 1,528,799 |
| Capital investing activities | ||
| Acquisition of tangible capital assets | 8,425 | 5,398 |
| Proceeds from disposal of tangible capital assets | (12) | (12) |
| Cash used in capital investing activities | 8,413 | 5,386 |
| Net cash provided by Government of Canada | 1,335,648 | 1,534,185 |
The accompanying notes form an integral part of these financial statements.
Notes to the financial statements (unaudited) for the year ended March 31, 2018
1. Authority and objectives
The Department of Canadian Heritage was established in 1995 under the Department of Canadian Heritage Act.
The Department of Canadian Heritage is responsible for formulating policies and delivering programs that help all Canadians participate in their shared cultural and civic life.
The Department of Canadian Heritage's work is structured around the following three strategic outcomes:
- Canadian artistic expressions and cultural content are created and accessible at home and abroad;
- Canadians share, express and appreciate their Canadian identity; and
- Canadians participate and excel in sport.
The Department of Canadian Heritage is specifically responsible for formulating and implementing cultural policies related to copyright, foreign investment and broadcasting, as well as policies related to arts, heritage, multiculturalism, official languages, sports, state ceremonial and protocol, and Canadian symbols.
The programs include:
- Arts: This improves Canadians' opportunities to engage with the arts, contributes to the resilience of the arts sector and deepens the connections between cultural organizations and their communities. This Program encourages access and participation, resilience and excellence in the arts for all Canadians by supporting institutions that offer artists and performers training of the highest calibre in preparation for professional careers, the presentation of professional arts festivals or performing arts series, the improvement of arts and heritage infrastructure, the improvement of business practices of arts and heritage organizations, and the development of partnerships in the sector. Policy, legislative and regulatory measures targeting the Canadian arts sector also further this Program's objectives.
- Cultural Industries: This Program supports Canadian cultural industries in adapting to a changing and challenging global marketplace. This is achieved through the delivery of grants, contributions and tax credits as well as policy, regulatory and legislative measures. Fostering the competitiveness and creative output of these industries ensures that Canadian and international audiences access a range of Canadian content across a variety of formats and platforms and contributes to the Canadian economy.
- Heritage: This Program ensures that Canada's cultural heritage is preserved and accessible to Canadians today and in the future. It enables the heritage sector to improve professional knowledge, skills and practices, to preserve and present heritage collections and objects, and to create and circulate exhibitions and other forms of heritage content. This is accomplished by providing funding such as grants, contributions and tax incentives; information, expertise, training and other services; and regulatory and legislative measures. The primary goal of this Program is to promote the preservation and presentation of Canada's cultural heritage.
- Attachment to Canada: This Program strengthens Canadian identity by promoting pride and a sense of national purpose in Canadians. It celebrates and commemorates Canada and enhances understanding of shared values, cultural diversity and knowledge of Canada. Also, it promotes civic education and participation among Canadians, including youth, as well as provides them with the opportunity to learn about and understand Canada's society, diversity, history and institutions. This is achieved through delivering programs and services in the form of grants and contributions. The core concept of this Program is to promote knowledge and experiences of Canada among Canadians.
- Engagement and Community Participation: This Program aims to engage Canadians and provide them with opportunities to participate in the civil, social and cultural aspects of life in Canada and in their communities. This is accomplished through funding programs and initiatives that support the efforts of communities to build stronger citizen engagement and social inclusion through the performing and visual arts; express, celebrate and preserve local heritage; contribute to increasing the respect for and awareness of human rights in Canada; and develop innovative and culturally appropriate initiatives to support the efforts of indigenous communities in the revitalization and preservation of their languages and cultures. This Program has strong social benefits, as it contributes to the preservation of the history and identity of Canada's diverse communities, while offering a way for traditions and identities to evolve over time. The Program supports the Department's mandate to strengthen Canadian identity and values, and build attachment to Canada.
