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Canadian Heritage financial statements for the year ended March 31, 2022

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List of acronyms and abbreviations

PCH
Department of Canadian Heritage
ICFM
Internal control over financial management
ICFR
Internal control over financial reporting
OL
Official languages
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, 2022, 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, 2022, 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

Isabelle Mondou
Deputy Minister
Gatineau, Canada
Date: August 29, 2022

Éric Doiron
Chief Financial Officer
Gatineau, Canada
Date: August 23, 2022

Table 1. Statement of financial position (unaudited) as at March 31 (in thousands of dollars)
2022 2021
Liabilities
Accounts payable and accrued liabilities (Note 4) 553,767 432,655
Vacation pay 15,053 16,395
Employee future benefits (Note 5) 5,710 6,229
Other liabilities 2,689 2,827
Total liabilities 577,219 458,106
Financial assets
Due from the Consolidated Revenue Fund (Note 2) 554,385 433,376
Accounts receivable and advances (Note 6) 5,712 6,034
Total gross financial assets 560,097 439,410
Financial assets held on behalf of government
Accounts receivable and advances (Note 6) (142) (126)
Total financial assets held on behalf of government (142) (126)
Total net financial assets 559,955 439,284
Net debt 17,264 18,822
Non-financial assets
Prepaid expenses 955 531
Inventory (Note 7) 2,003 1,897
Tangible capital assets (Note 8) 7,944 11,291
Total non-financial assets 10,902 13,719
Net financial position (6,362) (5,103)

Contractual Obligations (note 9)

Contingent Liabilities (note 10)

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

Original signed

Isabelle Mondou
Deputy Minister
Gatineau, Canada
Date: August 29,2022

Éric Doiron
Chief Financial Officer
Gatineau, Canada
Date: August 23,2022

Table 2. Statement of operations and departmental net financial position (unaudited) for the year ended March 31 (in thousands of dollars)
2022 Planned Results 2022 2021
Expenses
Creativity, Arts and Culture 508,228 796,737 823,119
Heritage and Celebration 102,628 173,630 167,359
Sport 250,832 286,662 322,570
Diversity and Inclusion 156,370 174,073 109,581
Official Languages 455,253 489,595 463,077
Internal Services 96,755 115,198 114,669
Total expenses 1,570,066 2,035,895 2,000,375
Revenues
Revenue from the 1979 Federal-provincial Lottery-agreement 78,592 80,810 77,741
Miscellaneous revenues 4,960 5,962 5,157
Sale of goods and services 3,814 1,061 3,072
Revenues earned on behalf of Government (78,673) (80,893) (77,854)
Total revenues 8,693 6,940 8,116
Net cost of operations before government funding and transfers 1,561,373 2,028,955 1,992,259
Government funding and transfers
Net cash provided by Government of Canada - 1,874,427 1,916,407
Change in due from Consolidated Revenue Fund - 121,009 39,130
Services provided without charge by other government departments (Note 12) - 32,281 30,117
Transfer of the transition payments for implementing salary payments in arrears - - -
Transfer of capital assets (to) / from other government departments - (25) (17)
Transfer of other assets (to) / from other government departments - 4 (380)
Total government funding and transfers - 2,027,696 1,985,257
Net cost of operations after government funding and transfers - 1,259 7,002
Net financial position - Beginning of year - (5,103) 1,899
Net financial position - End of year - (6,362) (5,103)

Non-monetary transactions (note 11)

Segmented information (note 13)

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

Table 3. Statement of change in departmental net debt (unaudited) for the year ended March 31 (in thousands of dollars)
2022 2021
Net cost of operations after government funding and transfers 1,259 7,002
Change due to tangible capital assets (Note 8)
Acquisitions and improvements to tangible capital assets 1,024 1,736
Amortization of tangible capital assets (2,332) (2,302)
Proceeds from disposal of tangible capital assets - -
Net loss on disposal of tangible capital assets including adjustments (2,014) (2,367)
Transfer from other government departments (25) (17)
Total change due to tangible capital assets (3,347) (2,950)
Change due to inventory 106 197
Change due to prepaid expenses 424 82
Net increase (decrease) in net debt (1,558) 4,331
Net debt - Beginning of year 18,822 14,491
Net debt - End of year 17,264 18,822

