ARCHIVED - Future-oriented Financial Statements 2011-2012

Table of Contents

Statement of Management Responsibility

The introduction of Future-oriented Financial Statements is a Parliamentary direction for departments to provide enhanced financial information to external users. Health Canada has prepared a full set of Future-oriented Financial Statements which forecast results for the 2011-12 fiscal year and update 2010-11 projections. Responsibility for the compilation, content and presentation of the Future-oriented Financial Statements for the years ended March 31, 2011 and 2012 and all information contained in this statement rests with Health Canada's management. This future-oriented information has been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector. The Future-oriented Financial Statements and accompanying notes are submitted in Part III of the Estimates (Report on Plans and Priorities), and will be used in the Health Canada's Departmental Performance Report to compare with actual results.

Management is responsible for the integrity and objectivity of the information contained in the Future-oriented Financial Statements and for the process of developing forecasts and future projections. These forecasts and future projections are based upon information available and known to management at the time of development. They reflect current business and economic conditions, assume a continuation of current governmental priorities and are consistent with Health Canada's mandate and strategic objectives. Much of the future-oriented financial information uses best estimates, assumptions and judgement to derive forecasts and future projections while at the same time giving due consideration to materiality. At the time of preparation of this information, management believes these best estimates and assumptions to be reasonable. However, as with any use of best estimates and assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

The actual results achieved for the fiscal year covered in the accompanying Future-oriented Financial Statements will vary from the information presented and these variations may be material.

Glenda Yeates
Deputy Minister
Ottawa, Canada

Date: March 23, 2011

Germain Tremblay
Acting Chief Financial Officer
Ottawa, Canada

Date: March 11, 2011

Future-oriented Statement of Operations (Unaudited)

For the year ended March 31 (in thousands of dollars)
Estimated Results 2011 Forecast 2012
Total A Health System Responsive to the Needs of Canadians Canadians are informed of and protected from health risks associated with food, products, substances and environments, and are informed of the benefits of healthy eating First Nations and Inuit communities and individuals receive health services and benefits that are responsive to their needs so as to improve their health status Internal Services Total
Expenses
Transfer payments 1,427,701 297,708 68,891 1,053,841 0 1,420,440
Salaries and wages 976,815 61,523 448,986 214,377 231,349 956,235
Utilities, material and supplies 513,212 1,249 27,396 413,794 8,789 451,228
Professional and special services 491,633 9,387 54,551 296,363 35,493 395,794
Travel - non-insured health patient 180,799 0 0 160,646 0 160,646
Accommodation 68,016 3,307 25,709 14,683 19,838 63,537
Travel and relocation 45,307 1,330 7,384 23,281 2,674 34,669
Amortization 23,648 0 6,616 3,569 14,634 24,819
Purchased repair and maintenance 29,858 50 549 1,625 18,269 20,493
Communications 24,489 114 3,796 3,500 9,101 16,511
Information 23,387 124 5,550 1,862 7,112 14,648
Rentals 4,186 224 887 1,592 811 3,514
Other 2,325 184 1,681 (446) 698 2,117
3,811,376 375,200 651,996 2,188,687 348,768 3,564,651
Revenues
Sales of goods and services
Services of a regulatory nature 29,046 0 44,370 0 0 44,370
Rights and privileges 18,851 0 43,534 0 0 43,534
Services of a non-regulatory nature 21,528 8,304 9,443 5,450 0 23,197
Other 200 0 18,095 0 0 18,095
Interest 194 12 173 8 0 193
69,819 8,316 115,615 5,458 0 129,389
Net cost of operations 3,741,557 366,884 536,381 2,183,229 348,768 3,435,262

Information for the year ended March 31, 2011 includes actual amounts from April 1, 2010 to September 30, 2010.
The accompanying notes are an integral part of the financial statements

Future-oriented Statement of Financial Position (Unaudited)

