2017-2018 Financial Statements

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2018 and all information contained in these financial statements rests with the management of the Canadian Environmental Assessment Agency (the Agency). These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Agency’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Agency's Departmental Results Report, is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the Agency and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

The Agency is subject to periodic Core Control Audits performed by the Office of the Comptroller General and uses the results of such audits to comply with the Treasury Board Policy on Financial Management.

A Core Control Audit was performed in 2014-2015 by the Office of the Comptroller General of Canada (OCG). The Audit Report and related Management Action Plan are posted on the departmental web site at https://www.canada.ca/en/impact-assessment-agency/corporate/publications/accountability-performance-financial-reporting/core-control-audit.html.

The financial statements of the Agency have not been audited.

Original signed by

Ron Hallman
President

Original signed by

Alan Kerr
Vice-President, Corporates Services and Chief Financial Officer

Ottawa, Canada
August 29, 2018

Statement of Financial Position (Unaudited)
As at March 31, 2018
(in dollars)
2018 2017
Financial assets
Due from the Consolidated Revenue Fund $3,990,958 $4,826,209
Accounts receivable and advances (Note 4) 2,695,740 2,591,795
Total financial assets 6,686,698 7,418,004
Liabilities
Accounts payable and accrued liabilities (Note 5) 4,073,152 5,088,583
Vacation pay and compensatory leave 988,572 1,204,222
Employee future benefits (Note 6) 1,280,468 1,035,665
Total liabilities 6,342,192 7,328,470
Agency net financial assets 344,506 89,534
Non-financial assets
Tangible capital assets (Note 7) - 20,685
Total non-financial assets - 20,685
Agency net financial position $344,506 $110,219

Contractual obligations (Note 8)

Contingent liabilities (Note 9)

The accompanying notes form an integral part of these financial statements

Original signed by

Ron Hallman
President

Original signed by

Alan Kerr
Vice-President, Corporates Services and Chief Financial Officer

Ottawa, Canada
August 29, 2018

Statement of Operations and Agency Net Financial Position (Unaudited)
For the Year Ended March 31, 2018
(in dollars)
2018
Planned Results
2018 2017
Expenses
Environmental Assessment Delivery $ 24,159,057 $ 1,250,127 $ 27,323,580
Environmental Assessment Policy 4,500,940 7,009,835  
Internal Services 5,433,237 8,484,282  
Total expenses 34,093,234 46,744,244 44,602,092
Revenues
Environmental assessment and training services 4,500,000 1,430,112 695,513
Miscellaneous revenues - 395,262 487,680
Total revenues 4,500,000 1,825,374 1,183,193
Net cost of operations before government funding and transfer 29,593,234 44,918,870 43,418,899
Government funding and transfers
Net cash provided by Government 40,083,270 40,586,571 36,307,960
Change in due from Consolidated Revenue Fund - (835,251) 2,263,050
Other transfers of assets and liabilities (to)/ from other government departments - (14,402) -
Services provided without charge by other government departments (Note 10) 5,000,000 5,387,435 5,580,043
Net cost of operations after government funding and transfers (15,490,036) (205,484) (732,154)
Agency net financial position - Beginning of year (1,737,741) 110,219 (621,935)
Agency net financial position - End of year $ 13,752,295 $ 315,703 $ 110,219

Segmented information (Note 11)
The accompanying notes form an integral part of these financial statements.

Statement of Change in Agency Net Debt (Unaudited)
For the Year Ended March 31, 2018
(in dollars)
2018
Planned Results
2018 2017
Net cost of operations after government funding and transfers $(15,490,036) $(205,484) $(732,154)
Change due to tangible capital assets
Amortization of tangible capital assets (Note 7) (22,000) (20,685) (20,685)
Total change due to tangible capital assets (22,000) (20,685) (20,685)
Net increase (decrease) in agency net debt (15,512,036) (226,169) (752,839)
Agency net debt - Beginning of year 5,881,216 (89,534) 663,305
Agency net debt - End of year $ (9,630,820) $ (315,703) $ (89,534)

The accompanying notes form an integral part of these financial statements.

