Archived - Department of Finance Canada Future-oriented Statement of Operations (unaudited): 2015

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

Estimated
Results
2015
Planned
Results
2016
Expenses (Note 6)
Transfer and taxation payment programs 61,364,639,638 63,809,613,260
Treasury and financial affairs 25,010,421,866 25,726,000,000
Economic and fiscal policy framework 96,611,973 76,349,444
Internal services 71,333,157 59,249,768

Total expenses 86,543,006,634 89,671,212,472
Revenues (Note 6)
Investment income 1,986,136,811 1,766,817,874
Interest on bank deposits 317,602,795 319,545,394
Sale of domestic coinage 113,374,709 110,714,624
Other 93,907,692 92,664,564
Revenues earned on behalf of Government (Note 7) (2,510,921,307) (2,289,641,756)

Total revenues 100,700 100,700

Net cost of operations 86,542,905,934 89,671,111,772
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 2015 is based on actual results as at January 16, 2015 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2016 fiscal year.

The main assumptions underlying the forecasts are as follows:

These assumptions are adopted as at January 16, 2015.

While every attempt has been made to forecast final results for the remainder of 2015 and for 2016, 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 the following:

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:

The Department reports expenses on an accrual basis:

The Department reports revenues on an accrual basis:

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.

Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions.

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
Computer hardware One to ten years
Leasehold improvements Lesser of the remaining term of lease or useful life of the improvement
Machinery and equipment Three to ten years
Motor vehicles Three years

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:

Reconciliation of net cost of operations to requested authorities
(dollars)

Estimated
Results
2015
Planned
Results
2016
Net cost of operations 86,542,905,934 89,671,111,772
Adjustments for items affecting net cost of operations but not affecting authorities:
Allowance on loan guarantees (76,800,000) -
Services provided without charge by other government departments (19,804,202) (22,511,088)
Employee future benefits 797,149 17,479
Amortization of tangible capital assets (674,076) (100,098)
Other (1,591,028) (2,120,953)

Total adjustments for items affecting net costs of operation but not affecting authorities (98,072,157) (24,714,660)

Adjustments for items not affecting net cost of operations but affecting authorities:
Notes payable to international organizations 441,610,000 -
Incentive for provinces to eliminate taxes on capital agreements 95,042,000 -

Requested authorities 86,981,485,777 89,646,397,112

Authorities requested
(dollars)

Estimated
Results
2015
Planned
Results
2016
Authorities requested
Vote 1 – Operating expenditures 125,194,482 99,936,668
Vote 5 – Grants and contributions 5,035,000 3,035,000
Statutory amounts 86,851,256,295 89,543,425,444

Requested authorities 86,981,485,777 89,646,397,112

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.

The Department is estimated and planned to receive services 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
(dollars)

Estimated
Results
2015
Planned
Results
2016
Accommodation 11,559,759 14,230,694
Employer’s contributions to the health and dental insurance plans 6,005,217 5,976,663
Legal services 2,239,226 2,303,731

Total services received without charge 19,804,202 22,511,088

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.

Other transactions with related parties
(dollars)

Estimated
Results
2015
Planned
Results
2016
Expenses - Other Government departments and agencies 8,160,122,564 7,662,818,934
Revenues - Other Government departments and agencies 8,417,212 8,417,212

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 revenuesgenerated 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
(dollars)

2015
2016


Total Transfer and
Taxation
Payment
Programs
Treasury and
Financial Affairs
Economic and
Fiscal Policy
Framework
Internal Services Total
Expenses
Transfer payments
Provinces and territories (Note 6a) 60,780,029,638 63,312,434,002 - - - 63,312,434,002
International organizations 579,610,000 492,810,000 - - - 492,810,000
Non-Profit institutions and organizations 13,605,078 3,000,000 - 35,000 - 3,035,000

Total transfer payments 61,373,244,716 63,808,244,002 - 35,000 - 63,808,279,002
Interest and other costs (Note 6b)
Interest on unmatured debt 16,769,649,719 - 17,988,000,000 - - 17,988,000,000
Other interest costs 8,118,272,147 - 7,630,000,000 - - 7,630,000,000
Operating expenses 159,340,052 1,369,258 - 76,314,444 59,249,768 136,933,470
Cost of domestic coinage sold 122,500,000 - 108,000,000 - - 108,000,000

Total expenses 86,543,006,634 63,809,613,260 25,726,000,000 76,314,444 59,249,768 89,671,212,472

Revenues
Investment income
Crown borrowings - interest (Note 6c) 679,783,604 - 613,716,874 - - 613,716,874
Exchange Fund Account (Note 6d) 1,257,328,306 - 1,121,686,958 - - 1,121,686,958
Other interest 49,024,901 27,372,362 3,982,736 58,944 - 31,414,042

Total investment income 1,986,136,811 27,372,362 1,739,386,568 58,944 - 1,766,817,874
Sale of domestic coinage 113,374,709 - 110,714,624 - - 110,714,624
Interest on bank deposits 317,602,795 - 319,545,394 - - 319,545,394
Other income 93,907,692 51,652,755 39,161,531 1,681,565 168,713 92,664,564
Revenues earned on behalf of Government (Note 7) (2,510,921,307) (79,025,117) (2,208,808,117) (1,740,509) (68,013) (2,289,641,756)

Total revenues 100,700 - - - 100,700 100,700

Net cost of operations 86,542,905,934 63,809,613,260 25,726,000,000 76,314,444 59,149,068 89,671,111,772

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.

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.

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

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
(dollars)

Estimated
Results
2015
Planned
Results
2016
Revenues earned on behalf of Government:
Crown borrowing - interest 679,783,604 613,716,874
Exchange Fund Account - net revenues 1,257,328,306 1,121,686,958
Other interest 49,024,901 31,414,042
Sale of domestic coinage 113,374,709 110,714,624
Interest on bank deposits 317,602,795 319,545,394
Other income 93,806,992 92,563,864

Total revenues earned on behalf of Government 2,510,921,307 2,289,641,756
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