- Official Languages: Canadian Heritage plays an important role in the horizontal coordination of official languages within the federal government and especially with respect to coordination and support to federal institutions in the implementation of the government's commitment towards the development of official-language minority communities (OLMCs) and the promotion of linguistic duality, pursuant to section 42 of the Official Languages Act. Canadian Heritage is also responsible for the planning, implementation and management of the Official Languages Support Programs pertaining to the promotion of linguistic duality within Canada and the development of OLMCs, in accordance with section 43 of the Act. These activities contribute to achieving the following Government Outcome: "A diverse society that promotes linguistic duality and social inclusion."
- Sport: This Program promotes development and excellence in sport among Canadians and Canadian communities through initiatives that: provide direct support to Canadian high performance athletes; enhance Canada's ability to host the Canada Games and international sport events in Canada; support the development of excellence in the Canadian sport system; and contribute to increasing participation in sport by Canadians of all ages and abilities. The core concept of this Program is to enhance and promote Canadian participation and excellence in sport, by providing funding, expertise and other services to Canadian athletes, sport organizations, stakeholders and event organizers.
- Internal Services: Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Management Services; Materiel Services; Acquisition Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization, and not to those provided specifically to a program.
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:
a. Parliamentary authorities
The Department of Canadian Heritage is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Department of Canadian Heritage 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 "Expenses" and "Revenues" sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2017-2018 Departmental Plan. Planned results are not presented in the "Government funding and transfers" section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2017-2018 Departmental Plan.
b. Consolidation
These consolidated financial statements include the accounts of the following sub-entities that the Deputy Minister is accountable for: Canadian Conservation Institute and Canadian Heritage Information Network. The accounts of these sub-entities have been consolidated with those of the Department of Canadian Heritage, and all inter-organizational balances and transactions have been eliminated.
c. Net cash provided by Government of Canada
The Department of Canadian Heritage operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Department of Canadian Heritage is deposited to the CRF, and all cash disbursements made by the Department of Canadian Heritage 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.
d. Amounts due from or to the Consolidated Revenue Fund
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 Department of Canadian Heritage is entitled to draw from the CRF without further authorities to discharge its liabilities.
e. Non-monetary transactions
In the normal course of business, the Department of Canadian Heritage regularly signs non-monetary agreements, which result in the exchange of non-monetary assets, goods or services for other non-monetary assets, goods or services with little or no monetary consideration involved. When a non-monetary transaction has a commercial substance, the transaction is recorded at the fair value of the asset, good or service given up, unless the fair value of the asset, good or service received is more reliable. If the transaction lacks commercial substance, it is recorded at the carrying amount of the asset, good or service given up.
f. Revenues
Revenues from sale of goods and services are recognized in the accounts based on the goods and services provided in the year.
Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.
Revenues that are non-respendable are not available to discharge the Department of Canadian Heritage's liabilities. While the Deputy Minister is expected to maintain accounting control, he 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 Department of Canadian Heritage's gross revenues.
g. Expenses
Expenses are recorded on the accrual basis:
Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.
Vacation pay is accrued as the benefits are earned by employees under their respective terms of employment.
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.
h. Employee future benefits
- Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The Department of Canadian Heritage's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Department of Canadian Heritage'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: 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.
i. Accounts receivable
Accounts receivable are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for accounts receivable where recovery is considered uncertain.
j. Inventory
Inventory consists of parts, materials and supplies held for future program delivery and not intended for resale. Inventory is valued at the actual cost. If there is no longer any service potential, inventory is valued at the lower of cost or net realizable value.
k. Tangible capital assets
All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The Department does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on First Nation reserves and museum collections.
Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:
| Asset class | Amortization period |
|---|---|
| Machinery and equipment | 5 and 10 years |
| Computer Hardware | 5 years |
| Computer Software | 3 and 5 years |
| Vehicles | 7 and 10 years |
| Leasehold improvements | Lesser of the remaining term of lease or useful life of the improvement |
| Assets under construction | Once in service, in accordance with asset type |
l. Contingent liabilities
Contingent liabilities are potential liabilities that 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 if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.
m. Contingent assets
Contingent assets are possible assets which may become actual assets when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, the contingent asset is disclosed in the notes to the financial statements.
n. Foreign currency transactions
Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars using the rate of exchange in effect at year-end. Gains and losses resulting from foreign currency transactions are respectively included in the miscellaneous revenues and other operating expenses in the Statement of Operations and Departmental Net Financial Position.
o. 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 contingent liabilities, the liability for employee future benefits, the useful life of tangible capital assets, the allowance for doubtful accounts, and the fair value of non-monetary transactions. 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.
p. Related party transactions
Related party transactions, other than inter-entity transactions, are recorded at the exchange amount.
Inter-entity transactions are transactions between commonly controlled entities. Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis and are measured at the carrying amount, except for the following:
- Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
3. Parliamentary authorities
The Department of Canadian Heritage receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the Department of Canadian Heritage 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:
| 2018 | 2017 | |
|---|---|---|
| Net cost of operations before government funding and transfers | 1,519,978 | 1,411,617 |
| Adjustments for items affecting net cost of operations but not affecting authorities: | ||
| Amortization of tangible capital assets | (2,245) | (2,522) |
| Gain (loss) on disposal of tangible capital assets | 10 | (2) |
| Adjustments to tangible capital assets | (31) | - |
| Services provided without charge by other government departments | (29,376) | (27,958) |
| Decrease (increase) in vacation pay | (1,126) | (519) |
| Decrease (increase) in employee future benefits | (425) | 2,778 |
| Decrease (increase) in accrued liabilities not charged to authorities | 982 | 1,143 |
| Bad debt expense | (327) | (255) |
| Refund of prior years' expenditures | 4,311 | 2,607 |
| Miscellaneous revenues | 17 | 12 |
| Outstanding respendable revenue | 154 | 133 |
| Total items affecting net cost of operations but not affecting authorities | (28,056) | (24,583) |
| Adjustments for items not affecting net cost of operations but affecting authorities: | ||
| Acquisition of tangible capital assets | 8,425 | 5,398 |
| Increase (decrease) in prepaid expenses | 132 | 783 |
| Transition payments for implementing salary payments in arrears | (3) | (2) |
| Increase (decrease) in inventory | (1,409) | 54 |
| Total items not affecting net cost of operations but affecting authorities | 7,145 | 6,233 |
| Current year authorities used | 1,499,067 | 1,393,267 |
| 2018 | 2017 | |
|---|---|---|
| Authorities provided: | ||
| Vote 1 – Operating expenditures | 236,622 | 211,480 |
| Vote 5 – Grants and contributions | 1,264,743 | 1,204,970 |
| Statutory amounts | 24,873 | 23,899 |
| Less: | ||
| Authorities available for future years | (20) | (21) |
| Lapsed: Operating expenditures (1) | (20,606) | (24,586) |
| Lapsed: Grants and contributions (2) | (6,545) | (22,475) |
| Current year authorities used | 1,499,067 | 1,393,267 |
- The lapse of $20,606K in Operating expenditures includes a $15,000K of authorities that were not spent for non-monetary transactions that could have been offset by in-kind contributions received from sponsors for the Canada 150 initiative. Also contributing to the lapse is an amount of $463K in frozen allotments (funds withheld by Treasury Board Secretariat which cannot be spent by Canadian Heritage) for Government-wide Initiatives for the Executive Leadership Development Program and for the tax to convert salary dollars to operating dollars. The remaining lapse of $5,143K is mainly explained by staff turnover, time in staffing vacant positions, and some initiatives not spending as planned.
- The lapse of $6,545K in Grants and Contributions is due to $2,284K in unused funds for the provision of services in French and Indigenous languages in the Territories which must be placed in a frozen allotment, pursuant to the Treasury Board decision, and to $1,500K for a reprofile of funds to 2018-19 for the exploration of the possibility of establishing a new Community Arctic Foundation that would serve Canada's Arctic Regions. The remaining lapse of $2,761K is explained by some initiatives not spending as planned.
