Department of Finance Canada
Future-oriented Statement of Operations (unaudited)

For the year ending March 31, 2017

Department of Finance Canada
Future-oriented Statement of Operations (unaudited)
For the Year Ending March 31 
in thousands of dollars
  Forecast
Results
2015-16
Planned
Results
2016-17
Expenses    
  Transfer and taxation payment programs 63,902,193 66,484,400
  Treasury and financial affairs 23,154,000 22,878,000
  Economic and fiscal policy framework 79,776 65,805
  Internal services 66,323 59,504
 
Total expenses 87,202,292 89,487,709
Revenues    
  Investment income 2,145,604 1,625,931
  Interest on bank deposits 188,753 187,363
  Sale of domestic coinage 131,848 106,156
  Other 121,299 133,299
  Revenues earned on behalf of Government (2,587,402) (2,052,647)
 
Total revenues 102 102
 
Net cost of operations  87,202,190 89,487,607
The accompanying notes form an integral part of the future-oriented statement of operations.

Notes to the Future-oriented Statement of Operations (unaudited)

1. Methodology and significant assumptions

The future-oriented statement of operations has been prepared on the basis of the government priorities and departmental plans as described in the Report on Plans and Priorities.

The information in the forecast results for fiscal year 2015-16 is based on actual results as at November 30, 2015 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2016-17 fiscal year.

The main assumptions underlying the forecasts are as follows:

  • Operations and statutory requirements of the Department will remain substantially the same as the previous year;
  • Significant management estimates are consistent with those disclosed in the most recently published departmental financial statements unless otherwise indicated;
  • 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;
  • External economic and other market variables which can impact the net cost of operations of the Department are assumed to be consistent throughout the projection period in order to permit comparability of financial results. These variables can fluctuate significantly.

These assumptions are adopted as at November 30, 2015.

2. Variations and changes to the forecast financial information

While every attempt has been made to forecast final results for the remainder of 2015-16 and for 2016-17, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing this future-oriented statement of operations the Department 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 statement of operations and the historical statement of operations include the following:

  • Foreign-exchange and interest rates;
  • Future legislative changes or changes in policy requirements;
  • Borrowing requirements of Crown corporations participating in the Crown Borrowing Program;
  • Material changes in the levels or mix of the Official International Reserves of Canada;
  • Further changes to the operating budget through additional new initiatives or technical adjustments later in the year;
  • Implementation of new collective agreements; and
  • Economic conditions may affect both the amount of revenue earned and the collectability of loans receivables.

Once the Report on Plans and Priorities is presented, the Department will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates.

3. Summary of significant accounting policies

The future-oriented statement of operations has been prepared using 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) Expenses

The Department reports expenses on an 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.
  • Interest and other costs are recognized when incurred and include interest, amortization of debt discounts, premiums and commissions, and servicing and issue costs. Amortization of discounts and premiums is performed on a straight line basis.
  • Operating expenses are recognized as incurred.
  • The cost of domestic coinage sold is recognized in the period in which the related sale took place.
  • Vacation pay and compensatory leave, as well as severance benefits, are accrued and expenses are recorded as the benefits are earned by employees under their terms of employment.
  • Services provided without charge by other government departments for accommodation, employer contributions to the health and dental insurance plans and legal services are recorded as operating expenses at their estimated cost.
  • Expenses also include amortization of tangible capital assets, which are capitalized at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset.

b) Revenues

The Department reports revenues on an accrual basis:

  • Investment income is recognized as revenue in accordance with the terms and conditions of underlying agreements or relevant legislation as applicable.
  • Sale of domestic coinage is recognized in the period that the sale took place.
  • Interest on bank deposits is recognized as revenue when earned.
  • Guarantee fees are recognized when earned and are determined by reference to the terms of the guarantee program or underlying contract.
  • Uncashed Receiver General cheques, warrants and bank account cheques for all departments and agencies are recognized as revenue of the Department if they remain outstanding 10 years after the date of issue.
  • Unclaimed matured bonds are recognized as revenue if they remain unredeemed 15 years after the date of call or maturity, whichever is earlier.
  • Unclaimed bank balances are recognized as revenue when there has been no owner activity in relation to the balance for a period of 40 years.
  • 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 Deputy Head is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the entity's gross revenues.

4. Parliamentary authorities

The Department 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 because authorities are primarily based on cash flow requirements. Items recognized in the future-oriented statement of operations in one year may be funded through parliamentary authorities in prior, current, or future years. Accordingly, the Department has different net cost 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 requested authorities

Reconciliation of net cost of operations to requested authorities
in thousands of dollars
  Forecast
Results
2015-16
Planned
Results
2016-17
Net cost of operations 87,202,190 89,487,607
Adjustments for items affecting net cost of operations but not affecting authorities:    
  Services provided without charge by other government departments (21,437) (20,555)
  Employee future benefits (1,261) 66
  Amortization of tangible capital assets (1,365) (1,313)
  Other (2,012) (2,012)
 
Total adjustments for items affecting net costs of operation but not affecting authorities (26,075) (23,814)
Adjustments for items not affecting net cost of operations but affecting authorities:    
  Incentive for provinces to eliminate taxes on capital agreements 28,000 -
 
Requested authorities 87,204,115 89,463,793

b) Authorities requested

Authorities requested
in thousands of dollars
  Forecast
Results
2015-16
Planned
Results
2016-17
Authorities requested    
  Vote 1 - Operating expenditures 109,122 -
  Vote 1 - Program expenditures - 90,741
  Vote 5 - Grants and contributions 3,035 -
  Statutory amounts 87,091,958 89,373,052
 
Requested authorities 87,204,115 89,463,793
In planned results for 2016-17, departmental operating expenditures and grants and contributions expenditures are consolidated into Vote 1 – Program expenditures.