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:
- the preservation and enhancement of the quality of the natural environment (including water, air and soil quality)
- renewable resources, including migratory birds and other non-domestic flora and fauna
- water
- meteorology
- enforcement of any rules or regulations made by the International Joint Commission relating to boundary waters
- coordination of the policies and programs of the Government of Canada respecting the preservation and enhancement of the quality of the natural environment
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:
- Antarctic Environmental Protection Act
- Arctic Waters Pollution Prevention Act
- Bridge to Strengthen Trade Act
- Canada Emission Reduction Incentives Agency Act
- Canada Foundation for Sustainable Development Technology Act
- Canada-Newfoundland and Labrador Atlantic Accord Implementation Act
- Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act
- Canada Oil and Gas Operations Act
- Canada Water Act
- Canada Wildlife Act
- Canadian Environment Week Act
- Canadian Environmental Protection Act, 1999
- Department of the Environment Act
- Emergency Management Act
- Energy Supplies Emergency Act
- Environmental Enforcement Act
- Environmental Violations Administrative Monetary Penalties Act
- Federal Sustainable Development Act
- Fisheries Act (Sections 36-42)
- Greenhouse Gas Pollution Pricing Act
- Impact Assessment Act
- Income Tax Act
- International River Improvements Act
- Lac Seul Conservation Act, 1928
- Lake of the Woods Control Board Act, 1921
- Manganese-Based Fuel Additives Act
- Marine Liability Act
- Migratory Birds Convention Act, 1994
- National Strategy for Safe and Environmentally Sound Disposal of Lamps Containing Mercury Act
- National Wildlife Week Act
- Nunavut Planning and Project Assessment Act
- Perfluorooctane Sulfonate Virtual Elimination Act
- Resources and Technical Surveys Act
- Species at Risk Act
- Weather Modification Information Act
- Wild Animal and Plant Protection and Regulation of International and Interprovincial Trade Act
- Yukon Environmental and Socio-economic Assessment Act
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
- Revenues from regulatory fees are recognized based on the services provided in the year.
- Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue.
- Revenues are then recognized in the period in which the related expenses are incurred.
- Deferred revenue consists of amounts received in advance of the delivery of goods and rendering of services that will be recognized as revenue in a subsequent fiscal year as it is earned.
- The compensations for excess emissions provided for under the Greenhouse Gas Pollution Pricing Act are recognized upon confirmation by the registered facility that the compensation is to be provided.
- Other revenues are recognized in the period the event giving rise to the revenues occured.
- Revenues that are non-respendable are not available to discharge Environment and Climate Change Canada's liabilities. While the Deputy Head 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 entity's gross revenues.
(e) Expenses
- Transfer payments are recorded as an expense in the year the transfer is authorized and eligibility criteria have been met by the recipient.
- Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
- Services provided without charge by other government departments for accommodation, employer contributions to the health and dental insurance plans, legal services and workers' compensation are recorded as operating expenses at their carrying value.
(f) Employee future benefits
- Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. Environment and Climate Change Canada’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. 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 financial statements of the Government of Canada, as the Plan’s sponsor.
- Severance benefits: The accumulation of severance benefits for voluntary departures ceased for applicable employee groups. The remaining obligation for employees who did not withdraw benefits is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
(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:
- Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
- 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:
(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 |
(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.
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