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

Table 4. Statement of cash flow (unaudited) for the year ended March 31 (in thousands of dollars)
2022 Note 14 2021
Operating activities
Net cost of operations before government funding and transfers (note 3) 2,028,955 1,992,259
Non-cash items:
Amortization of tangible capital assets (2,332) (2,302)
Net loss on disposal of tangible capital assets including adjustments (2,014) (2,367)
Services provided without charge by other government departments (Note 12) (32,281) (30,117)
Transition payments for implementing salary payments in arrears - -
Variations in Statement of Financial Position:
Decrease in accounts receivable and advances (338) (4,039)
Increase in prepaid expenses 424 82
Increase in inventory 106 197
Increase in accounts payable and accrued liabilities (121,112) (35,021)
Decrease (increase) in vacation pay 1,342 (4,189)
Decrease in employee future benefits 519 822
Decrease (increase) in other liabilities 138 (1,034)
Transfer of salary overpayments to other government departments (4) 380
Cash used in operating activities 1,873,403 1,914,671
Capital investing activities
Acquisitions and improvements to tangible capital assets 1,024 1,736
Proceeds from disposal of tangible capital assets - -
Cash used in capital investing activities 1,024 1,736
Net cash provided by Government of Canada 1,874,427 1,916,407

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

Notes to the financial statements (unaudited) for the year ended March 31, 2022

1. Authority and objectives

The Department of Canadian Heritage was established in 1995 under the Department of Canadian Heritage Act, which centers on fostering and promoting “Canadian identity and values, cultural development, and heritage.”

The Department of Canadian Heritage is responsible for formulating policies and delivering programs that promote an environment where Canadians can experience dynamic cultural expressions, celebrate its history and heritage and build strong communities. The Department invests in the future by supporting the arts, our official and indigenous languages and our athletes and the sport system.

The following set of core responsibilities reflect the Department’s mandate:

Internal Services are grouped as a final responsibility and serve the Department as a whole.

A description of the Department's core responsibilities and internal services are as follows:

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 2021-2022 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 2021-2022 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 CRF

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, 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 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

i. Accounts receivable

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.

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:

Table 5. Amortization period of tangible capital assets
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:

  1. 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:

Table 6. a. Reconciliation of net cost of operations to current year authorities used (in thousands of dollars)
2022 (Note 14) 2021
Net cost of operations before government funding and transfers 2,028,955 1,992,259
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (2,332) (2,302)
Net loss on disposal of tangible capital assets including adjustments (2,014) (2,367)
Services provided without charge by other government departments (32,281) (30,117)
Decrease (increase) in vacation pay 1,342 (4,189)
Decrease in employee future benefits 519 822
Bad debt expense (250) (207)
Refund of prior years' expenditures 5,323 5,987
Other 5,140 (773)
Total items affecting net cost of operations but not affecting authorities (24,553) (33,146)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions and improvements to tangible capital assets 1,024 1,736
Proceeds from disposal of tangible capital assets - -
Increase in prepaid expenses 424 82
Salary overpayments 579 414
Transition payments for implementing salary payments in arrears - -
Increase in inventory 106 197
Total items not affecting net cost of operations but affecting authorities 2,133 2,429
Current year authorities used 2,006,535 1,961,542
Table 7. b. Authorities provided and used (in thousands of dollars)
2022 2021
Authorities provided:
Vote 1 – Operating expenditures 254,113 225,364
Vote 5 – Grants and contributions 1,955,438 1,367,113
Statutory amounts 29,541 449,650
Total authorities 2,239,092 2,042,127
Less:
Authorities available for future years 20 20
Lapsed: Operating expenditures (1) 18,221 9,203
Lapsed: Grants and contributions (2) 214,316 71,362
Lapsed: Budget implementation votes - -
Current year authorities used 2,006,535 1,961,542
  1. The Public Account lapse of $18.2 million in operating expenditures is mainly explained by the remnants of the COVID-19 pandemic: spending on some events such as Canada Day, Winterlude and other events was lower than in pre-pandemic years because, due to health restrictions, they were converted from face-to-face to virtual, and the difficulty in hiring on a temporary basis during the pandemic. Further, other specific items made up the lapse: An amount of $2.6 million was planned for the execution of a Survey on the Official Language Minority Population. The survey had to be postponed to outer years and activities extended to 2023-24 due to post COVID 19 realities. An amount of $2.1 million for the Public Education and Awareness Campaign headed by the Anti-Racism Program which had its contracting phase further delayed due to the COVID-19 pandemic and other administrative challenges. The campaign's launch was rescheduled again and is aimed to be completed by March 31, 2023. Further, there was a $1.0 million for the National Engagement with Indigenous peoples to determine how best to deliver funding related to commemoration of residential schools and the National Day for Truth and Reconciliation, which was marked for the first time on September 30, 2021. Unfortunately, this broad engagement could not be undertaken in 2021-22 due to the pandemic. Also contributing to the lapse is a $1.0 million cut, as announced in Budget 2021, for the travel allocation.
  2. The Public Accounts lapse of $214.3 million in Grants and Contributions is mainly explained by funds not being spent due to the COVID-19 pandemic. More specifically, the surplus is explained by the following items: $102.9 million for the Action Plan for Official Languages delivered under the Official Languages (OL) Support Programs. Amongst many factors depending on the program sub-components involved, restrictions imposed to contain the spread of COVID-19 caused significant disruptions and delays in the delivery of OL support programs. $43.3 million for Sports Support Program of which $40.0 million are for the Community Sport for All Initiative and $3.3 million for Indigenous Youth and Sport due to the significant impact COVID-19 had on the sport system and sport participation in general and specially for Indigenous communities being hit hard by the COVID-19 pandemic and in many cases, not being able to fully realize their projects funded in 2021-2022. $17.3 million for the Indigenous Languages and Cultures Program of which $14.0 million for the Office of the Commissioner was already successfully reprofiled to 2022-23, thereby reducing this particular lapse. $11.2 million for the Sport Hosting program due to the postponing and rescheduling of major sports events to subsequent years. Further, $18.0 million for Canada’s Multiculturalism programming for multi-year projects for which spending has been significantly affected by COVID-19. $7.0 million for the Canada Cultural Spaces Fund as a result of COVID-19 affecting capital construction projects in the form of closures as well as those delayed by the federal election. $3.0 million for funds for the Harbourfront Centre as some of the capital improvements and repairs that are currently underway have been delayed due to COVID-related labour shortages and weather-related rescheduling to spring 2022. Lastly, also contributing to the lapse is a $1.5 million in unspent funds for the Delivery of French-language services and to support the preservation of Indigenous languages in the Northwest Territories, Yukon, and Nunavut. These unspent funds must be returned to the Fiscal Framework, pursuant to Treasury Board decision.