4. Accounts payable and accrued liabilities
The following table presents details of the Department of Canadian Heritage's accounts payable and accrued liabilities:
| 2018 | 2017 | |
|---|---|---|
| Accounts payable - External parties | 461,575 | 310,134 |
| Accounts payable - Other government departments and agencies | 6,043 | 2,481 |
| Accrued salaries, wages and employee benefits | 17,954 | 14,186 |
| Total accounts payable and accrued liabilities | 485,572 | 326,801 |
5. Employee future benefits
a. Pension benefits
The Department of Canadian Heritage'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. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to EAP 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.
The 2017-2018 expense amounts to $22,232K ($21,252K in 2016-2017). For Group 1 members, the expense represents approximately 1.01 times (1.12 times in 2016-2017) the employee contributions and, for Group 2 members, approximately 1.00 times (1.08 times in 2016-2017) the employee contributions.
The Department of Canadian Heritage'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
Severance benefits provided to the Department's employees were previously based on an employee's eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. By March 31, 2018, substantially all settlements for immediate cash out were completed. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.
The changes in the obligations during the year were as follows:
| 2018 | 2017 | |
|---|---|---|
| Accrued benefit obligation - Beginning of year | 7,687 | 10,465 |
| Expense for the year | 1,024 | (1,716) |
| Benefits paid during the year | (599) | (1,062) |
| Accrued benefit obligation - End of year | 8,112 | 7,687 |
6. Accounts receivable and advances
The following table presents details of the Department of Canadian Heritage's accounts receivable and advances:
| 2018 | 2017 | |
|---|---|---|
| Receivables - External parties | 5,175 | 4,453 |
| Receivables - Other government departments and agencies | 4,173 | 5,094 |
| Employee advances | 315 | 12 |
| Subtotal | 9,663 | 9,559 |
| Allowance for doubtful accounts on receivables from external parties | (246) | (528) |
| Gross accounts receivable | 9,417 | 9,031 |
| Accounts receivable held on behalf of Government | (16) | (106) |
| Net accounts receivable | 9,401 | 8,925 |
7. Inventory
The following table presents details of the inventory, measured at cost using the actual cost method:
| 2018 | 2017 | |
|---|---|---|
| Canadian Symbols - Promotional items | 586 | 1,990 |
| Canadian Gift Bank for Dignitaries | 134 | 139 |
| Total inventory | 720 | 2,129 |
8. Tangible capital assets
| Cost | Accumulated amortization | Net Book Value | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Capital Asset Class | Opening Balance | Acquisi-tions | Adjustments | Disposals and Write-Offs | Closing balance | Opening balance | Amortization | Adjustments | Disposals and Write-offs | Closing balance | 2018 | 2017 |
| Machinery and equipment | 10,583 | 1,275 | - | 45 | 11,813 | 6,474 | 1,043 | - | 45 | 7,472 | 4,341 | 4,109 |
| Computer Hardware | 103 | - | - | - | 103 | 92 | 2 | - | - | 94 | 9 | 11 |
| Computer Software | 5,098 | - | (1) | - | 5,097 | 5,097 | - | - | - | 5,097 | - | 1 |
| Vehicles | 460 | 59 | (25) | 57 | 437 | 362 | 25 | 5 | 45 | 337 | 100 | 98 |
| Leasehold improvements | 14,435 | 1,056 | - | - | 15,491 | 12,298 | 1,175 | - | - | 13,473 | 2,018 | 2,137 |
| Software - under construction1 | 4,385 | 6,035 | - | - | 10,420 | - | - | - | - | - | 10,420 | 4,385 |
| Total | 35,064 | 8,425 | (26) | 102 | 43,361 | 24,323 | 2,245 | 5 | 90 | 26,473 | 16,888 | 10,741 |
1. This asset under construction is a project that includes various aspects including the modernization of business processes, systems for Grants and Contributions delivery in the department as well as the construction of other software for financial management purposes. This asset will not be amortized until it is put into service.
