Unaudited financial statements for the period ending March 31, 2021, Environment and Climate Change Canada, chapter 6

Notes to the financial statements (unaudited)

1. Authority and objectives

Environment and Climate Change Canada was established under Department of the Environment Act. Under this Act, the powers, duties and functions of the Minister of the Environment and Climate Change Canada extend to and include matters relating to:

Environment and Climate Change Canada delivers its mandate by promoting the four (4) following Core Responsibilities:

Taking action on clean growth and climate change

Through engagement with other federal departments and agencies, provinces, territories, Indigenous Peoples, and other stakeholders, and external experts, the Department will support and coordinate the implementation of the Pan-Canadian Framework on Clean Growth and Climate Change (PCF); work to reduce Canadian greenhouse gas (GHG) emissions; drive clean growth; develop regulatory instruments; support businesses and Canadians to adapt and become more resilient to climate change; and contribute to international climate change actions to increase global benefits.

Preventing and managing pollution

Collaborate with provinces, territories, Indigenous peoples and others to develop and administer environmental standards, guidelines, regulations and other risk management instruments to reduce releases and monitor levels of contaminants in air, water and soil; and promote and enforce compliance with environmental laws and regulations.

Conserving nature

Protect and recover species at risk and their critical habitat; conserve and protect healthy populations of migratory birds; engage and enable provinces and territories, Indigenous Peoples, stakeholders, and the public to increase protected areas and contribute to conservation and stewardship activities; expand and manage the Department’s protected areas; and collaborate with domestic and international partners to advance the conservation of biodiversity and sustainable development.

Predicting weather and environmental conditions

Monitor weather, water, air quality and climate conditions; provide forecasts, information and warnings to the Canadian public and targeted sectors through a range of service delivery options; conduct research; develop and maintain computer-based models for predicting weather and other environmental conditions; and collaborate and exchange data with other national meteorological services and with international organizations.

The Internal Services Program includes groups of related activities and resources that are administered to support the Department's Core Responsabilities and Programs. It is the basis for a common government-wide approach to planning, designing, budgeting, reporting and communicating all Government of Canada internal services.

In addition, Environment and Climate Change Canada has authority under numerous pieces of legislation which affect how Environment and Climate Change Canada operates. The most significant Acts are as follows:

2. Summary of significant accounting policies

These financial statements are prepared using the department'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) Parliamentary authorities

Environment and Climate Change Canada is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to Environment and Climate Change Canada 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 Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the “Expenses” and “Revenues” sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-Oriented Statement of Operations included in the 2019-20 Departmental Plan. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2019-20 Departmental Plan.

(b) Net cash provided by government

Environment and Climate Change Canada operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by Environment and Climate Change Canada is deposited to the CRF, and all cash disbursements made by Environment and Climate Change Canada are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements, including transactions between departments of the Government.

(c) Amount due from or to the Consolidated Revenue Fund (CRF)

Amounts due from or to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that Environment and Climate Change Canada is entitled to draw from the CRF without further authorities to discharge its liabilities.

(d) Revenues

(e) Expenses

(f) Employee future benefits

(g) Accounts receivable

Accounts receivable are initially recorded at cost and when necessary, an allowance for valuation is recorded to reduce the carrying value of accounts receivable to amounts that approximate their net recoverable value.

(h) Non-financial assets

The costs of acquiring land, buildings, equipment and other capital property are capitalized as tangible capital assets and, except for land, are amortized to expense over the estimated useful lives of the assets, as described in Note 11. All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Tangible capital assets do not include works of art, museum collection and Crown land to which no acquisition cost is attributable; and intangible assets.

Inventories are valued at cost and are comprised of spare parts and supplies held for future program delivery and are not primarily intended for resale. Inventories that no longer have service potential are valued at the lower of cost or net realizable value.

(i) Contingent liabilities

Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, a provision is accrued and an expense recorded to other expenses. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

(j) Contingent assets

Contingent assets are possible assets which may become actual assets when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, the contingent asset is disclosed in the notes to the financial statements.

(k) Environmental liabilities

An environmental liability for the remediation of contaminated sites is recognized when all of the following criteria are satisfied: an environmental standard exists, contamination exceeds the environmental standard, the Government is directly responsible or accepts responsibility, it is expected that future economic benefits will be given up and a reasonable estimate of the amount can be made. The liability reflects the Government’s best estimate of the amount required to remediate the sites to the current minimum standard for its use prior to contamination. When the future cash flows required to settle or otherwise extinguish a liability are estimable, predictable and expected to occur over extended future periods, a present value technique is used. The discount rate used reflects the Government’s cost of borrowing, associated with the estimated number of years to complete remediation.