4. Accounts payable and accrued liabilities

The following table presents details of the Department of Canadian Heritage's accounts payable and accrued liabilities:

Table 8. Details of the Department of Canadian Heritage's accounts payable and accrued liabilities (in thousands of dollars)
2022 2021
Accounts payable - External parties 533,530 413,774
Accounts payable - Other government departments and agencies 2,748 2,745
Accrued salaries, wages, and employee benefits 17,489 16,136
Total accounts payable and accrued liabilities 553,767 432,655

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 2021-2022 expense amounts to $17,905,445.0 million ($17,949,039.0 million in 2020-2021). For Group 1 members, the expense represents approximately 0.01 times (0.01 times in 2020-2021) the employee contributions and, for Group 2 members, approximately 0.01 times (0.01 times in 2020-2021) 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:

Table 9. Changes in the obligations during the year (in thousands of dollars)
2022 2021
Accrued benefit obligation - Beginning of year 6,229 7,051
Expense for the year 939 (321)
Benefits paid during the year (1,458) (501)
Accrued benefit obligation - End of year 5,710 6,229

6. Accounts receivable and advances

The following table presents details of the Department of Canadian Heritage's accounts receivable and advances:

Table 10. Details of the Department of Canadian Heritage's accounts receivable and advances (in thousands of dollars)
2022 2021
Receivables - External parties 5,100 5,611
Receivables - Other government departments and agencies 1,552 1,195
Employee advances 268 392
Subtotal 6,920 7,198
Allowance for doubtful accounts on receivables from external parties (1,208) (1,164)
Gross accounts receivable 5,712 6,034
Accounts receivable held on behalf of Government (142) (126)
Net accounts receivable and advances 5,570 5,908

7. Inventory

The following table presents details of the inventory, measured at cost using the actual cost method:

Table 11. Details of the inventory, measured at cost using the actual cost method (in thousands of dollars)
2022 2021
Canadian Symbols - Promotional items 1,882 1,776
Canadian Gift Bank for Dignitaries 121 121
Total inventory 2,003 1,897

8. Tangible capital assets

Table 12a. Tangible capital assets (in thousands of dollars) - Cost
Capital Asset Class Opening Balance Acquisitions Adjustments Disposals and write-offs Closing balance
Machinery and equipment 12,279 369 - - 12,648
Computer Hardware 434 153 - - 587
Computer Software 10,623 - - - 10,623
Vehicles 597 26 (14) 32 577
Leasehold improvements 16,170 - 168 - 16,338
Assets under construction Table 12(a) note * 2,699 476 (168) 2,013 994
Total 42,802 1,024 (14) 2,045 41,767
Table 12b. Tangible capital assets (in thousands of dollars) - Accumulated Amortization
Accumulated Amortization Opening balance Amortization Adjustments Disposals and Write-offs Closing balance Net Book value 2022 Net Book Value 2021
Machinery and equipment 9,977 469 - - 10,446 2,202 2,302
Machinery and Computer 111 7 - - 118 469 323
Computer 6,549 1,544 - - 8,093 2,530 4,074
Vehicles 411 42 12 32 433 144 186
Leasehold Improvements 14,463 270 - - 14,733 1,605 1,707
Assets under construction Table 12(b) note * - - - - - 994 2,699
Total 31,511 2,332 12 32 33,823 7,944 11,291

Table 12(a)(b) notes

Table 12(a)(b) note *

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.

