Future-oriented statement of operations for the years ending March 31, 2020 and March 31, 2021 (unaudited)

	Forecast Results 2020 (in thousands of dollars)	Planned Results 2021 (in thousands of dollars)
Expenses
Creativity, Arts and Culture	558,702	525,788
Heritage and Celebration	129,260	115,867
Sport	247,695	252,400
Diversity and Inclusion	135,349	133,620
Official Languages	450,069	453,865
Internal Services	94,436	89,771
Total expenses	1,615,511	1,571,311
Revenues
Revenue from the 1979 Federal-provincial Lottery-agreement	77,202	78,746
Miscellaneous revenues	3,704	4,351
Sale of goods and services	5,317	3,826
Revenues earned on behalf of Government	(77,286)	(78,832)
Total revenues	8,937	8,091
Net cost of operations before funding and transfers	1,606,574	1,563,220

Information for the year ending March 31, 2020 includes actual amounts from April 1, 2019 to December 31, 2019.

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 diversity and inclusion, heritage and celebration, 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 welcoming 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 services that support Program delivery in the organization, regardless of the Internal Services delivery model in a department. These services 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 Management Services; and Acquisition Management 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 fiscal year 2019-2020 is based on actual results as at December 31st, 2019 and on forecasts for the remainder of the fiscal year. Forecasts have been established for the planned results for the 2020-2021 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 past experience. 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 at January 16, 2020.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of fiscal year 2019-2020 and for 2020-2021, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing this Future-Oriented Statement of Operations, 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 past 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 statement of operations 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. Other changes to the operating budget such as new or modified initiatives, or technical adjustments later in the fiscal year.

After the Departmental Plan is tabled in Parliament, the Department of Canadian Heritage will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Results Report.

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 2019-2020 fiscal year, and is 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:

1. Consolidation

   This Consolidated Future-Oriented Statement of Operations includes the accounts of the following sub-entities that the deputy head 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.

2. 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 Statement of Operations. 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.

3. 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 head is expected to maintain accounting control, he or 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’s gross revenues.

4. Employee future benefits

   • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer 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 is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the department differs from financial reporting according to generally accepted accounting principles because authorities are based mainly on cash flow requirements. 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 2020 (in thousands of dollars)	Planned Results 2021(in thousands of dollars)
Net cost of operations before government funding and transfers	1,606,574	1,563,220
Adjustment for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(1,530)	(860)
Services provided without charge by other government departments	(29,399)	(30,285)
Decrease (increase) in vacation pay	214	(397)
Decrease (increase) in employee future benefits	258	(319)
Bad debt expense	(714)	(1,238)
Refund of prior years' expenditures	8,573	4,759
Outstanding respendable revenue	55	57
Total items affecting net cost of operations but not affecting authorities	(22,543)	(28,283)
Adjustment for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets	197	200
Total items not affecting net cost of operations but affecting authorities	197	200
Requested authorities	1,584,228	1,535,137

b. Authorities provided/requested

	Forecast Results 2020 (in thousands of dollars)	Planned Results 2021 (in thousands of dollars)
Authorities provided/requested:
Vote 1 - Operating expenditures	215,466	203,231
Vote 5 - Grants and contributions	1,359,229	1,305,619
Statutory amounts	26,444	26,287
Less:
Estimated unused operating authoritiesFootnote 1	(14,952)	-
Estimated unused grants and contributions authoritiesFootnote 2	(1,959)	-
Requested authorities	1,584,228	1,535,137

Authorities requested for the year ending March 31, 2020, are the planned spending amounts presented in the 2020-2021 Departmental Plan. Authorities requested for the year ending March 31, 2020, include amounts presented in the 2019-2020 Main Estimates, Budget Implementation Votes, Supplementary Estimates (A) and (B), and estimates of amounts to be allocated at year-end from Treasury Board central votes.