9. Contractual Obligations
The nature of the Department of Canadian Heritage's activities can result in some large multi-year contracts and obligations whereby the Department of Canadian Heritage will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:
| 2019 | 2020 | 2021 | 2022 | 2023 and thereafter | Total | |
|---|---|---|---|---|---|---|
| Transfer payments | 261,930 | 147,751 | 43,331 | 17,248 | 1,940 | 472,200 |
10. Contingent liabilities
Claims have been made against the Department in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. The Department of Canadian Heritage would record an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. There are no claims for 2017-2018 ($0K in 2016-2017) and litigations for which the outcome is determinable and a reasonable estimate can be made by management at March 31, 2018.
Pursuant to s. 3(1) of the Canada Travelling Exhibition Indemnification Act (the "Act") the Minister of Canadian Heritage is authorized to enter into indemnification agreements with owners of objects or appurtenances on loan to travelling exhibitions in Canada. Under the Act, maximum levels of liability are established including: no more than $600M in respect of each travelling exhibition and; no more than $3,000M at any given time in respect of all travelling exhibitions. The Canada Travelling Exhibitions Indemnification Regulations set out specific requirements to be met when owners are seeking indemnification agreements with the Minister. The Regulations also set limitations on the scope of indemnity, establish deductibles, define maximums for and period of coverage, set requirements for condition reporting, outline a claims procedure and provide for dispute resolution, among other things.
11. Non-monetary transactions
During the year, the Department of Canadian Heritage entered into sponsorship agreements through which it received various goods or services. In exchange, the sponsors received various benefits, including exclusive marketing rights and visibility. These non-monetary transactions with unrelated parties were recorded equally in revenues and cost of operations. The estimated value of these transactions is $1.8 million ($1.3 million in 2017), which represents the fair value of the goods and services received.
12. Related party transactions
The Department of Canadian Heritage is related as a result of common ownership to all government departments, agencies, and Crown corporations. Related parties also include individuals who are members of key management personnel or close family members of those individuals, and entities controlled by, or under shared control of, a member of key management personnel or a close family member of that individual. The Department of Canadian Heritage enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Department of Canadian Heritage has various agreements such as the one with Parks Canada for the provision of functional services related to the financial system. During the year, the Department of Canadian Heritage 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 Department of Canadian Heritage 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 Department of Canadian Heritage's Statement of Operations and Departmental Net Financial Position as follows:
| 2018 | 2017 | |
|---|---|---|
| Employer's contribution to the health and dental insurance plans | 15,026 | 13,330 |
| Accommodation | 13,490 | 13,419 |
| Legal services | 846 | 1,195 |
| Workers' compensation | 14 | 14 |
| Total | 29,376 | 27,958 |
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, are not included in the Department of Canadian Heritage's Statement of Operations and Departmental Net Financial Position.
b. Other transactions with related parties
| 2018 | 2017 | |
|---|---|---|
| Accounts receivable – Other government departments and agencies | 4,173 | 4,367 |
| Accounts payable – Other government departments and agencies | 6,043 | 2,474 |
| Expenses – Other government departments and agencies | 35,505 | 34,400 |
| Revenues – Other government departments and agencies | 2,898 | 3,032 |
Expenses and revenues disclosed in (b) exclude common services provide without charge, which are already disclosed in (a).
13. Comparative information
Certain comparative figures have been reclassified to conform to the current year's presentation.