Return to table 12(a)(b) note * referrer

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:

Table 13. Estimate on significant contractual obligations (in thousands of dollars)
2023 2024 2025 2026 2027 and thereafter Total
Transfer payments 751,913 139,164 41,402 7,295 1,430 941,204

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 2021-2022 ($0.0 million in 2020-2021) and litigations for which the outcome is determinable, and a reasonable estimate can be made by management at March 31, 2022.

Pursuant to s. 3(1) of the Canada Travelling Exhibition Indemnification 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 $600 million in respect of each travelling exhibition and no more than $3 billion 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 $,009,50.00 million ($,028,486.00 million in 2020-2021), 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:

Table 14. Services provided without charge (in thousands of dollars)
2022 2021
Employer's contribution to the health and dental insurance plans 17,196 15,420
Accommodation 14,134 13,754
Legal services 942 935
Workers' compensation 9 8
Total 32,281 30,117

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 other government departments and agencies

Table 15. Other transactions with related parties (in thousands of dollars)
2022 2021
Accounts receivable 1,552 1,195
Accounts payable 2,748 2,745
Expenses 43,178 35,974
Revenues 1,091 3,094

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

13. 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:

Table 16. Expenses incurred and revenues generated for the main programs, by major object of expenses and by major type of revenues (in thousands of dollars)
Creativity, Arts and Culture Heritage and Celebration Sport Diversity and Inclusion Official Languages Interna Services Unallocated 2022 2021
Transfer payments
Non-profit organizations 554,676 111,247 237,277 142,074 113,935 - - 1,159,209 1,116,321
Other levels of government within Canada 7,734 4,618 - 1,248 352,365 - - 365,965 345,355
Industry 156,985 1,705 2,593 - 128 - - 161,411 199,294
Individuals 175 2,060 31,935 - - - - 34,170 38,105
Other countries and international organizations 12,217 - - - - - - 12,217 13,106
Total transfer payments 731,787 119,630 271,805 143,322 466,428 - - 1,732,972 1,712,181
Operating expenses
Salaries and employee benefits 49,949 38,133 12,271 26,659 18,490 84,862 - 230,364 225,951
Professional services 8,186 7,009 1,011 1,711 119 18,678 - 36,714 29,189
Accommodation 3,004 2,332 726 1,617 1,110 5,345 - 14,134 13,754
Information 2,112 1,451 - 251 - 1,180 - 4,994 2,829
Travel and relocation 255 206 344 (2) 7 185 - 995 171
Utilities, materials, and supplies 20 2,148 33 42 - 132 - 2,375 2,417
Amortization 3 462 - 1 4 1,862 - 2,332 2,302
Freight and communications 9 49 - 34 2 551 - 645 579
Repairs and maintenance - 1,001 - - - 555 - 1,556 1,184
Rentals 38 1,051 87 37 4 2,952 - 4,169 3,102
Other operating expenses 1,374 158 385 401 3,431 (1,104) - 4,645 6,716
Total Operating expenses 64,950 54,000 14,857 30,751 23,167 115,198 - 302,923 288,194
Total expenses 796,737 173,630 286,662 174,073 489,595 115,198 - 2,035,895 2,000,375
Revenues
Revenue from the 1979 Federal-provincial Lottery-agreement - - - - - - 80,810 80,810 77,741
Miscellaneous revenues 5,788 74 - - - 100 - 5,962 5,157
Sale of goods and services - 746 - - - 315 - 1,061 3,072
Revenues earned on behalf of Government - (83) - - - - (80,810) (80,893) (77,854)
Total revenues 5,788 737 - - - 415 - 6,940 8,116
Net cost from continuing operations 790,949 172,893 286,662 174,073 489,595 114,783 - 2,028,955 1,992,259

14. Comparative Information

Certain comparative figures have been reclassified to conform to the current year’s presentation.

©His Majesty the King in Right of Canada, as represented by the Minister of Department of Canadian Heritage, (2022)
Catalogue number: CH1-45E-PDF
ISSN: 2816-8704

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