Statement of Cash Flows (Unaudited)
For the Year Ended March 31, 2018
(in dollars)
2018 2017
Operating activities
Net cost of operations before government funding and transfers $ 44,918,870 $ 43,418,899
Non-cash items:
Amortization of tangible capital assets (20,685) (20,685)
Services provided without charge by other government departments (Note 10) (5,387,435) (5,580,043)
Other transfers of assets and liabilities (to)/ from other government departments (14,402) -
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances 103,946 442,487
Decrease (increase) in accounts payable and accrued liabilities 1,015,431 (1,869,002)
Decrease (increase) in vacation pay and compensatory leave 215,650 (328,499)
Decrease (increase) in employee future benefits (244,803) 244,803
Cash used by Operating Activities 40,586,571 36,307,960
Net cash provided by Government of Canada $ 40,586,571 $ 36,307,960

The accompanying notes form an integral part of these financial statements.

Notes to the Financial Statements (Unaudited)

For the Year Ended March 31, 2018

1. Authorities and Objectives

The Canadian Environmental Assessment Agency (the Agency) is the responsible authority for all projects subject to the Canadian Environmental Assessment Act, 2012 (CEAA 2012) except for those that are regulated by the National Energy Board or the Canadian Nuclear Safety Commission. In accordance with the transitional provisions of CEAA 2012, the Agency is also responsible for managing the environmental assessment (EA) of most projects that are required to be completed under the former Canadian Environmental Assessment Act.

In addition, the Agency advises and assists the Minister of the Environment and Climate Change in establishing review panels and supports panels in their work. It also supports the Minister in fulfilling responsibilities under CEAA 2012, including the development and issuance of enforceable EA decision statements.

The Agency administers a Participant Funding Program that supports individuals, not-for-profit organizations, and Aboriginal groups participating in federal EAs.

The Agency also has responsibilities for reviewing projects of a federal nature under the environmental and social protection regimes set out in sections 22 and 23 of the 1975 James Bay and Northern Quebec Agreement. The President of the Agency is designated by Order-in-Council as the federal administrator of these processes.

The Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals establishes a self-assessment process for conducting a strategic environmental assessment of a policy, plan or program proposal. The Agency supports the Minister of the Environment in promoting the application of the Cabinet Directive and provides training and guidance for federal authorities.

The Agency's activities are carried out under three different programs: Environmental Assessment Delivery, Environmental Assessment Policy and Internal Services.

Environmental Assessment Delivery ensures that high-quality environmental assessments of major projects are conducted and completed in a timely and predictable way, supporting economic growth while preventing or reducing adverse environmental effects. The most appropriate means of avoiding duplication of assessment activities with other jurisdictions is applied, thereby increasing efficiency and providing certainty for all participants in the process. The Agency will promote, monitor, and facilitate compliance with CEAA 2012. The environmental assessment provides for meaningful participation of the public and Aboriginal groups. Aboriginal consultation obligations are integrated to the greatest extent possible with the federal environmental assessment process. As such, the Agency consults with Aboriginal groups during the environmental assessment process to assess how the proposed project may adversely affect potential or established Aboriginal or treaty rights and related interests, and find ways to avoid or minimize these adverse impacts.

The EA Policy develops and promotes robust policies and practices for high-quality EA in accordance with (CEAA 2012). This is achieved by: building and reinforcing policies, procedures and criteria for the conduct of federal EAs; promoting cooperation and coordinated action between the federal government and other jurisdictions; promoting communication and cooperation with Aboriginal peoples; and developing instruments and training for EA practitioners. The EA Policy program enables continuous improvement through research, monitoring, analysis and advice. Recommendations inform the development of new regulatory and policy approaches as well as the revision of guidance, training and knowledge-based instruments. The program also provides support for the conduct of EAs through various means, such as federal-provincial agreements and policy criteria.

Internal Services comprises related activities and resources to support the needs of programs and other corporate obligations of the Agency. These include: Management and Oversight Services, Communications Services, Legal Services, Human Resources Management Services, Financial Management Services, Information Management Services, Information Technology Services, the Access to Information and Privacy Office, Real Property Services, Materiel Management Services, Acquisition Services, and Travel and Other Administrative Services. Internal Services includes activities and resources that apply across an organization, not those provided specifically to a program.

2. Summary of significant accounting policies

These financial statements have been prepared using the agency'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:

  1. Parliamentary authorities — The Agency is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Agency does 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 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 2017-2018 Departmental Plan. The planned results amounts 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 were prepared for internal management purposes and have not been previously published.
  2. Net cash provided by Government — The Agency operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Agency is deposited to the CRF, and all cash disbursements made by the Agency 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.
  3. 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 the Agency is entitled to draw from the CRF without further authorities to discharge its liabilities.
  4. Revenues
    1. Revenues from regulatory fees are recognized based on the services provided in the year.
  5. Expenses — Expenses are recorded on an accrual basis
    1. Transfer payments are recorded as an expense in the year the transfer is authorized and all eligibility criteria have been met by the recipient.
    2. Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
    3. 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.
  6. Employee future benefits
    1. Pension Benefits — Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The Agency's contributions to the Plan are charged to expenses in the year incurred and represent the total Agency obligation to the Plan. The Agency'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 —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.
  7. Accounts receivable - Accounts receivable are initially recorded at cost. When necessary, an allowance for valuation is recorded to reduce the carrying value of accounts receivable to amounts that approximate their net recoverable value.
  8. 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 7. 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 immovable assets located on reserves as defined in the Indian Act, works of art, museum collection and Crown land to which no acquisition cost is attributable; and intangible assets.
  9. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the capital asset as follows:
    Asset Class Sub-asset Class Amortization Period
    Machinery and equipment Videoconferencing equipment 10 years
    Other equipment (including furniture) Furniture and fixtures 10 years
    Informatics software Server 4 years
  10. 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.
  11. Measurement uncertainty — The preparation of 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, 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.

3. Parliamentary Authorities

The Agency receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and the 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, the Agency has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

a) Reconciliation of net cost of operations to current year authorities used
2018 2017
(in dollars)
Net cost of operations before government funding and transfers $ 44,918,870 $ 43,418,899
Adjustments for items affecting net cost of operations but not affecting authorities:    
Services provided without charge by other government departments (5,387,435) (5,580,043)
Amortization of tangible capital assets (20,685) (20,685)
Revenues not available for respending 66,404 545,253
Refund of prior year's expenditures 253,923 125,620
Adjustments for prior year's Payables at Year End 34,638 282,652
Decrease (Increase) for vacation pay and compensatory leave 215,650 (328,499)
Decrease (Increase) for employee future benefits (244,803) 243,803
Other transfers of assets and liabilities (to)/ from other government departments (14,402) -
Current year authorities used $ 39,822,160 $ 38,688,000
b) Authorities provided and used
2018 2017
(in dollars)
Authorities provided
Vote 1 – Operating expenditures $ 36,634,525 $ 38,348,293
Statutory amounts 3,448,745 3,326,299
Less:    
Lapsed: Operating (261,110) (2,986,522)
Current year authorities used $ 39,822,160 $ 38,688,000

4. Accounts receivable and advances

The following table presents details of the Agency's accounts receivable and advances balances:

2018 2017
(in dollars)
Receivables – Other government departments and agencies $ 83,021 $ 269,659
Receivables - External parties 3,505,202 3,218,776
Employee advances 6,180 2,600
Sub-Total 3,594,403 3,491,035
   
Allowance for doubtful accounts on receivables from external parties (898,663) (899,240)
Total accounts receivable and advances $ 2,695,740 $ 2,591,795

5. Accounts payable and accrued liabilities

The following table presents details of the Agency’s accounts payable and accrued liabilities:

2018 2017
(in dollars)
Accounts payable – Other government departments and agencies $ 545,449 $ 329,236
Accounts payable - External parties 1,539,369 2,707,189
Total accounts payable 2,084,818 3,036,425
   
Accrued liabilities 1,988,334 2,052,158
Total accounts payable and accrued liabilities $ 4,073,152 $ 5,088,583

6. Employee Future Benefits

a) Pension benefits

The Agency'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 Plans benefits and they are indexed to inflation.

Both the employees and the Agency 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 relates 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 2017–2018 expense amounts to $2,348,595 ($2,317,384 in 2016–2017). For Group 1 members, the expense represents approximately 1.01 times (1.12 times in 2016–2017) the employee contributions, and for Group 2 members, approximately 1.00 times (1.08 times in 2016-2017) the employee contributions.

The Agency'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 Agency’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, 2018, 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:

2018 2017
(in dollars)
Accrued benefit obligation - Beginning of year $ 1,035,665 $ 1,280,468
Expense (Adjustment) for the year 367,879 (370,810)
Benefits paid during the year (123,076) 126,007
Accrued benefit obligation - End of year $ 1,280,468 $ 1,035,665

As at March 31, 2016, all employee groups in the core public administration ceased severance benefits. The Treasury Board of Canada Secretariat provided a prescribed provision rate to account for severance benefits which remain to be redeemed. As a result, the 2017-2018 provision rate for severance benefits represents 5.49% of eligible salaries compared to 5.69% of eligible salaries in 2016-2017.