14. Segmented information
Presentation by segment is based on the Department of Canadian Heritage's program alignment 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 programs, by major object of expenses and by major type of revenues. The segment results for the period are as follows:
| Sport | Arts | Cultural Industries | Heritage | Attachment to Canada | Engagement and Community Participation | Official Languages | Internal Services | Unallocated | 2018 | 2017 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Transfer payments | |||||||||||
| Non-profit organizations | 173,477 | 171,888 | 158,356 | 19,244 | 127,794 | 57,293 | 77,032 | - | - | 785,084 | 720,963 |
| Other levels of government within Canada | - | 15,270 | - | 945 | 18,513 | 767 | 269,779 | - | - | 305,274 | 300,208 |
| Industry | - | - | 115,632 | - | 1,835 | - | 70 | - | - | 117,537 | 119,414 |
| Individuals | 32,998 | - | 123 | - | 1,922 | - | 34 | - | - | 35,077 | 29,909 |
| Other countries and international organizations | - | - | 10,954 | - | 1,865 | 45 | - | - | - | 12,864 | 10,795 |
| Total transfer payments | 206,475 | 187,158 | 285,065 | 20,189 | 151,929 | 58,105 | 346,915 | - | - | 1,255,836 | 1,181,289 |
| Operating expenses | |||||||||||
| Salaries and employee benefits | 11,439 | 14,771 | 28,565 | 14,003 | 25,330 | 22,541 | 15,643 | 66,996 | - | 199,288 | 174,399 |
| Professional services | 967 | 68 | 1,796 | 1,440 | 10,225 | 2,118 | 129 | 11,226 | - | 27,999 | 23,138 |
| Accommodation | 702 | 815 | 1,656 | 983 | 2,718 | 1,376 | 895 | 4,345 | - | 13,490 | 13,419 |
| Information | 1 | - | 185 | 35 | 6,511 | 184 | 5 | 1,696 | - | 8,617 | 8,342 |
| Travel and relocation | 385 | 183 | 408 | 244 | 683 | 373 | 140 | 2,074 | - | 4,490 | 3,170 |
| Utilities, materials and supplies | 40 | 6 | 69 | 814 | 4,025 | 224 | 4 | 4,008 | - | 9,190 | 6,714 |
| Amortization | - | 2 | - | 1,089 | 840 | 5 | 6 | 303 | - | 2,245 | 2,522 |
| Freight and communications | 3 | 1 | 2 | 10 | 147 | 124 | - | 469 | - | 756 | 581 |
| Repairs and maintenance | 1 | - | 8 | 219 | 348 | - | - | 605 | - | 1,181 | 1,052 |
| Rentals | 34 | 1 | 21 | 904 | 1,979 | 233 | 17 | 2,901 | - | 6,090 | 3,912 |
| Loss on disposal of capital assets | - | - | - | - | - | - | - | - | - | - | 2 |
| Other operating expenses | 191 | 49 | 117 | 52 | 1,014 | 30 | 121 | 109 | - | 1,683 | 2,747 |
| Total operating expenses | 13,763 | 15,896 | 32,827 | 19,793 | 53,850 | 27,208 | 16,960 | 94,732 | - | 275,029 | 239,998 |
| Total expenses | 220,238 | 203,054 | 317,892 | 39,982 | 205,779 | 85,313 | 363,875 | 94,732 | - | 1,530,865 | 1,421,287 |
| Revenues | |||||||||||
| Revenue from the 1979 Federal-provincial Lottery agreement | - | - | - | - | - | - | - | - | 74,062 | 74,062 | 73,013 |
| Miscellaneous revenues | - | - | 5,656 | 27 | 668 | - | - | 8 | - | 6,359 | 6,025 |
| Sale of goods and services | - | - | 18 | 761 | 2,178 | - | - | 1,796 | - | 4,753 | 3,987 |
| Revenues earned on behalf of Government | - | - | (7) | - | (215) | - | - | (3) | (74,062) | (74,287) | (73,355) |
| Total revenues | - | - | 5,667 | 788 | 2,631 | - | - | 1,801 | - | 10,887 | 9,670 |
| Net cost of operations before government funding and transfers | 220,238 | 203,054 | 312,225 | 39,194 | 203,148 | 85,313 | 363,875 | 92,931 | - | 1,519,978 | 1,411,617 |
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