The recorded liabilities are adjusted each year, for present value adjustments, inflation, new obligations, changes in management estimates and actual costs incurred.

(l) Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported and disclosed amounts of assets, liabilities, revenues and expenses reported in the financial statements and accompanying notes at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the Government's best estimate of the related amount at the end of the reporting period. The most significant items where estimates are used are contingent liabilities, environmental liabilities, the liability for employee future benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management’s estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

Environmental liabilities are subject to measurement uncertainty as discussed in Note 5 due to the evolving technologies used in the estimation of the costs for remediation of contaminated sites, the use of discounted present value of future estimated costs, and the fact that not all sites have had a complete assessment of the extent and nature of remediation. Changes to underlying assumptions, the timing of the expenditures, the technology employed, or the revisions to environmental standards or changes in regulatory requirements could result in significant changes to the environmental liabilities recorded.

(m) Related party transactions

Related party transactions, other than inter-entity transactions, are recorded at the exchange amount.

Inter-entity transactions are transactions between commonly controlled entities. Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis and are measured at the carrying amount, except for the following:

  1. Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
  2. Certain services received on a without charge basis are recorded for departmental financial statement purposes at the carrying amount.

3. Parliamentary authorities

Environment and Climate Change Canada receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, Environment and Climate Change Canada has different net results 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 current year authorities used:
(in thousands of dollars) 2021 2020
Net cost of operations before government funding and transfers $1,753,249 $1,419,014
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (Note 11) (37,350) (40,408)
Net loss on disposals, write-off and adjustments to tangible capital assets (4,665) (3,185)
Common services provided without charge by other government departments (Note 14) (111,534) (113,784)
Refunds/adjustments to previous years' expenses 5,793 4,345
Timing differences between revenues earned and collected (3,494) (802)
Decrease (increase) in accrued liabilities not charged to authorities 51,551 201,748
Decrease (increase) in vacation pay and compensatory leave (15,299) (9,109)
Decrease (increase) in employee future benefits (Note 8) 3,427 (711)
Decrease (increase) in environmental liabilities (Note 5) 6,391 7,589
Decrease (increase) in provision for contingent liabilities (Note 13) (86) (22,143)
Increase (decrease) in inventory (Note 10) (275) (1,301)
Other 715 1,082
Total items affecting net cost of operations but not affecting authorities (104,826) 23,321
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets (Note 11) 77,130 99,141
Increase (decrease) in prepaid expenses 17,910 (90)
Salary Overpayments 2,348 3,250
Other Loans and advances to employees 84 190
Lease payments for tangible capital assets 886 839
Total items not affecting net cost of operations but affecting authorities 98,364 103,330
Current year authorities used $1,746,787 $1,545,665

 

(b) Authorities provided and used:
(in thousands of dollars) 2021 2020
Authorities provided
Vote 1 - Operating expenditures $928,441 $896,857
Vote 5 - Capital expenditures 104,909 109,542
Vote 10 - Grants & Contributions 878,014 791,613
Vote 15 - Canada's Marine Safety Response - 468
Vote 20 - Ensuring Better Disaster Management Preparation and Response - 198
Vote 25 - Implementing a Federal Carbon Offset System - 508
Statutory amounts 209,794 98,201
- 2,121,158 1,897,387
Less:
Authorities available for future years (441) (289)
Lapsed authorities (373,930) (351,433)
- (374,371) (351,722)
Current year authorities used $1,746,787 $1,545,665

4. Accounts payable and accrued liabilities

The following table presents details of Environment and Climate Change Canada's accounts payable and accrued liabilities:

(in thousands of dollars) 2021 2020
Accounts payable - Other government departments and agencies $31,409 $22,892
Accounts payable - External parties 169,419 144,506
Total accounts payable 200,828 167,398
Accrued liabilities 452,118 286,954
Total accounts payable and accrued liabilities $652,946 $454,352

5. Environmental liabilities

The Government’s “Federal Approach to Contaminated Sites” sets out a framework for management of contaminated sites using a risk-based approach. Under this approach the Government has inventoried the contaminated sites identified on federal lands, allowing them to be classified, managed and recorded in a consistent manner. This systematic approach aids in identification of the high risk sites in order to allocate limited resources to those sites which pose the highest risk to human health and the environment.