As at March 31 (in thousands of dollars)
Estimated Results 2011 Forecast 2012
Assets
Financial assets
Due from Consolidated Revenue Fund 387,831 394,252
Accounts receivable and advances 27,191 26,826
415,022 421,078
Non-financial assets
Prepaid expenses 15,000 15,000
Tangible capital assets (Note 7) 170,255 173,417
185,255 188,417
Total Assets 600,277 609,495
Liabilities and Equity of Canada
Liabilities
Accounts payable and accrued liabilities (Note 8) 416,559 420,458
Vacation pay and compensatory leave 43,687 44,904
Deferred revenue 1,852 2,127
Employee future benefits (Note 9) 183,268 196,615
Other Liabilities (Note 10) 568,429 585,919
1,231,795 1,250,023
Equity of Canada (631,518) (640,528)
Total Liabilities and Equity of Canada 600,277 609,495

Information for the year ended March 31, 2011 includes actual amounts from April 1, 2010 to September 30, 2010.
Contingent Liabilities (Note 11)
Contractual Obligations (Note 12)

The accompanying notes are an integral part of the financial statements

Future-oriented Statement of Equity (Unaudited)

For the year ended March 31 (in thousands of dollars)
Estimated Results 2011 Forecast 2012
Equity of Canada, beginning of year (725,775) (631,518)
Net cost of operations (3,741,557) (3,435,262)
Net Cash provided by Government 3,655,280 3,298,318
Change in due from Consolidated Revenue Fund 57,689 6,421
Services provided without charge by other government departments (Note 13) 122,845 121,513
Equity of Canada, end of year (631,518) (640,528)

Information for the year ended March 31, 2011 includes actual amounts from April 1, 2010 to September 30, 2010.
The accompanying notes are an integral part of the financial statements

Future-oriented Statement of Cash Flow (Unaudited)

For the year ended March 31 (in thousands of dollars)
Estimated Results 2011 Forecast 2012
Operating transactions
Net cost of operations 3,741,557 3,435,262
Non-cash items:
Amortization of tangible capital assets (Note 7) (23,648) (24,819)
Loss on disposal of capital and non-capital assets (3,342) (2,062)
Services provided without charge by other government departments (Note 13) (122,845) (121,513)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable, advances and prepaid expenses (1,010) (365)
Decrease (increase) in liabilities 24,487 (18,228)
Cash used by Operating Activities 3,615,199 3,268,275
Capital investment activities
Acquisitions of tangible capital assets (Note 7) 40,081 30,043
Cash used by Investment Activities 40,081 30,043
Net cash provided by Government of Canada 3,655,280 3,298,318

Information for the year ended March 31, 2011 includes actual amounts from April 1, 2010 to September 30, 2010.
The accompanying notes are an integral part of the financial statements

Notes to the Future-oriented Financial Statements (Unaudited)

1. Authority and purpose

The Department of Health was established effective July 12, 1996 under the Department of Health Act to participate in the promotion and preservation of the health of the people of Canada. It is named in Schedule I of the Financial Administration Act and reports through the Minister of Health. Priorities and reporting are aligned under the following strategic outcomes and related program activities:

Strategic Outcome 1: A Health System Responsive to the Needs of Canadians

Canadian Health System

The goal of this program activity is to provide strategic policy advice, research and analysis, and program support to provinces and territories, partners and stakeholders on health care system issues. Mindful of long-term equity, sustainability and affordability considerations, Health Canada collaborates and targets its efforts with provinces and territories, national and international organizations, health care providers, professional associations, other key stakeholders and Canadians in order to support improvements to the health care system, such as improved access, quality and integration of health care services. These targeted efforts are in place to better meet the health needs of Canadians, wherever they live or whatever their financial circumstances. Focusing on emerging health issues, such as Assisted Human Reproduction and nanotechnology enables Health Canada to strategically position itself as a proactive organization, and targeted Grants and Contribution funding to support international health partners helps to ensure Health Canada is an active player in tackling global health issues.

Specialized Health Services

These specialized health services ensure continuity of services and occupational health services to public servants and works to ensure that Health Canada is prepared and able to continue services in the event of a national emergency. By working pro-actively to reduce the number of workdays lost to illness, Health Canada is promoting a productive public service thereby delivering results to Canadians. This Program Activity also ensures that Health Canada works internally and with partners to ensure that Health Canada has preparedness plans that are ready for execution in the event of a national emergency. By ensuring that organizations have plans in place that take into account all facets of their legislated responsibilities helps Health Canada continue to deliver services to Canadians at a time that it will be most needed. This includes coordination with other members of the Health Portfolio as well as partners across the Government of Canada. As part of this work Health Canada provides health services to internationally protected persons when they are visiting Canada for international events such as the Olympics, G8/G20 meeting and Royal visits. Together, these specialized health services work to ensure continuity of services and capacity in day to day operations but as well as extraordinary and unpredictable circumstances such as a national emergency or disease outbreaks such as H1N1.

Official Language Minority Community Development

Official language minority community development involves the administration of Health Canada's responsibilities under Section 41 of the Official Languages Act committing the federal government to enhancing the vitality of English-speaking and French-speaking minority communities as well as fostering the full recognition and use of both English and French in Canadian Society and the provision of policy and program advice relating to the Act. Administration involves consulting with Canada's official language minority communities on a regular basis, supporting and enabling the delivery of contribution programs and services for official language minority communities, reporting to Parliament and Canadians on Health Canada's achievements under Section 41, and coordinating Health Canada's activities and awareness in engaging and responding to the health needs of official language minority communities.

Strategic Outcome 2: Canadians are informed of and protected from health risks associated with food, products, substances and environments, and are informed of the benefits of healthy eating

Health Products

This program activity is responsible for regulating a broad range of health products that affect the everyday lives of Canadians. Under the authority of the Food and Drugs Act and its Regulations, and the Department of Health Act, the program activity evaluates and monitors the safety, quality and efficacy of human and veterinary drugs, biologic and genetic therapies, radio-pharmaceuticals, medical devices, and natural health products so that Canadians have access to safe and effective health products. This program activity also verifies, through compliance monitoring and enforcement activities, that regulatory requirements for health products are met. In addition, the program provides timely, evidence-based and authoritative information to key stakeholders including, but not limited to, health care professionals such as physicians, pharmacists, natural health practitioners and members of the public to enable them to make informed decisions about the use of health products.

Food Safety and Nutrition

The Food Safety and Nutrition program activity establishes policies, regulations and standards related to the safety and nutritional quality of food. Food safety standards are enforced by the Canadian Food Inspection Agency and the program activity assesses the effectiveness of CFIA's activities related to food safety. The legislative framework for food is found in the Food and Drugs Act and Regulations, the Canadian Food Inspection Agency Act and the Department of Health Act. The program activity also promotes the nutritional health and well-being of Canadians by collaboratively defining, promoting and implementing evidence-based nutrition policies and standards. As the focal point and authoritative source for nutrition and healthy eating policy and promotion, the program activity disseminates timely, evidence-based and authoritative information to Canadians and stakeholders to enable them to make informed decisions and healthy choices.

Environmental Risks to Health

The environment continues to be a key determinant of health for all Canadians. This program activity aims to promote and protect the health of Canadians by identifying, assessing and managing health risks posed by environmental factors. The scope of activities includes: research on climate change, air quality, drinking water quality, chemical substances, and contaminated sites; clean air programming and regulatory activities; risk assessment and management of chemical substances, products of biotechnology and products of other new and emerging technologies (including nanotechnology); and working with the passenger conveyance industry to protect the health of the travelling public.

Consumer Products Safety

Health Canada is committed to promoting the health and safety of Canadians by working to improve the safety of consumer products in the Canadian marketplace. Under the Consumer Products Program Activity, Health Canada works to identify, assess, manage and communicate to Canadians the health and safety risks associated with consumer products (consumer products are those products that adults and children commonly use for personal (incl. cosmetics), family, household or garden use or in recreation or sports). This is achieved through areas of active prevention, targeted oversight and rapid response. Specifically, the Consumer Products Program Activity, through active prevention, works with industry to help identify and systematically assess safety risks at early and ongoing stages of product development, develop standards and share best practices. Also, the Program Activity promotes awareness of new policy and regulatory activity, and provides guidance to industry on existing regulations through workshops and training. Through targeted oversight, this Program Activity keeps a close watch on products for which the risks are not yet fully understood or that pose the greatest potential risk to the public. Under rapid response, this Program Activity can act quickly to protect the public when a problem occurs - including the removal of unsafe consumer products from store shelves.

Substance Use and Abuse

Through regulatory, programming and educational activities, Health Canada seeks to improve health outcomes by reducing and preventing tobacco consumption and combating alcohol and drug abuse. Through the Tobacco Act and its regulations, Health Canada regulates the manufacture, sale, labelling, and promotion of tobacco products. It also leads the Federal Tobacco Control Strategy - the goal of which is to further reduce the prevalence of smoking through regulatory, programming and educational activities. Through the Controlled Drugs and Substances Act (CDSA) and its regulations, Health Canada regulates controlled substances and promotes initiatives that reduce or prevent the harm associated with these substances. It also provides expert advice and drug analysis services to law enforcement agencies across the country.

Radiation Protection

Health Canada aims to reduce the health and safety risks associated with different types of radiation, both naturally occurring and from artificial sources, in living and working environments. Health Canada: conducts research into the biological effects of environmental and occupational radiation; develops better methods for internal radiation dosimetry and its measurement; provides radiation safety inspections of federally regulated facilities containing radiation-emitting devices, the devices themselves, as well as training on the proper operation of the devices; develops regulations, guidelines, standards and safety codes pertaining to radiation-emitting devices; and provides radiation advice to other government departments, industry and the general public.

Pesticide Regulation

Health Canada, through the Pest Management Regulatory Agency, administers the Pest Control Products Act (PCPA) and its regulations. The primary objective of the PCPA is to prevent unacceptable risks to people and the environment from the use of pest control products. Health Canada regulates the entire life cycle of a pesticide, including: determination of value, health and environmental risk assessment, characterization and mitigation, registration of products, monitoring and enforcement activities, re-evaluation of registered pesticides on a 15-year cycle, and phase-out or cancellation of products. Pest control products are regulated in a manner to encourage the development and implementation of innovative, sustainable pest management strategies and to facilitate access to pest control products that pose lower risks. Health Canada also encourages public awareness in relation to pest control products by informing the public, facilitating access to relevant information and participating in the decision-making process. Health Canada plays a leading role in international efforts to integrate various regulatory systems around the world. International cooperation facilitates consistency and ensures the best science available supports our decision making.

Strategic Outcome 3: First Nations and Inuit communities and individuals receive health services and benefits that are responsive to their needs so as to improve their health status

First Nations and Inuit Primary Health Care

The Primary Health Care Activity funds a suite of programs, services and strategies provided primarily to First Nations and Inuit individuals, families and communities living on-reserve or in Inuit communities. It encompasses health promotion and disease prevention programs to improve health outcomes and reduce health risks, public health protection, including surveillance, to prevent and/or mitigate human health risks associated with communicable diseases and exposure to environmental hazards, and primary care where individuals are provided diagnostic, curative, rehabilitative, supportive, palliative/end-of-life care and referral services.

Supplementary Health Benefits for First Nations and Inuit

The NIHB Program provides a specified range of medically necessary health-related goods and services to registered Indians (according to the Indian Act) and Inuit (recognized by one of the Inuit Land Claim Organizations) regardless of residency in Canada where not otherwise covered under a separate agreement (e.g. a self-government agreement) with federal, provincial or territorial governments. The benefits under the NIHB Program include the following, where not otherwise provided to eligible clients through other private or provincial/territorial programs: pharmacy benefits (prescription drugs and some over-the-counter medication), medical supplies and equipment, dental care, vision care, short term crisis intervention mental health counselling, and medical transportation benefits to access medically required health services not available on reserve or in the community of residence. The Program also pays provincial health premiums on behalf of eligible clients in British Columbia.

Note: Proposed change to be considered by TBS in the Fall when Departments are asked to validate the information in the EMIS system.

