Archived - Department of Finance Canada Future-oriented Statement of Operations (unaudited): 2014

Department of Finance Canada
Future-oriented Statement of Operations (unaudited)
For the Year Ending March 31
$ thousands

Estimated
Results
2014
Planned
Results
2015
Expenses (Note 6)
Transfer and taxation payment programs 58,838,450 61,069,229
Treasury and financial affairs 26,407,500 26,419,500
Economic and fiscal policy framework 94,887 83,118
Internal services 63,821 57,114

Total expenses 85,404,658 87,628,961
Revenues (Note 6)
Investment income 3,244,347 2,103,515
Interest on bank deposits 344,017 354,450
Sale of domestic coinage 107,725 107,725
Other 114,535 107,393
Revenues earned on behalf of Government (Note 7) (3,810,542) (2,673,001)

Total revenues 82 82

Net cost of operations 85,404,576 87,628,879
Segmented information (Note 6)
The accompanying notes form an integral part of the future-oriented statement of operations.

The future-oriented statement of operations has been prepared on the basis of the government priorities and departmental plans as described in the Report on Plans and Priorities.

The information in the estimated results for fiscal year 2014 is based on actual results as at January 17, 2014 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2015 fiscal year.

The main assumptions underlying the forecasts are as follows:

These assumptions are adopted as at January 17, 2014.

While every attempt has been made to forecast final results for the remainder of 2014 and for 2015, 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 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 statement of operations include:

Once the Report on Plans and Priorities is presented, the Department will not be updating the forecast for any changes in financial resources made in ensuing supplementary estimates.

The future-oriented statement of operations has been prepared using 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) Expenses

The Department reports expenses on an accrual basis:

b) Revenues

The Department reports revenues on an accrual basis:

c) Employee future benefits

Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The Department’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Department’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.

d) 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.

e) Tangible capital assets

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

Tangible capital assets

Asset class Amortization Period
Machinery and equipment Three to five years
Motor vehicles Three years

Parliamentary authorities

The Department is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Department 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

Reconciliation of net cost of operations to requested authorities
($ thousands)

Estimated
Results
2014
Planned
Results
2015
Net cost of operations 85,404,576 87,628,879
Adjustments for items affecting net cost of operations but not affecting authorities:
Employee future benefits 1,567 (121)
Amortization of tangible capital assets (112) (101)
Services provided without charge by other government departments (17,505) (19,623)
Other (1,892) (1,903)

Total adjustments for items affecting net costs of operation but not affecting authorities (17,942) (21,748)

Adjustments for items not affecting net cost of operations but affecting authorities:
Transitional assistance provided under sales tax harmonization agreements 1,481,000 -
Incentive for provinces to eliminate taxes on capital agreements 74,100 -
Transfer to other Construction or Work in Progress 5,800 8,600

Requested authorities 86,947,534 87,615,731

b) Authorities requested

Authorities requested
($ thousands)

Estimated
Results
2014
Planned
Results
2015
Authorities requested
Vote 1 – Operating expenditures 136,082 114,981
Vote 5 – Grants and contributions 9,235 5,035
Statutory amounts 86,802,217 87,495,715

Requested authorities 86,947,534 87,615,731

The Department is related as a result of common ownership to all government departments, agencies, and Crown corporations. The Department enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Department has an agreement with Treasury Board of Canada Secretariat related to the provision of accounting services. During the year, the Department received common services which were obtained without charge from other government departments as disclosed below.

a) Common services received without charge from other government departments

The Department is estimated and planned to receive without charge from certain common service organizations, related to accommodation, legal services, and the employer’s contribution to the health and dental insurance plans. These services received without charge have been recognized in the Department’s future-oriented statement of operations as follows:

Services received without charge
($ thousands)

Estimated
Results
2014
Planned
Results
2015
Accommodation 9,581 11,588
Employer’s contributions to the health and dental insurance plans 5,821 6,005
Legal services 2,103 2,030

