Future-oriented statement of operations for the years ending March 31, 2019, and March 31, 2020 (unaudited)

Forecast results 2019 (in thousands of dollars) Planned results 2020 (in thousands of dollars)
Expenses

Creativity, Arts and Culture

501,014

485,251

Heritage and Celebration

124,964

108,131

Sport

237,698

233,029

Diversity and Inclusion

95,938

101,768

Official Languages

395,315

438,466

Internal Services

95,021

82,067

Total expenses

1,449,950

1,448,712

Revenues

Revenue from the 1979 Federal-provincial Lottery-agreement

75,916

77,434

Miscellaneous revenues

5,562

5,403

Sale of goods and services

4,951

4,731

Revenues earned on behalf of Government

(75,994)

(77,516)

Total revenues

10,435

10,052

Net cost of operations before funding and transfers

1,439,515

1,438,660

Information for the year ending March 31, 2019, includes actual amounts from April 1, 2018, to December 31, 2018.

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 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 those groups of related activities and resources that the federal government considers to be services in support of Programs and/or required to meet corporate obligations of an organization. Internal Services refers to the activities and resources of the 10 distinct service categories that support Program delivery in the organization, regardless of the Internal Services delivery model in a department. The 10 service categories are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; and Acquisition Services.

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 the fiscal year 2018-2019 is based on actual results as of December 31st, 2018, and on forecasts for the remainder of the fiscal year. Forecasts have been established for the planned results for the 2019-2020 fiscal year.

The main assumptions underlying the forecasts are as follows:

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

These assumptions were adopted as of January 18, 2019.

3. Variations and changes to the forecast financial information

While every attempt has been made to forecast final results for the remainder of the fiscal year 2018-2019 and for 2019-2020, 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 established 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 trends 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:

  1. The timing and amounts of acquisitions and disposals of tangible capital assets may affect gains/losses and amortization expense.
  2. Implementation of new collective agreements.
  3. Economic conditions may affect both the amount of revenue earned and the collectability of accounts receivable.
  4. 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 2018-2019 fiscal year, which are based on Canadian public sector accounting standards.

Significant accounting policies are as follows:

a. 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.

b. 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.

c. Revenues

Revenues from the 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.

d. 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:

a. Reconciliation of net cost of operations to requested authorities
Forecast results 2019 (in thousands of dollars) Planned results 2020 (in thousands of dollars)

Net cost of operations before government funding and transfers

1,439,515

1,438,660

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

-

-

Amortization of tangible capital assets

(1,563)

(2,308)

Gain on disposal of tangible capital assets

(29,037)

(29,444)

Services provided without charge by other government departments

(333)

(273)

Decrease (increase) in vacation pay

15

(280)

Decrease (increase) in employee future benefits

(286)

(328)

Bad debt expense

6,214

3,387

Refund of prior years' expenditures

478

95

Total items affecting net cost of operations but not affecting authorities

(24,512)

(29,151)

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

-

-

Acquisitions of tangible capital assets

6,163

6,600

Total items not affecting net cost of operations but affecting authorities

6,163

6,600

Requested authorities

1,421,166

1,416,109

b. Authorities requested
Forecast results 2019 (in thousands of dollars) Planned results 2020 (in thousands of dollars)
Authorities requested:

Vote 1 - Operating expenditures

209,924

187,919

Vote 5 - Grants and contributions

1,202,682

1,201,637

Statutory amounts

27,057

26,553

Less:

Lapsed: Operating expenditures (1)

(11,271)

-

Lapsed: Grants and contributions (2)

(5,226)

-

Requested authorities

1,421,166

1,416,109

Authorities requested for the year ending March 31, 2020, are the planned spending amounts presented in the 2019-2020 Departmental Plan. Authorities requested for the year ending March 31, 2019, include amounts presented in the 2018-2019 Main Estimates and Supplementary Estimates (A) and (B), and estimates of amounts to be allocated at year-end from Treasury Board central votes.

  1. The lapse of $11.3 million in Operating expenditures includes an amount of $1.9 million in frozen allotments (funds withheld by Treasury Board Secretariat which cannot be spent by Canadian Heritage) for Government-wide Initiatives such as back office transformation. Also contributing to the lapse is an amount of $7.2 million put aside for a potential reprofile for a key modernization initiative. The remaining lapse of $2.1 million is mainly explained by project implementation delays, staff turnover and some initiatives not spending as planned.
  2. The lapse of $5.2 million in Grants and Contributions is mainly due to $2.7 million in unused funds for the provision of services in French and Indigenous languages in the Territories and $2.5 million in unused funds for the 2026 Calgary Bid which must be placed in a frozen allotment.
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