Health Infrastructure Support for First Nations and Inuit

The Health Infrastructure Support Activity underpins the long-term vision of an integrated health system with greater First Nations and Inuit control by enhancing their capacity to design, manage, deliver and evaluate quality health programs and services. It provides the foundation to support the delivery of programs and services in First Nations communities and for individuals and promote innovation and partnerships in health care delivery to better meet the unique health needs of First Nations and Inuit. The funds are used for: planning and management for the delivery of quality health services; construction and maintenance of health facilities; research activities; encouraging Aboriginal people to pursue health careers; investments in technologies to modernize health services, and integrate and realign the governance of existing health services.

Strategic Outcome 4: Internal Services

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Material Services; Acquisition Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

2. Significant Assumptions

The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of the department as described in the Report on Plans and Priorities.

The main assumptions are as follows:

  1. The department's activities will remain substantially the same as for the previous year.
  2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
  3. Allowances for uncollectibility are based on historical experience. The general historical pattern is expected to continue.
  4. Estimated year-end information for 2011 is used as the opening position for the 2012 forecasts.

These assumptions are adopted as at January 17, 2011.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for the fiscal years 2010-11 and 2011-12, actual results achieved for both years are likely to vary from the forecast information presented and this variation could be material.

In preparing these financial statements, Health Canada has made estimates and assumptions concerning the future. These estimates and judgements may differ from the subsequent actual results. Estimates and judgements 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 financial statements and the historical financial statements include:

  1. The timing and amounts of acquisition and disposals of property, plant and equipment may affect gains/losses and amortization expense.
  2. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, Health Canada will not be updating the forecasts for any changes to authorities or forecast financial information made in ensuring supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Significant accounting policies

The future-oriented financial statements have been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

Significant accounting policies are as follows:

(a) Parliamentary authorities

The Department of Health is financed by the Government of Canada through Parliamentary authorities. The cash accounting basis is used to recognize transactions affecting parliamentary authorities. The future-oriented financial statements are based on accrual accounting. Consequently, items recognized in the future-oriented Statement of Operations and the future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a high-level reconciliation between the two bases of reporting.

(b) Net Cash Provided by Government

The department operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the department is deposited to the CRF and all cash disbursements made by the department 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 federal Government.

(c) Amounts Due from the Consolidated Revenue Fund

Amounts due from 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 the department is entitled to draw from the CRF without further appropriations to discharge its liabilities.

d) Forecasted Revenues:

  • Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
  • Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.
  • Funds that have been received an recorded as deferred revenue, provided the department has an obligation to other parties for the provision of goods, services or the use of assets in the future.
  • Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.

(e) Forecasted Expenses

  • Grants are recognized in the year in which the conditions for payment are met. In the case of grants which do not form part of an existing program, the expense is recognized when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements;
  • Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement, provided that the transfer is authorized and a reasonable estimate can be made.
  • Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
  • Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans and legal services are reported as operating expenses at their estimated cost.

(f) Accounts receivable

Accounts receivable are stated at the lower of cost and net recoverable value; a valuation allowance is established for receivables where recovery is considered uncertain. 

(g) Employee future benefits

  1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer 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. Current legislation does not require the department to make contributions for any actuarial deficiencies of the Plan.
  2. Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. 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.

(h)Contingent liabilities

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

(i)Environmental liabilities

Environmental liabilities reflect the estimated costs related to the management and remediation of environmentally- contaminated sites. Based on management's best estimates, a liability is accrued and an expense recorded when the contamination occurs or when the department becomes aware of the contamination and is obligated or is likely to be obligated to incur such costs. If the likelihood of the department's obligation to incur these costs is not determinable or if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the future-oriented financial statements.

(j) Tangible Capital Assets

All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Health Canada does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, immovable assets located on Indian Reserves and museum collections.

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

Asset class Sub-asset class Amortization Period
Buildings Buildings 25 years
Works and infrastructure Works and infrastructure 25 years
Leasehold improvements Leasehold improvements Lease term, max. 40 years
Machinery and equipment Machinery and equipment 8-12 years
Computer equipment 3-5 years
Computer software 3 years
Other equipment 5-12 years
Vehicles Motor Vehicles 4-7 years
Other Vehicles 10 years
Assets under construction Buildings in progress of construction Once in service, in accordance with asset type
Engineering works in progress of construction
Work in progress for software
Other construction or work in progress

Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.

(k) Prepaid expenses

Prepaid expenses include prepayments of transfer payments. Prepaid transfer payments consist of contributions advanced to recipients as of March 31 for which it is known that the costs will be incurred by the recipient in the subsequent fiscal year and the amount can be readily determined based on available information.

5. Parliamentary appropriations

Health Canada receives most of its funding through annual Parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the department has different net cost of operations from an appropriations perspective as opposed to an accrual accounting basis. These differences are reconciled in the following tables.

(a) Authorities requested:

(in thousands of dollars)
Estimated 2011 Forecast 2012
Authorities requested
Operating expenditures - Vote 1 $2,035,878 $1,750,942
Capital expenditures - Vote 5 40,081 30,043
Grants and Contributions - Vote 10 1,542,740 1,444,698
Statutory Amounts 131,926 134,228
Forecast authorities available $3,750,625 $3,359,911

Forecast authorities requested for the year ending March 31, 2012 are the planned spending amounts presented in the 2011-2012 Report of Plans and Priorities. Estimated authorities requested for the year ending March 31, 2011 include amounts presented in the 2010-2011 Main Estimates and Supplementary Estimates (A) and (B), and estimates to be allocated at year-end from Treasury Board central votes.

(b) Reconciliation of net cost of operation to requested authorities:

(in thousands of dollars)
Estimated 2011 Forecast 2012
Net cost of operations 3,741,557 3,435,262
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (Less):
Services provided without charge by other government departments (122,845) (121,513)
Amortization (23,648) (24,819)
Employee severance benefits (12,441) (13,347)
Refund/adjustment of previous year's expenditures 37,262 38,852
Revenue not available for spending 394 16,319
Bad debts 96 331
Vacation pay and compensatory leave (1,219) (1,217)
Other changes in liabilities 91,388 0
3,710,544 3,329,868
Adjustments for items not affecting net cost of operations but affecting appropriations:
Add (Less):
Acquisitions of tangible capital assets 40,081 30,043
Forecasted Authorities available 3,750,625 3,359,911

6. Accounts receivable and advances

(in thousands of dollars)
Estimated Results 2011 Forecast 2012
Receivables from external parties 33,254 32,889
Receivables from other government departments and agencies 6,469 6,139
Employee advances 103 102
Gross receivables 39,826 39,130
Less: Allowance for doubtful accounts on receivables from external parties 12,635 12,304
Net accounts receivable and advances 27,191 26,826

7. Tangible capital assets

(in thousands of dollars)
Capital assets Opening Balance Acquisitions Net Change Disposals/ Write-downs/ Adjustments
Closing Balance
Land 1,177 0 0 1,177
Buildings 133,469 3,329 (705) 136,093
Works and infrastructure 1,525 0 (151) 1,374
Leasehold improvements 21,362 803 (52) 22,113
Machinery and equipment 203,342 17,527 (1,143) 219,726
Vehicles 24,288 4,252 (11) 28,529
Assets under construction 48,200 4,132 0 52,332
Total 433,363 30,043 (2,062) 461,344
(in thousands of dollars)
Accumulated amortization Opening Balance Amortization Disposals/ write-downs/ adjustments Closing Balance
Buildings 100,577 4,841 0 105,418
Works and infrastructure 120 85 0 205
Leasehold improvements 19,150 159 0 19,309
Machinery and equipment 130,252 17,260 0 147,512
Vehicles 13,009 2,474 0 15,483
Total 263,108 24,819 0 287,927
(in thousands of dollars)
Tangible capital assets net book value Opening Balance Net Change Acquisitions & Amortization Disposals/ write-downs/ adjustments Closing Balance
Land 1,177 0 0 1,177
Buildings 32,892 (1,512) (705) 30,675
Works and infrastructure 1,405 (85) (151) 1,169
Leasehold improvements 2,212 644 (52) 2,804
Machinery and equipment 73,090 267 (1,143) 72,214
Vehicles 11,279 1,778 (11) 13,046
Asset under construction 48,200 4,132 0 52,332
Total 170,255 5,224 (2,062) 173,417