Environment and Climate Change Canada has identified approximately 263 sites (77 sites in 2019–20) where contamination may exist and assessment, remediation and monitoring may be required. Of these, the Department has identified approximately 64 sites (16 sites in 2019–20) where action is required and for which a gross liability of $185,753 thousand ($192,277 thousand in 2019–20) has been recorded. This liability estimate has been determined based on site assessments performed by environmental experts.

In addition, a statistical model based upon a projection of the number of sites that will proceed to remediation and upon which current and historical costs are applied is used to estimate the liability for a group of unassessed sites. As a result, there are 37 unassessed sites (9 sites in 2019–20) where a liability estimate of $827 thousand ($694 thousand in 2019–20) has been recorded using this model.

Moreover, there is 1 site that has not been assessed by environmental experts (1 site in 2019–20) for which the department has estimated and recorded a liability of $13,051 thousand ($13,051 thousand in 2019–20).

These three estimates combined, totalling $199,631 thousand ($206,022 thousand in 2019–20), represents management’s best estimate of the costs required to remediate sites to the current minimum standard for its use prior to contamination, based on information available at the financial statement date.

For the remaining 161 sites (51 sites in 2019–20), no liability for remediation has been recognized. Some of these sites are at various stages of testing and evaluation and if remediation is required, liabilities will be reported as soon as a reasonable estimate can be determined. For other sites, Environment and Climate Change Canada does not expect to give up any future economic benefits (there is likely no significant environmental impact or human health threats). These sites will be re-examined and a liability for remediation will be recognized if future economic benefits will be given up.

The following table presents the total estimated amounts of these liabilities by nature and source, the associated expected recoveries and the total undiscounted future expenditures as at March 31, 2021, and March 31, 2020. When the liability estimate is based on a future cash requirement, the amount is adjusted for inflation using a forecast (CPI) rate of 2.0% (2.0% in 2019–20). Inflation is included in the undiscounted amount. The Government of Canada's cost of borrowing by reference to the actual zero-coupon yield curve for Government of Canada bonds has been used to discount the estimated future expenditures. The March 2021 rates range from 0.24% (0.45% in 2020) for 2 year term to 2.02% (1.39% in 2020) for a 30 or greater year term.

Nature and Source
(in thousands of dollars)
Number of sites
2021
Number of sites with a liability
2021
Estimated liability
2021
Estimated total undiscounted expenditures
2021
Estimated recoveries
2021
Number of sites
2020
Number of sites with a liability
2020
Estimated liability
2020
Estimated total undiscounted expenditures
2020
Estimated recoveries
2020
Military and former military sites(1) 1 - - - - - - - - -
Fuel related practices(2) 20 9 68,181 70,159 - 32 10 55,645 56,917 -
Marine facilities/ aquatic sites(3) 198 84 128,737 133,853 - 12 7 147,491 152,216 -
Parks and protected areas(4) 29 7 718 728 - 26 7 862 869 -
Office/ commercial/
industrial
operations(5)
15 2 1,995 2,037 - 7 2 2,024 2,075 -
Totals 263 102 $199,631 $206,777 - 77 26 $206,022 $212,077 -

(1) Contamination associated with the operations of military and former military sites where activities such as fuel handling and storage activities, waste sites, metals/PCB-based paint used on buildings resulted in former or accidental contamination, e.g. petroleum hydrocarbons, PCBs, heavy metals. Sites often have multiple sources of contamination.

(2) Contamination primarily associated with fuel storage and handling. E.g. accidental spills related to fuel storage tanks or former fuel handling practices, e.g. petroleum hydrocarbons, polyaromatic hydrocarbons and BTEX (benzene, toluene, ethylbenzene and xylenes).

(3) Contamination associated with the operations of marine assets, e.g. port facilities, harbours, navigation systems, light stations, hydrometric stations, where activities such as fuel storage/handling, use of metal based paint (e.g. on light stations) resulted in former or accidental contamination, e.g. metals, petroleum hydrocarbons, polyaromatic hydrocarbons and other organic contaminants. Sites often have multiple sources of contamination.

(4) Contamination associated with the operations and maintenance of parks and protected areas where activities such as fuel storage/handling, waste sites and use of metal based paint resulted in former or accidental contamination, e.g. metals, petroleum hydrocarbons, polyaromatic hydrocarbons, PCBs and other organic contaminants. Sites often have multiple sources of contamination.

(5) Contamination associated with the operations of the office/commercial/industrial facilities where activities such as fuel storage/handling, waste sites and use of metal-based paint resulted in former or accidental contamination, e.g. metals, petroleum hydrocarbons, polyaromatic hydrocarbons, BTEX, etc. Sites often have multiple sources of contamination

The Department’s ongoing efforts to assess contaminated sites, may result in additional environmental liabilities.

6. Deferred revenue

Deferred revenue represents the balance at year-end of unearned revenues stemming from amounts received from external parties that are restricted in order to fund the expenditures related to specific research projects and stemming from amounts received for fees prior to services being performed. Revenue is recognized in the period in which these expenditures are incurred or in which the service is performed. Details of the transactions related to this account are as follows:

(in thousands of dollars) 2021 2020
Opening balance $35,473 $26,606
Amounts received  
Donations 1 1
Cost sharing project deposits 15,448 19,581
Disposal at sea permit fees 353 -
Revenue recognized (8,285) (10,715)
Closing balance $42,990 $35,473

7. Lease obligation for tangible capital assets

Environment and Climate Change Canada has entered into agreements to lease certain equipment under capital leases with a cost of $18,199 thousand and accumulated amortization of $13,831 thousand as at March 31, 2021 ($18,199 thousand of cost and $13,103 thousand in accumulated amortization respectively as at March 31, 2020). The obligations related to the upcoming years include Carleton University for which, on October 13, 2000, Environment and Climate Change Canada entered into an agreement to rent office laboratory space for the National Wildlife Research Centre (NWRC), at an annual cost of $1,300 thousand under a capital lease which expires in 2027.

(in thousands of dollars) 2021
Maturing year
2022 $1,300
2023 1,300
2024 1,300
2025 1,300
2026 1,300
2027 and subsequent 1,300
Total future minimum lease payments 7,800
Less: imputed interest (5.63% ) 1,333
Balance of obligation under leased tangible capital assets $6,467

8. Employee future benefits

(a) Pension benefits

Environment and Climate Change Canada's employees participate in the Public Service Pension Plan (the "Plan"), which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plan benefits and they are indexed to inflation.

Both the employees and the Department contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups - Group 1 related to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

The 2020-21 expense amounts to $69,982 thousand ($66,675 thousand in 2019-20). For Group 1 members, the expense represents approximately 1.01 times (1.01 times in 2019-20) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2019-20) the employee contributions.

Environment and Climate Change Canada's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the Consolidated Financial Statements of the Government of Canada, as the Plan’s sponsor.

(b) Severance benefits

Severance benefits provided to the Environment and Climate Change Canada's employees were previously based on an employee's eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. By March 31, 2021, substantially all settlements for immediate cash out were completed. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

The changes in the obligations during the year were as follows:

(in thousands of dollars) 2021 2020
Accrued benefit obligation, beginning of year $27,266 $26,555
Expense for the year (559) 4,516
Benefits paid during the year (2,868) (3,805)
Accrued benefit obligation, end of year $23,839 $27,266

9. Accounts receivable and advances

The following table presents details of Environment and Climate Change Canada's accounts receivable and advances balances:

(in thousands of dollars) 2021 2020
Receivables - Other government departments and agencies $2,984 $9,189
Receivables - External partiesFootnote 1  223,089 20,590
Employee advances 485 514
Subtotal 226,558 30,293
Allowance for doubtful accounts on receivables from external parties (201) (139)
Gross accounts receivable 226,357 30,154
Accounts receivable held on behalf of Government (217,284) (15,731)
Net accounts receivable $9,073 $14,423

10. Inventory

The following table presents details of the inventory:

(in thousands of dollars) 2021 2020
Printed material, books, maps and forms $18 $19
Stationery and office paper supplies 194 194
Meteorological supplies 16,570 16,355
Electric lighting 42 56
Compressed gases and acetylene 6 2
Chemicals and related products 5 5
Scientific & technical equipment 859 830
Radar Equipment 3,659 3,524
General purpose machinery and equipment 15 17
Computer equipment 61 62
Laboratory materials and supplies 341 309
Test vehicles 2,192 2,864
Total inventory $23,962 $24,237

Inventory is valued using the moving average price.

11. 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:

Asset class Amortization period
Buildings 25 to 40 years
Works and Infrastructure 20 to 40 years
Machinery and Equipment 3 to 30 years
Vehicles 3 to 25 years
Leasehold Improvements Lesser of the remaining term of lease or useful life of the improvement
Leased tangible capital assets Over term of lease/useful life

Assets under construction are recorded in the applicable asset class in the year they are put into service and are not amortized until they are put into service.

Cost
(in thousands of dollars)
2020 Acquisitions Adjustments(3) Disposals and write-offs 2021
Land $25,004 $117 $612 - $25,733
Buildings 257,757 - 11,358 132 268,983
Works and infrastructure 43,005 - 4,520 3,021 44,504
Machinery and equipment 489,082 9,044 13,891 12,692 499,325
Vehicles(2) 42,301 3,593 (66) 642 45,186
Leasehold improvements 40,199 - 393 23,677 16,915
Assets under construction(1) 211,761 64,376 (22,660) 373 253,104
Leased tangible capital asset - building 18,199 - - - 18,199
  $1,127,308 $77,130 $8,048 $40,537 $1,171,949
Accumulated amortization
(in thousands of dollars)
2020 Amortization Adjustments(3) Disposals and write-offs 2021
Buildings $161,831 $7,993 - $91 $169,733
Works and infrastructure 16,174 2,669 - 989 17,854
Machinery and equipment 385,142 23,153 7,942 11,078 405,159
Vehicles(2) 31,542 2,058 (76) 629 32,895
Leasehold improvements 38,020 749 - 22,487 16,282
Leased tangible capital asset - building 13,103 728 - - 13,831
  $645,812 $37,350 $7,866 $35,274 $655,754
Net book value
(in thousands of dollars)
2020 - - - 2021
Land $25,004 - - - $25,733
Buildings 95,926 - - - 99,250
Works and infrastructure 26,831 - - - 26,650
Machinery and equipment 103,940 - - - 94,166
Vehicles(2) 10,759 - - - 12,291
Leasehold improvements 2,179 - - - 633
Assets under construction(1) 211,761 - - - 253,104
Leased tangible capital asset - building 5,096 - - - 4,368
Net book value $481,496 - - - $516,195

(1) Assets under construction include: buildings, engineering works, software and other construction.

(2) Vehicles include: road motor vehicles, off road vehicles, aircraft, mobile laboratories, ships and boats.

(3) Adjustments include assets under constructions of $(22,803) thousand that were transferred to the other categories upon completion of the assets, post-capitalization and write-offs for a net book value of $182 thousand.

12. Contractual obligations and contractual rights

(a) Contractual obligations

The nature of the Department’s activities may result in some large multi-year contracts and obligations whereby the Department will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in thousands of dollars) Operating leases Transfer payments Capital assets Other Total
2022 - $646,531 $28,125 $2,944 $677,600
2023 18,000 190,555 9,607 2,920 221,082
2024 18,000 94,861 - 2,920 115,781
2025 18,000 4,910 - 2,920 25,830
2026 18,000 - - 2,920 20,920
2027 and subsequent 342,000 - - - 342,000
Total $414,000 $936,857 $37,732 $14,624 $1,403,213

b) Contractual rights

The activities of the department sometimes involve the negotiation of contracts or agreements with outside parties that result in the department having rights to both assets and revenues in the future. They principally involve leases of property, royalties, and sales of goods and services. Major contractual rights that will generate revenues in future years and that can be reasonably estimated are summarized as follows:

(in thousands of dollars) Leases of property Royalties Sales of goods and services Other Total
2022 - - $8,369 - $8,369
2023 - - - - -
2024 - - - - -
2025 - - - - -
2026 - - - - -
2027 and subsequent - - - - -
Total - - $8,369 - $8,369

13. Contingent liabilities and contingent assets

a) Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. They are grouped into two categories as follows:

Claims and litigation

Claims have been made against Environment and Climate Change Canada in the normal course of operations. These claims include items with pleading amounts and other for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. Environment and Climate Change Canada has recorded an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management remain nil at March 31, 2021.

b) Contingent assets

Environment and Climate Change Canada has entered into an Agreement in Principle in 2018-19 to negotiate a settlement related to the remediation of a leased land. While the amount claimed in this action is significant, the outcome is not determinable.

14. Related party transactions

Environment and Climate Change Canada is related as a result of common ownership to all government departments, agencies, and Crown corporations. Related parties also include individuals who are members of key management personnel or close family members of those individuals, and entities controlled by, or under shared control of, a member of key management personnel or a close family member of that individual.

Environment and Climate Change Canada enters into transactions with these entities in the normal course of business and on normal trade terms.

a) Common services provided without charge by other government departments

During the year, Environment and Climate Change Canada received services without charge from certain common service organizations, related to accommodation, legal services, the employer’s contribution to the health and dental insurance plans and workers' compensation coverage. These services provided without charge have been recorded at the carrying value in the Department’s Statement of Operations and Departmental Net Financial Position as follows:

(in thousands of dollars) 2021 2020
Accommodation $47,889 $49,717
Employer's contribution to the health and dental insurance plans 62,081 62,547
Workers’ compensation 759 826
Legal services 805 694
Total $111,534 $113,784

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 service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Services and Procurement Canada and audit services provided by the Office of the Auditor General are not included in the Department’s Statement of Operations and Departmental Net Financial Position.

b) Other transactions with other government departments and agencies

(in thousands of dollars) 2021 2020
Accounts receivable $2,984 $9,189
Accounts payable 31,409 22,892
Expenses 234,936 251,110
Revenues 23,414 26,458

Expenses and revenues disclosed in (b) exclude common services provided without charge, which are already disclosed in (a).

15. Transfers from/to other government departments

During the year, Environment and Climate Change Canada transferred tangible capital assets with Agriculture and Agri-Food Canada, Fisheries and Oceans and Royal Canadian Mounted Police with a net effect of $3 (-$281,452 in 2019-20) on the departmental net financial position affecting categories under vehicles and machinery and equipment. Environment and Climate Change Canada also transferred salary overpayments and emergency salary advances with a net effect of $103,280 (-$131,673 in 2019-20).

(in thousands of dollars) 2021
Assets:
Tangible capital assets (Note 11) $0
Salary overpayments and emergency salary advances 103
Total assets transferred 103
Adjustment to Environment and Climate Change Canada net financial position $103

16. Segmented information

Presentation by segment is based on Environment and Climate Change Canada's core responsibility. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the main core responsibilities, by major object of expense and by major type of revenue. The segment results for the period are as follows:

(in thousands of dollars) Taking action on clean growth and climate change Preventing and managing pollution Conserving nature Predicting weather and environmental conditions Internal services 2021 2020
Operations and administration
Salaries and employee benefits $74,408 $265,281 $143,337 $210,290 $199,127 $892,443 $846,317
Professional and special services 9,178 48,295 17,974 12,400 24,717 112,564 116,719
Accommodation 4,087 17,411 7,974 13,487 11,614 54,573 54,209
Amortization of tangible capital assets 786 19,241 3,117 10,012 4,194 37,350 40,408
Other contracted services 836 4,775 2,632 7,366 5,374 20,983 27,217
Materials and supplies 313 5,525 2,821 4,001 2,220 14,880 21,438
Rentals 350 904 2,264 6,131 26,925 36,574 27,743
Travel 95 360 624 2,814 53 3,946 30,109
Machinery & equipment 464 4,248 4,943 4,686 6,762 21,103 11,016
Net loss on disposals, write-off and adjustments to tangible capital assets 93 2,295 391 1,315 571 4,665 3,185
Environmental liability adjustments - (6,391) - - - (6,391) (7,589)
Equipment repair and maintenance 36 7,641 887 4,590 688 13,842 11,964
Postage 95 485 825 915 351 2,671 3,866
Information services – communications 504 1,720 859 220 2,928 6,231 6,120
Telecommunications 265 327 430 835 4,114 5,971 4,438
Earmarked fees and levies - 3,705 4 - - 3,709 3,757
Contingent liabilities - - - - 86 86 22,143
Other (62) 2,828 819 4,501 365 8,451 11,718
Total operations and administration 91,448 378,650 189,901 283,563 290,089 1,233,651 1,234,778
Transfer payments
Non-profit organizations 25,881 35,237 109,977 1,434 - 172,529 161,723
Other countries and international organization 18,973 689 1,324 3,980 - 24,966 23,720
Other levels of governments within Canada 214,211 1,969 82,594 97 - 298,871 188,857
Other to individuals 5 - 202 21 - 228 299
Industry 152,509 2,096 384 - - 154,989 104,618
Total transfer payments 411,579 39,991 194,481 5,532 - 651,583 479,217
Total expenses 503,027 418,641 384,382 289,095 290,089 1,885,234 1,713,995
Revenues
Sales of goods and services 200 9,459 4,265 49,219 1,017 64,160 79,006
Other revenues 161,026 69,380 572 7,135 88 238,201 224,808
Revenues earned on behalf of Government (161,023) (2,083) (1,690) (5,258) (322) (170,376) (8,833)
Total revenues 203 76,756 3,147 51,096 783 131,985 294,981
Net cost of operations $502,824 $341,885 $381,235 $237,999 $289,306 $1,753,249 $1,419,014

17. Comparative information

Certain comparative figures have been reclassified to conform to the current year's presentation.

Page details

Date modified: