Future-oriented Financial Statements for the year ending March 31, 2014

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 2013-14 fiscal year and update 2012-13 projections. Responsibility for the compilation, content and presentation of the Future-oriented Financial Statements for the years ended March 31, 2013 and 2014 and all information contained in this statement rests with Health Canada's management. This future-oriented information has been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards. 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 Departmental Performance Report to compare with actual results.

Departmental management is responsible for these Future-oriented Financial Statements, including responsibility for the appropriateness of the forecasts and future projections on which these statements are prepared. 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 as at December 31, 2012 and reflect the plans described in the Report on Plans and Priorities 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: February 22, 2013
  • Jamie Tibbetts
    Chief Financial Officer
    Ottawa, Canada
    Date: February 15, 2013

Future-oriented Statement of Financial Position (Unaudited)

Future-oriented Statement of Financial Position (Unaudited)
As at March 31 (in thousands of dollars)
Component Estimated
Results
2013
Planned
Results
2014
Liabilities
Accounts payable and accrued liabilities (note 6) $ 322,669 $ 311,052
Vacation pay and compensatory leave 37,355 35,955
Deferred revenue 1,876 1,652
Employee future benefits (note 7) 130,498 115,360
Other liabilities (note 8) 440,619 357,614
Total gross liabilities 933,017 821,633
Liabilities held on behalf of Government
Deferred revenue (33) (28)
Total liabilities held on behalf of Government (33) (28)
Total net liabilities 932,984 821,605
Financial assets
Due from Consolidated Revenue Fund 155,565 59,303
Accounts receivable and advances (note 9) 42,516 42,146
Total gross financial assets 198,081 101,449
Financial assets held on behalf of Government
Accounts receivable and advances (note 9) (8,928) (8,851)
Total financial assets held on behalf of Government (8,928) (8,851)
Total net financial assets 189,153 92,598
Departmental net debt 743,831 729,007
Non-financial assets
Tangible capital assets (note 10) 145,846 146,361
Total non-financial assets 145,846 146,361
Departmental net financial position $ (597,985) $ (582,646)
  • Contractual obligations (note 11)
  • Contingent liabilities (note 12)
  • Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012.
  • The accompanying notes form an integral part of these future-oriented financial statements.

Future-oriented Statement of Operations and Departmental Financial Position (Unaudited)

Future-oriented Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ending March 31 (in thousands of dollars)
Component Estimated
Results
2013
Planned
Results
2014
Expenses
A health system responsive to the needs of Canadians $ 384,403 $ 352,768
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 701,849 659,654
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 2,490,612 2,207,751
Internal services 399,806 295,995
Expenses incurred on behalf of Government 711 (730)
Total expenses 3,977,381 3,515,438
Revenues
Sales of goods and services
Services of a regulatory nature 52,804 53,424
Rights and privileges 56,602 57,898
Services of a non-regulatory nature 21,767 21,869
Other 1 2
Revenues earned on behalf of government (18,393) (17,344)
Total revenues 112,781 115,849
Net cost from continuing operations 3,864,600 3,399,589
Transferred operations (note 15)
Expenses - 4,523
Net cost of transferred operations - 4,523
Net cost of operations before government funding and transfers 3,864,600 3,404,112
Government funding and transfers
Net cash provided by Government 3,871,553 3,385,766
Change in due from Consolidated Revenue Fund (62,325) (96,262)
Services provided without charge by other government departments (note 13) 129,629 129,192
Transfer of assets and liabilities from other government departments
Hazardous Materials Review Commission (note 15 (a)) - 755
Public Health Agency (note 15 (b)) 5,864 -
Assisted Human Reproduction Canada (note 15 (c)) 381 -
Net cost of operations after government funding and transfers (80,502) (15,339)
Departmental net financial position - Beginning of year (678,487) (597,985)
Departmental net financial position - End of year $ (597,985) $ (582,646)
  • Segmented information (note 14)
  • Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012.
  • The accompanying notes form an integral part of these future-oriented financial statements.

Future-oriented Statement of Change in Departmental Net Debt (Unaudited)

Future-oriented Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ending March 31 (in thousands of dollars)
Component Estimated
Results
2013
Planned
Results
2014
Net cost of operations after government funding and transfers $ (80,502) $ (15,339)
Change due to tangible capital assets
Acquisition of tangible capital assets 37,350 28,641
Amortization of tangible capital assets (25,305) (26,435)
Net (loss) or gain on disposal of tangible capital assets including adjustments (3,187) (1,691)
Total change due to tangible capital assets 8,858 515
Change due to prepaid expenses (12,400) -
Net increase (decrease) in departmental net debt (84,044) (14,824)
Departmental net debt - Beginning of year 827,875 743,831
Departmental net debt - End of year $ 743,831 $ 729,007
  • Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012.
  • The accompanying notes form an integral part of these future-oriented financial statements.

Future-oriented Statement of Cash Flow (Unaudited)

Future-oriented Statement of Cash Flows (Unaudited)
For the Year Ending March 31 (in thousands of dollars)
Component Estimated
Results
2013
Planned
Results
2014
Operating activities
Net cost of operations before government funding and transfers $ 3,864,600 $ 3,404,112
Non-cash items:
Amortization of tangible capital assets (25,305) (26,435)
Gain (loss) on disposal of tangible capital assets (3,187) (1,691)
Services provided without charge by other government departments (note 11) (129,629) (129,192)
Variations in Statement of Financial Position:
Decrease (increase) in accounts payable and accrued liabilities 40,691 11,617
Decrease (increase) in vacation pay and compensatory leave 182 1,400
Decrease (increase) in deferred revenue 1,733 219
Decrease (increase) in employee future benefits 12,719 15,138
Decrease (increase) in other liabilities 88,566 83,005
Increase (decrease) in accounts receivable and advances 2,478 (293)
Increase (decrease) in prepaid expenses (12,400) -
Transfer of liabilities from other government departments (6,245) (755)
Cash used in operating activities 3,834,203 3,357,125
Capital investing activities
Acquisition of tangible capital assets 37,350 28,641
Cash used in capital investing activities 37,350 28,641
Net cash provided by Government of Canada $ 3,871,553 $ 3,385,766
  • Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012.
  • The accompanying notes form an integral part of these future-oriented financial statements.

Notes to the Future-oriented Financial Statements (Unaudited)

For the Year Ending March 31, 2014

1. Authority and objectives

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

Canadians expect their governments to provide a health system that meets their needs and that delivers results effectively and efficiently. In addition to ensuring that it meets specific federal responsibilities, such as health services for federal employees and during international events held in Canada, Health Canada works with provincial and territorial governments as well as health organizations and other stakeholder groups to address the health objectives of Canadians. Research and policy analysis, support and funding to test innovations in health service delivery and monitoring of provincial and territorial application of the Canada Health Act all lead to continuing improvement in Canada's health system.

Program Activities
  • Canadian health system
  • Specialized health services
  • Official language minority community development

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

This Strategic Outcome seeks to ensure that the food that Canadians eat and products they use are as safe as possible and that threats to health are addressed effectively. It helps increase Canadians' understanding of factors that influence everyone's health such as environmental conditions and nutrition. It helps to limit the use and abuse of tobacco and illicit drugs.

Program Activities
  • Health products
  • Food safety and nutrition
  • Environmental risks to health
  • Consumer products safety
  • Substance use and abuse
  • Radiation protection
  • Pesticide safety

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

This Strategic Outcome seeks to ensure that First Nations and Inuit living on reserve or in Inuit communities have access to health services as well as a limited range of medically necessary health-related goods and services not provided through private insurance plans, provincial/ territorial health or social programs or other publicly funded programs. It seeks to reduce the gap in health outcomes between First Nations and Inuit and the Canadian population in general.

Program Activities
  • First Nations and Inuit primary health care
  • Supplementary health benefits for First Nations and Inuit
  • Health infrastructure support for First Nations and Inuit

Internal services

Health Canada has a range of internal services. Some, such as financial, administrative, real property, security, human resources, information management and Information Technology, provide the basic infrastructure that enables the Department to function while ensuring compliance to new and existing central agency policies. Other internal services in Health Canada address departmental and Health Portfolio needs such as general communications and policy activities, as well as managing relations with Parliamentarians, the Cabinet system and other government departments and levels of government. An additional set of internal service roles centre on critical departmental and government-wide responsibilities, such as ensuring the best value for Canadians through planning, accountability and tracking performance and results.

2. Methodology and 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 information in the Estimated Results for fiscal year 2012-13 is based on actual results as at December 31, 2012 and forecasts for the remainder of the fiscal year, which include an estimate of all anticipated and approved funding through Main and Supplementary Estimates. Estimated year end information for 2012-13 is used as the opening position for the 2013-14 fiscal year.

The Planned Results for 2013-14 include approved reference level funding and planned spending amounts for which Treasury Board approval was received no later than February 1, 2013.

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.

These assumptions are adopted as at December 31, 2012.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2012-13 and 2013-14, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these future-oriented financial statements, Health Canada has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the future-oriented 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. Implementation of new collective agreements.
  3. Economic conditions may affect both the amount of revenue earned and the collectability of loan receivables.
  4. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year. Given the demand driven nature of certain programs, particularly related to First Nations and Inuit Non-insured Health Benefits, the 2013-14 planned spending amounts do not include portions of funding over the Non-insured Health Benefits A-base funding, which are subject to the annual government assessments and budget considerations.

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

4. Summary of significant accounting policies

These financial statements have been prepared using the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

(a) Parliamentary authorities

The Department of Health is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Department do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Financial Position and the Statement of Operations and Departmental Net Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a reconciliation between the 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 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 authorities to discharge its liabilities.

(d) 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 are 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 that gave rise to the revenue takes place;
  • Revenues that are non-respendable are not available to discharge the Department's liabilities. While the Department Head (DH) is expected to maintain accounting control, he or she 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

Expenses are recorded on the accrual basis:

  • Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses 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. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.
  • 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 health and dental insurance plans, legal services and workers' compensation are recorded as operating expenses at their estimated cost.

(f) Employee future benefits

  1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The Department's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Department's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.
  2. Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

g) Accounts receivable

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

(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 if 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 costs are disclosed as contingent liabilities 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, assets located on Indian Reserves and museum collections.

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

Amortization period by asset class
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
In-house developed software 5 years
Other equipment 5-12 years
Vehicles Motor vehicles 4-7 years
Other vehicles 10 years
Assets under construction Buildings in progress of construction
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) Measurement uncertainty

The preparation of these future-oriented financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are contingent liabilities, environmental liabilities, the liability for employee future benefits, the allowance for doubtful accounts 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 future-oriented financial statements in the year they become known.

5. Parliamentary authorities

Health Canada receives most of its funding through annual parliamentary authorities. Items recognized in the Future-oriented Statement of Financial Position and the Future-oriented Statement of Operations and Departmental Net Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the Department has different net results of operations for the year on a government funding basis than on an accrual accounting basis. These differences are reconciled in the following tables:

(a) Reconciliation of net cost of operations to current year authorities used (in thousands of dollars)
Component Estimated
Results
2013
Planned
Results
2014
Net cost of operations before government funding and transfers $ 3,864,600 $ 3,404,112
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (25,305) (26,435)
Services provided without charge by other government departments (129,629) (129,192)
Decrease (increase) in vacation pay and compensatory leave 182 1,400
Decrease (increase) in employee future benefits 12,719 15,138
Refund/adjustment of previous year's expenditures 32,086 31,712
Bad debt expense 3,386 (3,477)
Other (13,342) (20,950)
Total items affecting net cost of operations but not affecting authorities 3,744,697 3,272,308
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets 37,350 28,641
Net change to accountable advances 1 -
Total items not affecting net cost of operations but affecting authorities 37,351 28,641
Current year authorities used $ 3,782,048 $ 3,300,949
(b) Authorities provided and used (in thousands of dollars)
Component Estimated
Results
2013
Planned
Results
2014
Authorities provided:
Vote 1 - Operating expenditures $ 2,086,460 $ 1,723,425
Vote 5 - Capital expenditures 37,350 28,641
Vote 10 - Grants and contributions 1,523,290 1,422,714
Statutory amounts 134,948 126,169
Current year authorities used $ 3,782,048 $ 3,300,949

6. Accounts payable and accrued liabilities

The following table presents details of Health Canada's accounts payable and accrued liabilities:

Accounts payable and accrued liabilities (in thousands of dollars)
Component Estimated
Results
2013
Planned
Results
2014
Accounts payable - external parties $ 148,293 $148,672
Accounts payable - other government departments and agencies 23,246 17,778
Total accounts payable 171,539 166,450
Accrued liabilities 151,130 144,602
Total accounts payable and accrued liabilities $ 322,669 $ 311,052

In Canada's Economic Action Plan 2012, the Government announced savings measures to be implemented by departments over the three fiscal years starting in 2012-13. As a result, the Department recorded at March 31, 2012 an obligation for termination benefits for an amount of $65.1 million as part of accrued liabilities to reflect the estimated workforce adjustment costs.

7. 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. Pension benefits accrue up to a maximum period of 35 years at a rate of 2% 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, which represent approximately 1.8 times (1.9 times in 2012-13) the contributions by employees, amount to:

Pension expenses (in thousands of dollars)
Component Estimated
Results
2013
Planned
Results
2014
Expense for the year $ 97,028 $ 90,716

The Department's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the future-oriented 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 salary at termination of employment. These severance benefits are not pre-funded. Benefits will be paid from future authorities.

As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

Information about the severance benefits, measured as at March 31, is as follows:

Severance benefits (in thousands of dollars)
Component Estimated
Results
2013
Planned
Results
2014
Accrued benefit obligation - Beginning of year $ 143,217 $ 130,498
Transferred to other government department 4,588 456
Subtotal 147,805 130,954
Expense for the year 2,056 9,776
Benefits paid during the year (19,363) (25,370)
Accrued benefit obligation - End of year $ 130,498 $ 115,360

8. Other liabilities

Other liabilities (in thousands of dollars)
Component Estimated
Results
2013
Planned
Results
2014
Canada Health Infoway Inc. $ 399,954 $ 316,657
Other 40,665 40,957
Total other liabilities $ 440,619 $ 357,614

Budget 2007 announced an allocation of $400.0 million to Canada Health Infoway Inc. and an additional allocation of $500.0 million to Canada Health Infoway Inc. was announced in Budget 2009. Of these authorities $500.1 million has been disbursed to date. We project addition disbursements of $89.4 million in 2012-13 and $83.3 million in 2013-14.

The remaining other liabilities include amounts for contingent liabilities of $33.0 million and amounts for Specified Purpose Accounts: Collaborative research projects; miscellaneous federal/provincial projects; and World Health Organization.

9. Accounts receivable and advances

Health Canada records receivables from three main sources. As of March 31, amounts due under each of these categories are as follows:

Accounts receivable and advances (in thousands of dollars)
Component Estimated
Results
2013
Planned
Results
2014
Accounts receivable - external parties $ 41,688 $ 44,498
Accounts receivable - other government departments and agencies 7,656 7,952
Employee advances 100 102
Subtotal 49,444 52,552
Allowance for doubtful accounts on receivables from external parties (6,928) (10,406)
Gross accounts receivable and advances 42,516 42,146
Accounts receivable held on behalf of Government (8,928) (8,851)
Net accounts receivable and advances $ 33,588 $ 33,295

10. Tangible capital assets

Tangible capital assets (in thousands of dollars)
Capital assets Opening Balance Acquisitions Disposals/
write-downs
Transfers and adjustments Closing Balance
Land 1,177 - - - 1,177
Buildings 136,262 4,281 - 5,649 146,192
Works and infrastructure 1,539 - - (102) 1,437
Leasehold improvements 28,081 - - 1,625 29,706
Machinery and equipment 197,117 11,685 - 6,366 215,168
Vehicles 18,940 2,078 - (10) 21,008
Assets under construction 30,381 10,597 - (15,219) 25,759
Total $ 413,497 $ 28,641 $ - $ (1,691) 440,447
Accumulated amortization (in thousands of dollars)
Accumulated amortization Opening Balance Current year amortization Disposals/
write-downs
Transfers and adjustments Closing Balance
Buildings 110,218 5,255 - - 115,473
Works and infrastructure 245 70 - - 315
Leasehold improvements 21,053 725 - - 21,778
Machinery and equipment 123,852 18,410 - - 142,262
Vehicles 12,283 1,975 - - 14,258
Total $ 267,651 $ 26,435 $ - $ - $ 294,086
Tangible capital assets net book value (in thousands of dollars)
Tangible capital assets net book value Net Book Value 2013 Net change Acquisitions and Amortization Net change Disposals / write-downs Net change Transfers and adjustments Net Book Value 2014
Land 1,177 - - - 1,177
Buildings 26,044 (974) - 5,649 30,719
Works and infrastructure 1,294 (70) - (102) 1,122
Leasehold improvements 7,028 (725) - 1,625 7,928
Machinery and equipment 73,265 (6,725) - 6,366 72,906
Vehicles 6,657 103 - (10) 6,750
Asset under construction 30,381 10,597 - (15,219) 25,759
Total $ 145,846 $ 2,206 $ - $ (1,691) $ 146,361

Transfers from assets under construction represent assets that were put into use in the year and have been transferred to the other capital asset classes as applicable.

11. Contractual obligations

The nature of Health Canada's activities can result in multi-year contracts and obligations whereby the Department will be obligated to make some 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:

Contractual obligations (in thousands of dollars)
Fiscal year Transfer payments Non-insured health benefits Total
2013-14 202,972 23,000 225,972
2014-15 176,972 16,000 192,972
2015-16 145,972 - 145,972
2016-17 and thereafter 212,000 - 212,000
Total $ 737,916 $ 39,000 $ 776,916

12. 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. Health Canada has identified sites where such action is possible and for which a liability has been recorded.

Contaminated sites
Component Estimated
Results
2013
Planned
Results
2014
Approximate number of sites for which a liability has been recorded 1 1
Liability recorded for contaminated sites (in thousands of dollars) $ 167 $ 167

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 by the Department in the year in which they become likely and are reasonably estimable.

(b) Claims and litigation

Claims have been made against the Department 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. The Department 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 amount to approximately $0.2 million in 2013-14 ($0.2 million in 2012-13).

13. Related party transactions

The Department is related as a result of common ownership to all government departments, agencies, and Crown Corporations. The Department enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year, the Department received 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 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 in the Department's Statement of Operations and Departmental Net Financial Position as follows:

Common services provided without charge by other government departments (in thousands of dollars)
Component Estimated
Results
2013
Planned
Results
2014
Employer's contribution to the health and dental insurance plans $ 68,266 $ 68,108
Accommodation 57,516 57,499
Legal services 3,316 3,079
Worker's compensation 531 506
Total $ 129,629 $ 129,192

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 Works and Government Services Canada, are not included in the Department's Future-oriented Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties

Other transactions with related parties (in thousands of dollars)
Component Estimated
Results
2013
Planned
Results
2014
Accounts receivable - other government departments and agencies $ 7,656 $ 7,952
Accounts payable - other government departments and agencies 23,246 17,778
Expenses - other government departments and agencies 33,588 33,295
Revenues - other government departments and agencies (33) (28)

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

14. Segmented information

Segmented information (in thousands of dollars)
Component Estimated
Results
2013
Planned
Results
2014
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 $ 1,504,574 $ 282,754 34,437 $ 1,085,426 $ - $ 1,402,617
Salaries and employee benefits 984,141 55,491 462,514 191,529 196,060 905,594
Utilities, materials and supplies 543,458 618 21,251 407,541 12,341 441,751
Professional and special services 554,328 8,208 79,315 319,178 30,300 437,001
Travel non-insured health patients 195,218 - - 158,087 - 158,087
Accommodation 59,383 3,499 29,592 10,873 15,719 59,683
Travel and relocation 47,564 1,435 9,977 25,757 3,931 41,100
Amortization of tangible capital assets 25,305 254 8,953 3,861 13,367 26,435
Purchased repair and maintenance 18,727 130 3,373 1,364 8,808 13,675
Information services 21,526 140 6,316 1,326 2,944 10,726
Rentals 16,826 119 2,054 812 7,020 10,005
Communications 7,559 141 1,613 2,495 1,353 5,602
Bad debts (3,386) - - - 3,477 3,477
Other 1,447 (21) 259 (498) 675 415
Expenses incurred on behalf of Government 711 - - - (730) (730)
Total expenses 3,977,381 352,768 659,654 2,207,751 295,265 3,515,438
Revenues
Sales of goods and services:
Services of a regulatory nature 52,804 - 53,072 - 353 53,424
Rights and privileges 56,602 - 49,345 - 8,553 57,898
Services of a non-regulatory nature 21,767 8,304 8,110 5,450 4 21,869
Other 1 - 2 - - 2
Revenues earned on behalf of Government (18,393) (1,081) (14,393) (710) (1,160) (17,344)
Total revenues 112,781 7,223 96,136 4,740 7,750 115,849
Net cost from continuing operations $ 3,864,600 $ 345,545 $ 563,518 $ 2,203,011 $ 287,515 $ 3,399,589

15. Transfers from other government departments

  1. Effective April 1, 2013, the Department will be transferred the powers and functions of the Hazardous Materials Information Review Commission in accordance with section 298 of the Jobs and Growth Act, 2012 (Bill C-45), including the stewardship responsibility for the assets and liabilities related to the program. Accordingly, the Department will receive the following assets and liabilities from the Hazardous Materials Information Review Commission on April 1, 2013:
  2. Effective June 30, 2012, the control and supervision of portions of the federal public administration were transferred between the Department and the Public Health Agency of Canada in accordance with paragraph 2(a) of the Public Service Rearrangement and Transfer of Duties Act and Orders in Council P.C. 2012-0950 and P.C. 2012-0965. Accordingly, the Department received the following liabilities from the Public Health Agency of Canada on June 30, 2012:
  3. Effective September 30, 2012, the Department was transferred the residual federal functions from Assisted Human Reproduction Canada pursuant to Order in Council P.C. 2012-1136 when subsection 713(2) and sections 721 to 723, 726 and 741 to 751 of the Jobs, Growth and Long-term Prosperity Act came into force. Accordingly, the Department received the following liabilities from Assisted Human Reproduction Canada on September 30, 2012:

16. Accounting Changes

Effective April 1, 2012, the Department adopted the new accounting standard for Government transfers, under which prepaid expenses for transfer payments are no longer recorded.

The change in accounting policy was accounted for prospectively and as a result, the remaining balance was recorded as an expense during 2012-13.

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