Total services received without charge 17,505 19,623

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 services organizations so that one department performs services for all other departments and agencies without charge. The cost of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General, are not included as an estimated or planned expense in the future-oriented statement of operations.

b) Other transactions with related parties

Other transaction with related parties
($ thousands)

Estimated
Results
2014
Planned
Results
2015
Expenses - Other Government departments and agencies 8,711,864 8,180,242
Revenues - Other Government departments and agencies 23,463 23,463

Presentation by segment is based on the Department's program activity architecture. The presentation by segment is based on the same accounting policies as described in the summary of significant accounting policies in note 3. The following table presents the forecasted expenses incurred and forecasted revenues generated for the main program activities, by major object of expenses and by major type of revenues. The segmented results for the period are as follows:

Segmented Information
($ thousands)

2014 2015


Total Economic and Fiscal Policy Framework Transfer and Taxation Payment Programs Treasury and Financial Affairs Internal Services Total
Expenses
Transfer payments
Provinces and territories
(Note 6a)
58,330,605 - 60,552,284 - - 60,552,284
International organizations 502,810 - 502,810 - - 502,810
Non-Profit institutions
and organizations
15,024 - 14,135 - - 14,135

Total transfer payments 58,848,439 - 61,069,229 - - 61,069,229
Interest and other costs
(Note 6b)
Interest on unmatured debt 17,663,000 - - 18,147,000 - 18,147,000
Other interest costs 8,618,000 - - 8,150,000 - 8,150,000
Operating expenses 148,719 83,118 - - 57,114 140,232
Cost of domestic coinage sold 126,500 - - 122,500 - 122,500

Total expenses 85,404,658 83,118 61,069,229 26,419,500 57,114 87,628,961

Revenues
Investment income
Crown borrowings - interest
(Note 6c)
1,755,584 - - 739,398 - 739,398
Exchange Fund Account
(Note 6d)
1,415,601 - - 1,318,596 - 1,318,596
Other interest 73,162 59 42,212 3,250 - 45,521

Total investment income 3,244,347 59 42,212 2,061,244 - 2,103,515
Sale of domestic coinage 107,725 - - 107,725 - 107,725
Interest on bank deposits 344,017 - - 354,450 - 354,450
Other income 114,535 5 684 61,168 40,391 150 107,393
Revenues earned on behalf of
Government (Note 7)
(3,810,542) (5 743) (103,380) (2,563,810) (68) (2 673 001)

Total revenues 82 - - - 82 82

Net cost of operations 85,404,576 83,118 61,069,229 26,419,500 57,032 87,628,879

a) Provinces and territories

Transfer payments to provinces and territories are paid pursuant to the Federal-Provincial Fiscal Relations Act, Budget Implementation Acts, and other statutory authorities and are consistent with those described in the Department’s Report on Plans and Priorities.

b) Interest and other costs

Interest and other costs include the interest on market debt and on various superannuation accounts as prescribed by legislation. Also included are the amortization of premiums and discounts on unmatured debt, and the servicing costs and the costs of issuing new borrowings.

c) Crown borrowing interest

Estimated and planned Crown borrowing interest is comprised of interest revenue earned on direct lending to Crown corporations participating in the Crown Borrowing Program.

d) Exchange fund account

Estimated and planned revenues from investments includes interest earned, amortization of premiums and discounts using the straight line method, gains or losses on sales of securities, and revenues from securities lending activities. Interest is accrued on short-term deposits, deposits held under repurchase agreements, marketable securities, and Special Drawing Rights.

The following table presents details of the revenues earned on behalf of Government:

Revenues earned on behalf of Government
($ thousands)

Estimated
Results
2014
Planned
Results
2015
Revenues earned on behalf of Government:
Crown borrowing - interest 1,755,584 739,398
Exchange Fund Account - net revenues 1,415,601 1,318,596
Other interest 73,162 45,521
Sale of domestic coinage 107,725 107,725
Interest on bank deposits 344,017 354,450
Other income 114,453 107,311

Total revenues earned on behalf of Government 3,810,542 2,673,001
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