8. Accounts payable and accrued liabilities

(in thousands of dollars)
Estimated Results 2011 Forecast 2012
Accounts payable to external parties 148,512 163,054
Accounts payable to other government departments and agencies 31,201 33,484
179,713 196,538
Accrued liabilities 236,846 223,920
Total Accounts Payable and Accrued Liabilities 416,559 420,458

9. Employee Future Benefits

(a) Pension benefits

The department's employees participate in the Public Service Pension 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 Plans benefits and they are indexed to inflation.

Both the employees and the department contribute to the cost of the Plan. The current and previous year expenses amount to:

(in thousands of dollars)
  Estimated Results 2011 Forecast 2012
Expense for the year 95,194 96,857

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.

(b) Severance benefits

The department provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, estimated as at the date of these statements, is as follows:

(in thousands of dollars)
  Estimated Results 2011 Forecast 2012
Accrued benefit obligation, beginning of year 170,828 183,268
Expense for the year 20,352 21,310
Benefits paid during the year (7,912) (7,963)
Accrued benefit obligation, end of year 183,268 196,615

10. Other liabilities

Other liabilities include an allowance reflecting the balance of a statutory grant in the amount of $579M as a result of Budget 2009 (Canada Health Infoway Inc.).

11. 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:

(a) Contaminated sites

Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where the department is obligated or likely to be obligated to incur such costs. At the date of preparation of these future-oriented financial statements Health Canada has identified sites where such action is possible and for which a liability has been recorded.

2011 2012
Approximate number of sites for which a liability has been recorded 1 1
(in thousands of dollars)
Liability recorded for contaminated sites 90 90

Additional new sites, changes in the remediation approach or material changes in amounts accrued or not accrued are not forecasted for the future years presented in these statements. However, Health Canada's ongoing efforts to assess contaminated sites may result in additional environmental liabilities related to newly identified sites, or changes in the assessments or intended use of existing sites. These liabilities will be accrued in the year in which they become known.

(b) Claims and litigation

In the normal course of its operations, Health Canada becomes involved in various legal actions. There are a number of claims for which a reasonable estimate of the potential liability cannot presently be determined. Some of these potential liabilities may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded on the department's financial statements.

12. Contractual obligations

The nature of Health Canada's activity results in multi-year contracts and obligations whereby the department will be committed to make some future payments. Significant contractual obligations that can be reasonably estimated are as follows:

(in thousands of dollars)
  Transfer payments Non-Insured Health Benefits Total
2011-12 252,928 18,000 270,928
2012-13 103,382 18,000 121,382
2013-14 59,000 19,000 78,000
2014-15 37,000 12,000 49,000
2015-16 and thereafter 68,000 0 68,000
Total 520,310 67,000 587,310

13. Related party transactions

The department is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The department enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the department received services common services which were obtained without charge from other Government departments as disclosed below:

(a) Common services provided without charge by other government departments:

During the year the department is forecasted to receive without charge from other departments, accommodation, legal fees, worker's compensation and the employer's contribution to the health and dental insurance plans. These services without charge have been recognized in the department's Statement of Operations as follows:

(in thousands of dollars)
Estimated Results 2011 Forecast 2012
Employer's contribution to the health and dental insurance plans 65,230 63,352
Accomidations 51,761 52,251
Legal services 5,265 5,128
Worker's compensation costs 589 783
122,845 121,514

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Auditor General, are not included as an expense in the department's Statement of Operations.

(b) Other transactions with related parties:

(in thousands of dollars)
Estimated Results 2011 Forecast 2012
Accounts receivable with other government departments and agencies 6,469 6,139
Accounts payable to other government departments and agencies 31,201 33,484
Expenses - Other Government departments and agencies 105,552 106,058
Revenues - Other Government departments and agencies 8,415 8,674
Report a problem or mistake on this page
Please select all that apply:

Thank you for your help!

You will not receive a reply. For enquiries, contact us.

Date modified: