Future-oriented statement of operations for the years ending March 31, 2018 and March 31, 2019 (unaudited)

Forecast results 2018 (in thousands of dollars) Planned results 2019 (in thousands of dollars)

Expenses

 

 

Creativity, Arts and Culture

524,070

461,809

Heritage and Celebration

246,185

114,285

Sport

221,272

216,031

Diversity and Inclusion

83,410

86,722

Official Languages

363,700

368,465

Internal Services

93,563

91,706

Total expenses

1,532,200

1,339,018

Revenues

 

 

Revenue from the 1979 Federal-provincial Lottery-agreement

74,062

75,617

Miscellaneous revenues

4,611

4,415

Sale of goods and services

5,760

5,680

Revenues earned on behalf of Government

(74,135)

(75,686)

Total revenues

10,298

10,026

Net cost of operations before funding and transfers

1,521,902

1,328,992


Information for the year ending March 31, 2018 includes actual amounts from April 1, 2017 to December 31, 2017.

The accompanying notes form an integral part of this future-oriented statement of operations.

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, official languages, sports, state ceremonial and protocol, and Canadian symbols.

The core responsibilities include:

  • Creativity, Arts and Culture: ensures that a wide range of Canadian artistic and cultural content is accessible at home and abroad. Provides opportunities for Canadians to participate and engage in Canada’s creative life, fostering a sense of belonging and inclusion. Fosters creativity, innovation, growth and employment opportunities in Canada’s cultural sector, and in the creative economy. Support policy, legislative and regulatory measures; deliver funding programs that support creation, professional training, cultural infrastructure and arts presentation; business development and marketing initiatives; and the establishment of partnerships in Canada and abroad.
  • Heritage and Celebration: offers opportunities for Canadians to participate in celebrations and commemorations of national significance, and in local festivals and heritage events. Invests in the development of learning materials and experiences that give Canadians opportunities to enhance their understanding of Canada’s history. Facilitates access to heritage and provides support to heritage institutions to preserve and present heritage to all Canadians. Delivers projects, programs and services; grants, contributions and tax incentives; conducts research; provides authoritative information and expertise; and supports the implementation of heritage-related legislation.
  • Sport: promotes and enhances Canadian participation in sport from initial introduction to sport to the highest levels through transfer payments and policy leadership. Ensures that all Canadians have access to quality aligned sport programs in a safe and welcome environment regardless of race, gender or physical disability. Fosters the development of high-performance athletes, coaches, officials, leaders and organizations within the Canadian Sport System. Assists Canadian communities in hosting the Canada Games and international sport events.
  • Diversity and Inclusion: focuses on celebrating Canada’s diversity, identity and multicultural heritage, promoting resilient communities and reinforcing the rights of Canadians, as a means to foster diversity and inclusion. Supports legislation on multiculturalism. Promotes and supports domestic implementation of international human rights treaties, constitutional and quasi-constitutional rights in Canada. Works in collaboration with a variety of Governmental and non-governmental organizations to support the provision of programs and services on matters of diversity and inclusion. Supports the engagement, participation and inclusion of Canadian youth in their communities and in exchange activities. Revitalizes, preserves and promotes Indigenous languages and cultures and celebrates achievements, and strengthens Indigenous communities through investments in a variety of initiatives.
  • Official Languages: supports the promotion of Canada’s two official languages in Canadian society as well as the development of official-language minority communities by collaborating with voluntary organizations and provincial and territorial governments. Fosters a coordinated approach to ensure participation from across the federal government in the implementation of the Official Languages Act, and the coordination of related horizontal initiatives.
  • 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.

2. Methodology and significant assumptions

The future-oriented statement of operations has been prepared on the basis of the government priorities and the plans of the Department as described in the Departmental Plan.

The information in the forecast results for fiscal year 2017-2018 is based on actual results as at December 31st, 2017 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2018-2019 fiscal year.

The main assumptions underlying the forecasts are as follows:

  • The Department of Canadian Heritage’s activities will remain substantially the same as in the previous year.
  • Expenses and revenues, including the determination of amounts internal and external to the government, are based on experience. The general historical pattern is expected to continue.
  • Allowances for uncollectibility are based on experience. The general historical pattern is expected to continue.

These assumptions were adopted as at January 19, 2018.

3. Variations and changes to the forecast financial information

While every attempt has been made to forecast final results for the remainder of 2017-2018 and for 2018-2019, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

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

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

  • The timing and amounts of acquisitions and disposals of tangible capital assets may affect gains/losses and amortization expense.
  • Implementation of new collective agreements.
  • Economic conditions may affect both the amount of revenue earned and the collectability of accounts receivable.
  • Further changes to the operating budget through additional new or modified initiatives or technical adjustments later in the year.

Once the Departmental Plan is presented, the Department of Canadian Heritage will not be updating the forecasts for any changes to appropriations of forecast financial information made in ensuing supplementary estimates.

4. Summary of significant accounting policies

This future-oriented statement of operations has been prepared using the Government of Canada’s accounting policies in effect for the 2017-2018 fiscal year, 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:

  • Consolidation

  • This consolidated future-oriented statement includes 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.

  • Expenses

  • Expenses are recorded on an accrual basis.  Expenses for the Department’s operations are recorded when goods are received or services are rendered, including services provided without charge for accommodation, employer contributions to health and dental insurance plans, legal services and workers’ compensation, which are recorded as expenses at their estimated cost. Vacation pay and compensatory leave, as well as severance benefits, are accrued and expenses are recorded as the benefits are earned by employees under their terms of employment.  Expenses also include a provision for bad debt on accounts receivable and amortization of tangible capital assets.

    Transfer payments are recorded as expenses when the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement or, in the case of transactions which do not form part of an existing program, 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 future-oriented financial statement.  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.

  • 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.

  • 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 future-oriented financial statement 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. 

5. 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 Future-oriented Statement of Operations in one year may be funded through parliamentary authorities in prior, current, or future years.  Accordingly, the Department has different net cost of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

  • Reconciliation of net cost of operations to requested authorities

  •  

    Forecast results 2018 (in thousands of dollars) Planned results 2019 (in thousands of dollars)

    Net cost of operations before government funding and transfers

    1,521,902

    1,328,992

    Adjustment for items affecting net cost of operations but not affecting authorities:

     

     

    Amortization of tangible capital assets

    (2,337)

    (1,507)

    Gain on disposal of tangible capital assets

    4

    -

    Services provided without charge by other government departments

    (29,728)

    (28,926)

    Decrease (increase) in vacation pay

    1,138

    386

    Decrease (increase) in employee future benefits

    (377)

    436

    Bad debt expense

    (21)

    (84)

    Refund of prior years' expenditures

    2,495

    2,505

    Outstanding respendable revenue

    70

    69

    Total items affecting net cost of operations but not affecting authorities

    (28,756)

    (27,121)

    Adjustment for items not affecting net cost of operations but affecting authorities:

     

     

    Acquisitions of tangible capital assets

    12,241

    8,952

    Total items not affecting net cost of operations but affecting authorities

    12,241

    8,952

    Requested authorities

    1,505,387

    1,310,823


  • Authorities requested

  •  

    Forecast results 2018 (in thousands of dollars) Planned results 2019 (in thousands of dollars)

    Authorities requested:

     

     

    Vote 1 - Operating expenditures

    240,875

    186,316

    Vote 5 - Grants and contributions

    1,263,243

    1,099,654

    Statutory amounts

    26,371

    24,853

    Less:

     

     

    Lapsed: Operating expenditures (1)

    (23,075)

    -

    Lapsed: Grants and contributions (2)

    (2,027)

    -

    Requested authorities

    1,505,387

    1,310,823


    Authorities requested for the year ending March 31, 2019 are the planned spending amounts presented in the 2018-2019 Departmental Plan. Authorities requested for the year ending March 31, 2018 include amounts presented in the 2017-2018 Main Estimates and Supplementary Estimates (A) and (B), planned for presentations in Supplementary Estimates (C) and estimates of amounts to be allocated at year-end from Treasury Board central votes.

  1. The lapse of $23M in Operating expenditures includes a $15M 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 under the Heritage and Celebration core responsibility.  The remaining lapse of $8M is eligible for carry forward.
  2. The lapse of $2M in Grants and Contributions is mainly due to an amount put aside for an anticipated reprofile request to 2018-19 under the Heritage and Celebration core responsibility.
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