7. Tangible Capital Assets (in dollars)

Cost (in dollars)
Cost Accumulated Amortization 2018 2017
Capital Asset Class Opening Balance Acquisitions Adjustments Disposals and Write-offs Closing Balance Opening Balance Amortization Adjustments Disposals and Write-offs Closing Balance Net Book value Net Book value
Machinery and Equipment $188,656 - - - $188,656 $169,790 $ 18,866 - - $188,656 - $18,866
Other equipment (including furniture) 32,248 - - - 32,248 30,429 1,819 - - 32,248 - 1,819
Informatics software - - - - - - - - - - - -
Total $220,904 - - - $220,904 $200,219 $ 20,685 - - $220,904 - $20,685

8. Contractual Obligations

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

(in dollars) 2019 2020 2021 2022 2023 and thereafter Total
Transfer payments $6,842,991 $4,204,067 $1,601,424 $243,643 $ - $12,892,125
Professional services 430,669 27,868 - - - 458,537
Operating leases - - - - - -
Total $7,273,660 $4,231,935 $1,601,424 $243,643 $ - $13,350,662

9. Contingent Liabilities

a) Transfer payments

The Agency expects to meet all near-term liabilities relating to transfer payments. However, a change in economic conditions could result in the resumption of several environmental assessments currently on hold as well as new assessments which could increase the demand for transfer payments. The Agency would request support from the Government of Canada through Central agencies to cover any potential funding shortfall.

b) Claims and litigation

Claims have been made against the Agency 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.

10. Related Party Transactions

The Agency is related as a result of common ownership to all government departments, agencies, and Crown corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms. The Agency also obtains selected financial services, materiel management, informatics, and compensation and benefits services under a shared services agreement with Environment and Climate Change Canada.

a) Common services provided without charge by other government departments

During the year, the Agency 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. These services without charge have been recorded at the carrying value in the Agency’s Statement of Operations and Departmental Net Financial Position as follows:

2018 2017
(in dollars)
Employer's contribution to the health and dental insurance plans $ 2,345,425 $ 2,142,835
Accommodation 2,334,095 2,440,505
Legal services 707,915 996,703
Total $ 5,387,435 $ 5,580,043

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 Agency's Statement of Operations and Departmental Net Financial Position.

b) Other transactions with other government departments and agencies
2018 2017
(in dollars)
Accounts receivable $ 83,021 $ 269,659
Accounts payable 545,449 329,236
Expenses 4,147,466 3,471,038
Revenues 48,254 23,850

11. Segmented Information

Presentation by segment is based on the Agency’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:

2018
(in dollars)
2017
(in dollars)
Environmental Assessment Delivery Environmental Assessment Policy Internal Services Total
Transfer payments
Indigenous Groups $ 3,468,892 - - $ 3,468,892 $ 4,125,846
Non-profit organizations 112,768 - - 112,768 206,836
Other levels of government 245,500 - - 245,500 245,500
Total transfer payments 3,827,160 - - 3,827,160 4,578,182
Operating Expenses
Salaries and employee benefits 20,594,143 5,645,727 5,482,133 31,722,003 28,487,916
Professional and special services 3,862,078 648,621 1,542,364 6,053,063 5,634,248
Accommodation 1,573,445 426,562 596,726 2,596,733 2,836,779
Travel and relocation 599,718 198,465 38,158 836,341 1,259,935
Information 130,433 32,858 41,832 205,123 643,226
Furniture and equipment 75,186 19,956 589,200 684,342 741,163
Telecommunications 62,870 146 100,292 163,308 187,196
Utilities, materials and supplies 22,496 37,380 52,444 112,320 172,178
Postage 13,567 120 16,072 29,759 29,719
Repairs and maintenance 174 - 4,376 4,550 10,744
Amortization - - 20,685 20,685 20,685
Other 488,857 - - 488,857 121
Total operating expenses 27,422,967 7,009,835 8,484,282 42,917,084 40,023,910
Total expenses 31,250,127 7,009,835 8,484,282 46,744,244 44,602,092
Revenues
Environmental assessment and training services 1,385,943 29,566 14,603 1,430,112 695,513
Miscellaneous revenues 172,365 28,729 194,168 395,262 487,680
Total revenues 1,558,308 58,295 208,771 1,825,374 1,183,193
Net cost of operations before government funding and transfers $ 29,691,819 $ 6,951,540 $ 8,275,511 $ 44,918,870 $ 43,418,899
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