Archived - Department of Finance Canada
Financial statements (unaudited)

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For the year ended
March 31, 2015

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, 2015, and all information contained in these statements rests with the management of the Department of Finance Canada (the Department). 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 Department's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Department's Departmental Performance 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 Department 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.

A risk-based assessment of the system of ICFR for the year ended March 31, 2015 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the Annex.

The effectiveness and adequacy of the Department's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the Department's operations, and by the Departmental Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends the financial statements to the Deputy Minister.

The financial statements of the Department have not been audited.

 
 
Paul Rochon, Deputy Minister
Randy Larkin, Chief Financial Officer


Ottawa, Canada
September 4, 2015

 

Department of Finance Canada
Statement of Financial Position (unaudited)
As at March 31
$ thousands
  2015 2014
Liabilities    
  Deposit liabilities (note 4) 119,049 123,121
  Accounts payable and accrued liabilities (note 5) 206,574 1,881,812
  Taxes payable under tax collection agreements (note 6) 1,546,960 596,289
  Interest payable (note 7) 4,886,540 5,234,993
  Notes payable to international organizations (note 8) 34,440 471,670
  Matured debt (note 9) 352,895 349,851
  Unmatured debt (note 10) 660,004,823 653,785,838
  Employee future benefits (note 13) 5,961 4,473
 
Total gross liabilities 667,157,242 662,448,047
Liabilities held on behalf of Government (note 14) (34,440) (471,670)
 
Total net liabilities 667,122,802 661,976,377
Financial assets    
  Due from Consolidated Revenue Fund 5,147,466 5,506,837
  Coin inventory 6,641 9,155
  Accounts receivable (note 15) 147,970 194,917
  Taxes receivable under tax collection agreements (note 16) 5,771,920 2,654,503
  Foreign exchange accounts (note 17) 85,018,320 72,262,496
  Crown borrowings (note 18) 46,155,300 54,404,503
  Loans receivable (note 19) 1,780,497 2,070,486
  Investments and capital share subscriptions (note 20) 263,096 263,096
 
Total gross financial assets 144,291,210 137,365,993
Financial assets held on behalf of Government (note 14) (2,739,742) (3,911,747)
 
Total net financial assets 141,551,468 133,454,246
 
Departmental net debt 525,571,334 528,522,131
Non-financial assets    
  Tangible capital assets (note 21) 17,015 10,184
  Prepaid expenses 29 -
 
Total non-financial assets 17,044 10,184
 
Departmental net financial position (525,554,290) (528,511,947)

Contractual obligations (note 22)
Contingent liabilities (note 23)

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

 
 
Paul Rochon, Deputy Minister 
Randy Larkin, Chief Financial Officer


Ottawa, Canada
September 4, 2015

 

Department of Finance Canada
Statement of Operations and Departmental Net Financial Position (unaudited)
For the Year Ended March 31
$ thousands
  Planned Results
2015
2015 2014
Expenses (note 25)      
  Transfer and taxation payment programs 61,069,229 61,928,540 59,322,276
  Treasury and financial affairs 26,419,500 23,594,088 25,139,264
  Economic and fiscal policy framework 83,118 123,435 89,811
  Internal services 57,114 66,979 66,291
 
Total expenses 87,628,961 85,713,042 84,617,642
Revenues (note 25)      
  Investment income 2,103,515 1,547,330 3,303,740
  Sale of domestic coinage 107,725 112,733 84,975
  Interest on bank deposits 354,450 312,728 330,518
  Net foreign currency gain - 553,481 116,996
  Other income 107,393 134,655 78,148
  Revenues earned on behalf of Government (note 26) (2,673,001) (2,660,825) (3,914,295)
 
Total revenues 82 102 82
 
Net cost of operations before government funding and transfers 87,628,879 85,712,940 84,617,560
Government funding and transfers      
  Net cash provided by Government   89,012,659 74,037,631
  Changes in due from Consolidated Revenue Fund   (359,371) (426,818)
  Services provided without charge by other government departments (note 24)   20,102 18,292
  Transfer of transition payments for implementing salary payments in arrears (note 24)   (2,793) -
   
Net cost of operations after government funding and transfers   (2,957,657) 10,988,455
Departmental net financial position - beginning of year   (528,511,947) (517,523,492)
   
Departmental net financial position - end of year   (525,554,290) (528,511,947)

Segmented information (note 25)

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

Department of Finance Canada
Statement of Change in Departmental Net Debt (unaudited)
For the Year Ended March 31
$ thousands
  2015 2014
Net cost of operations after government funding and transfers (2,957,657) 10,988,455
Changes due to tangible capital assets    
  Acquisition of tangible capital assets 7,808 9,998
  Amortization of tangible capital assets (977) (112)
  Transfer of tangible capital assets from other government departments - 22
 
Total change due to tangible capital assets 6,831 9,908
Change due to prepaid expenses 29 (7)
 
Net (decrease) increase in departmental net debt (2,950,797) 10,998,356
Departmental net debt - beginning of year 528,522,131 517,523,775
 
Departmental net debt - end of year 525,571,334 528,522,131

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

Department of Finance Canada
Statement of Cash Flows (unaudited)
For the Year Ended March 31
$ thousands
  2015 2014
Operating activities    
  Net cost of operations before government funding and transfers 85,712,940 84,617,560
  Non-cash items:    
    Amortization of tangible capital assets (note 21) (977) (112)
    Amortization of discounts on loans receivable 4,126 3,053
    Amortization of discounts of Crown borrowings 33,207 27,467
    Amortization of premiums and discounts on unmatured debt (2,258,841) (2,789,885)
    Unrealized foreign exchange gains (losses) 24,645 310,009
    Services provided without charge by other government departments (note 24) (20,102) (18,292)
  Transition payments for implementing salary payments in arrears (note 24) 2,793 -
  Variations in Statement of Financial Position:    
    Increase (decrease) in assets 3,114,932 (1,451,939)
    Decrease in liabilities 1,075,604 3,563,469
 
Cash used in operating activities 87,688,327 84,261,330
Capital investing activities    
  Acquisition of tangible capital assets (note 21) 7,808 10,020
 
Cash used in capital investing activities 7,808 10,020
Investing activities    
  Net advances to the Exchange Fund Account of Canada 9,863,459 6,934,247
  Issuance of notes payable to International Monetary Fund (3,166,776) (501,684)
  Encashment of notes payable to International Monetary Fund 898,485 366,000
  Loans receivable from International Monetary Fund 581,509 203,835
  Issuance of loans receivable 79,877,898 70,308,296
  Repayment of loans receivable (87,994,421) (110,024,941)
 
Cash used/(provided) in investing activities 60,154 (32,714,247)
Financing activities    
  Net issuance from cross-currency swaps (146,492) (672,708)
  Issuance of debt (482,723,593) (520,330,090)
  Repayment of debt 484,126,455 543,483,326
 
Cash used in financing activities 1,256,370 22,480,528
 
Net cash provided by Government of Canada 89,012,659 74,037,631

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

Notes to the Financial Statements

1. Authority and objectives

The Department is established under the Financial Administration Act as a Department of the Government of Canada.

The Department contributes to a strong economy and sound public finances for Canadians. It does so by monitoring developments in Canada and around the world to provide first-rate analysis and advice to the Government of Canada and by developing and implementing fiscal and economic policies that support the economic and social goals of Canada and its people. The Department also plays a central role in ensuring that government spending is focused on results and delivers value for taxpayers dollars. The Department interacts extensively with other federal organizations and acts as an effective conduit for the views of participants in the economy from all parts of Canada.

Transfer and taxation payment programs: This program includes the supervision, control and direction of all matters relating to the financial affairs of Canada that are not by law assigned to the Treasury Board or any other Minister. This Program includes the administration and payment of transfers to provinces and territories, including fiscal equalization, the Canada Health Transfer and the Canada Social Transfer, in support of health and social programs and other shared priorities. In addition, it includes the administration of taxation payments to provinces and territories as well as to Aboriginal governments in accordance with legislation and negotiated agreements. Also included in this Program are commitments and agreements with international financial organizations aimed at supporting the economic advancement of developing countries. In addition, from time to time, the federal government will enter into agreements or enact legislation to respond to unforeseen pressures. These commitments can result in payments, generally statutory transfer payments, to a variety of recipients, including individuals, organizations, and other levels of government.

Treasury and financial affairs: This program contributes to the Government of Canada's effective debt and other cost management on behalf of Canadians. It provides direction for Canada's debt management activities, including the funding of interest costs for the debt and service costs for new borrowings. In addition, the Program manages investments in financial assets needed to establish a prudent liquidity position. This Program supports the ongoing refinancing of government debt coming to maturity, the execution of the budget plan, and other financial operations of the government, including governance of the borrowing activities of major government-backed entities, such as Crown corporations. This Program is also responsible for the system of circulating Canadian currency (banknotes and coins) to ensure efficient trade and commerce across Canada.

Economic and fiscal policy framework: This Program is the primary source of advice and recommendations to the Minister of Finance on issues, policies and programs of the Government of Canada related to the areas of economic, fiscal and social policy; federal-provincial relations; financial affairs; taxation; and international trade and finance. The work conducted by this Program involves extensive research, analysis, and consultation and collaboration with partners in both the public and private sectors, including the Cabinet and the Treasury Board; Parliament and parliamentary committees; the public and Canadian interest groups; departments, agencies and Crown corporations; provincial and territorial governments; financial market participants; the international economic and finance community; and the international trade community. In addition, this Program includes policy advice on the development of Memoranda to Cabinet, negotiation of agreements, drafting of legislation and sponsoring of bills through the parliamentary process, which are subsequently administered by other programs within the Department and by other government departments and agencies. The aim of this Program is to create a sound and sustainable fiscal and economic framework that will generate sufficient revenues and provide for the management of expenditures in line with the Budget Plan and financial operations of the Government of Canada.

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; Materiel Services; Acquisition Services; 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. 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 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 Canadian generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting.

The planned results amounts in the expenses and revenues sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented statement of operations included in the 2014-15 Report on Plans and Priorities. Planned results are not presented in the Government funding and transfers section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2014-15 Report and Plans and Priorities.

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 / to the Consolidated Revenue Fund

Amounts due from / 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 Department is entitled to draw from the CRF without further authorities to discharge its liabilities.

d) 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.
  • Net foreign currency gains are determined by reference to prevailing exchange rates at the time of transaction and at the year-end date as applicable on foreign currency denominated items.
  • 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 earned on behalf of the Government represent revenues that are non-respendable which 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 as a reduction of the entity's gross revenues.

e) 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.
  • Net foreign currency losses are determined by reference to prevailing exchange rates at the time of transaction and at the year-end date as applicable on foreign currency denominated items.
  • Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
  • Services provided without charge by other government departments for accommodation, employer contributions to the health and dental insurance plans and legal services are recorded as operating expenses at their estimated cost.

f) Employee future benefits

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.

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) Coin inventory

Coin inventory is valued at the lower of cost and net realizable value. Cost is determined using the average cost method.

h) Accounts receivable

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

i) Foreign exchange accounts

Short-term deposits, marketable securities, and special drawing rights held in the foreign exchange accounts are recorded at cost. Marketable securities are adjusted for amortization of purchase discounts and premiums. Purchases and sales of securities are recorded at the settlement date. Write-downs to reflect other than temporary impairment in the fair value of securities, if any, are included in foreign currency gain revenues on the Statement of Operations and Departmental Net Financial Position.

Canada's subscriptions, allocation of special drawing rights, notes payable to and loans receivable from the International Monetary Fund are recorded at cost.

j) Foreign currency transactions

Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars using the rate of exchange in effect at year-end. Gains and losses resulting from foreign currency transactions are included in revenue or expenses in Treasury and Financial Affairs and Transfer and Taxation Payment Programs in the Statement of Operations and Departmental Net Financial Position.

k) Loans receivable

Loans receivable are initially recorded at cost and are adjusted to reflect the concessionary terms of those loans made on a long-term, low interest, or interest-free basis. An allowance for valuation is further used to reduce the carrying value of loans receivable to amounts that approximate their net realizable value. The allowance is determined based on estimated probable losses that exist on the remaining portfolio.

When the terms of a loan are concessionary, such as those provided with a low or no interest clause, they are recorded at their estimated net present value. A portion of the unamortized discount is recorded as revenue each year to reflect the change in the present value of loans outstanding.

l) Investments and capital share subscriptions

Investments and capital share subscriptions are recorded at cost net of allowances. Allowances are determined based on a combination of expected return and likelihood of capital recovery. Given their nature, investments in certain international financial institutions are not expected to generate direct financial returns nor to be recovered. In those cases, investments are fully provisioned.

m) Derivative financial instruments

Derivative financial instruments are financial contracts that derive their value from underlying changes in interest rates, foreign exchange rates or other financial measures specified in the underlying contracts. Derivative financial instruments that the Department is currently party to include cross currency swap agreements and foreign exchange forward contracts.

Cross currency swaps and foreign exchange forward contracts are initially recorded at cost and are translated into Canadian dollars at the exchange rate in effect at the reporting date. The translated values of cross currency swap agreements are included as part of Unmatured debt reflecting their longer term nature. The translated values of foreign exchange forward contracts are included as part of accounts payable and accrued liabilities as these have maturities that are short term in nature.

For cross currency swaps where domestic debt has been converted into foreign debt, any exchange gains or losses are offset by the exchange gains or losses on foreign currency advances to the Exchange Fund Account.

For foreign exchange forward contracts, any exchange gains or losses are offset by the exchange gains or losses on loan balances with the International Monetary Fund.

Interest paid and payable, and interest received and receivable on cross currency swaps is included in interest on unmatured debt.

n) Tangible capital assets

All tangible capital assets and leasehold improvements having an initial cost of $10 thousand or more are recorded at their acquisition cost. The Department 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 performed on a straight-line basis over the estimated useful life of the asset as follows:

Tangible capital assets
Asset class Amortization Period
Computer hardware One to ten years
Informatics software Three years
Leasehold improvements Lesser of the remaining term of the lease or useful life of the improvement
Machinery and equipment Three to ten years
Motor vehicles Three years

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.

o) Unmatured debt

When a marketable bond is exchanged or repurchased, and the transaction results in an extinguishment of the debt, the difference between the carrying amount of the debt instrument and the net consideration paid is recognized in the Statement of Operations.

An extinguishment occurs on the repurchase of bonds, or when there is an exchange of bonds with an existing bond holder and the terms of the original debt and the replacement debt are substantially different. Exchanged bonds are considered to have substantially different terms when the discounted present value of the cash flows under the new terms, including any amounts paid on the exchange, and discounted using the average effective interest rate of the original debt, is at least 10 percent different from the discounted present value of the remaining cash flows of the original debt.

If an exchange of bonds with an existing bond holder does not result in an extinguishment, the carrying amount of the debt is adjusted for any amounts paid on the exchange, and the unamortized premiums or discounts relating to the original debt and arising on the exchange transaction are amortized over the remaining term to maturity of the replacement debt on a straight line basis.

p) Deposit liabilities

Deposits that are repayable on demand are recorded as liabilities.

q) Contingent liabilities

Contingent liabilities are potential liabilities that 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 financial statements.

Provisions for liabilities arising under the terms of a loan guarantee program are made when it is likely that a payment will be made and an amount can be estimated.

The allowance for losses on the guarantees of the Canadian Wheat Board is determined based on the government's identification and evaluation of countries that have formally applied for debt relief, estimated probable losses that exist on the remaining portfolio, and changes in the economic conditions of sovereign debtors.

The allowance is included in accounts payable and accrued liabilities.

r) Measurement uncertainty

The preparation of these 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, valuation allowances for loans receivable and investments and capital share subscriptions, discounts on loans receivable, accruals of taxes receivable and taxes payable under tax collection agreements, 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.

s) Liabilities and financial assets held on behalf of Government

Liabilities and financial assets held on behalf of Government are presented in these financial statements as the deputy head must maintain accounting control for these elements.

The classification of financial assets as held on behalf of Government is determined based on the ability to discharge that financial asset or financial assets against the Department's liabilities or to increase the value of those financial assets without further authority from Parliament. The classification of liabilities as held on behalf of Government is determined based on the ability to increase the value of those liabilities without further authorities or within prescribed limits or ceilings.

3. Parliamentary authorities

The Department 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 Department 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

Reconciliation of net cost of operations to current year authorities used
$ thousands
  2015 2014
Net cost of operations before government funding and transfers 85,712,940 84,617,560
Adjustments for items affecting net cost of operations but not affecting authorities:    
  Allowance for bad debts (118,644) (64,981)
  Allowance on loans, investments and advances (135,754) (1,435)
  Inventory charged to program expense (499) (21,587)
  Employee future benefits (1,488) 934
  Amortization of tangible capital assets (977) (112)
  Services provided without charge by other government departments (20,102) (18,292)
  Prepaid expenses (54) (7)
  Concessionary portion of loans receivable (33,325) -
Other expenses not being charged to authorities:    
  Incentive for the elimination of capital tax 67,571 (21,471)
  Obligation to Ontario - General Motors (2,684) (356,314)
  Other 1,458 123
 
Total items affecting net cost of operations but not affecting authorities (244,498) (483,142)
Adjustments for items not affecting net cost of operations but affecting authorities:    
  Advances and prepaid expenses 79,693,409 70,277,875
  Loans receivable from the International Monetary Fund 581,509 203,835
  Payments for International Development Association 441,610 -
  Loans receivable from National governments 400,000 -
  Transitional assistance provided under sales tax harmonization agreement (recovery) (319,800) 1,161,200
  Loans receivable from International and other organizations 60,329 -
  Acquisitions of tangible capital assets 7,808 9,998
  Transition payments for implementing salary payments in arrears 2,793 -
  Other 82,212 273,256
 
Total items not affecting net cost of operations but affecting authorities 80,949,870 71,926,164
 
Current year authorities used 166,418,312 156,060,582

b) Authorities provided and used

Authorities provided and used
$ thousands
  2015 2014
Authorities provided:    
  Vote 1 – Operating expenditures 127,774 127,266
  Vote 5 – Grants and contributions 5,035 9,235
  Statutory authorities:    
    Transfer payments 61,950,646 60,176,235
    Interest on unmatured debt 15,351,977 16,427,887
    Other interest costs 8,136,045 8,583,879
    Purchase of domestic coinage 105,672 106,076
    Other 87,446 221,690
 
  Total statutory authorities 85,631,786 85,515,767
 
  Non-budgetary authorities:    
    Crown borrowings 79,683,319 70,269,875
    National governments 400,000 -
    International organizations 641,838 203,835
    Other organizations 10,000 8,000
 
  Total non-budgetary authorities 80,735,157 70,481,710
 
Total authorities provided 166,499,752 156,133,978
Less:    
  Authorities available for future years (68,573) (68,572)
  Lapsed authorities:    
    Vote 1 – Operating expenditures (12,832) (4,794)
    Vote 5 – Grants and contributions (35) (25)
    Spending of proceeds from disposal of surplus Crown assets - (5)
 
Current year authorities used 166,418,312 156,060,582

4. Deposit liabilities

The following table presents details of deposit liabilities:

Deposit liabilities
$ thousands
  2015 2014
Canada Hibernia Holding Corporation (note 4a) 97,495 96,742
Canada Eldor Inc. (note 4b) 21,554 26,379
 
Total deposit liabilities 119,049 123,121

a) Canada Hibernia Holding Corporation—Abandonment reserve fund

This account is a demand deposit established to record funds that will be used by Canada Hibernia Holding Corporation to defray future abandonment costs that will be incurred at the closure of the Hibernia field.

The interest payable is calculated at a rate equivalent to 90 percent of the weekly three-month Treasury bill tender rate.

b)  Canada Eldor Inc.—Holdback—Privatization—CDEV

This account was established pursuant to subsection 129(2) of the Financial Administration Act. This special purpose money is to be used to meet costs incurred on the sale of Crown corporations and demand for payment by purchasers pursuant to the acquisition agreement and costs incurred by the CDEV in connection with their sale.

The interest payable is calculated at a rate equivalent to 90 percent of the weekly three-month Treasury bill tender rate.

5. Accounts payable and accrued liabilities

The following table presents details of the Department's accounts payable and accrued liabilities:

Accounts payable and accrued liabilities
$ thousands
  2015 2014
Accounts payable - external parties 115,947 132,332
Province of Ontario - General Motors (note 5a) - 1,546,406
Accounts payable - other government departments and agencies 198,002 96,719
Allowance for guarantees 5,720 50,414
Provision for redemption of Canadian pennies (note 5b) 8,771 10,785
Revaluation of foreign exchange forward contracts (note 5c) (128,765) 38,284
Other accrued liabilities 4,038 4,011
Other liabilities (note 5d) 2,861 2,861
 
Total accounts payable and accrued liabilities 206,574 1,881,812

a) Province of Ontario-General Motors

The liability to the Province of Ontario reflects Canada's obligation to Ontario for the province's one third interest in the Government's equity holdings in General Motors (GM). These equity investments were registered to wholly-owned subsidiaries of the Canada Development Investment Corporation (CDEV), a Crown corporation and included both common and preferred shares.

In light of Ontario's one-third contribution to the total Canadian financial assistance provided to General Motors, Canada had entered into an agreement with Ontario to transfer one-third of amounts received as a result of holding these investments, including dividends and proceeds from dispositions.

On December 22, 2014, CDEV declared and paid a dividend-in-kind of 36,694,915 GM common shares, which were transferred to the Government of Ontario. On December 31, 2014, GM also repurchased the outstanding preferred shares held by CDEV. The dividend-in-kind and preferred share repurchase resulted in the settlement of the liability to Ontario.

b) Provision for redemption of Canadian pennies

In Canada's Economic Action Plan 2012, the Government announced its intention to cease production of the penny and to start withdrawing it from circulation as of February 4, 2013. As part of this initiative, Canadians will have the option of redeeming their pennies at their face value.

This provision reflects the estimated remaining net cost to the Government of this initiative as of March 31, 2015.

c) Revaluation of foreign exchange forward contracts

This amount represents the net translated notional values of foreign exchange forward contracts outstanding at March 31, 2015. These amounts were settled on April 15, 2015 and are discussed at note 11.

d) Other liabilities

The most significant component of Other liabilities is an amount of $2.68 million which relates to the Common School Funds for Ontario and Quebec. This account was established under 12 Victoria 1849, Chapter 200, to record the proceeds from the sale of lands set apart for the support and maintenance of common schools in Upper and Lower Canada, now Ontario and Quebec. Interest of $134 thousand —apportioned on the basis of population—is paid directly to these provinces on a semi-annual basis, at the rate of 5 percent per annum, and is charged to interest and other costs.

6. Taxes payable under tax collection agreements

Pursuant to various tax collection agreements, the Canada Revenue Agency (CRA) collects and administers personal income tax, corporate income and capital taxes, harmonized sales tax, sales tax, and goods and services sales tax on behalf of certain provinces, territories and Aboriginal governments. Amounts collectible by the CRA, but not yet remitted to the Department, are described at note 16.

At March 31, the balance in the accounts pertaining to taxes collectible and payable to provinces, territories and Aboriginal governments under tax collection agreements is as follows:

Taxes payable under tax collection agreements
$ thousands
  April 1/2014 Receipts and other credits Payments and other charges March 31/2015
Corporate income tax 292,611 14,142,720 13,341,531 1,093,800
Personal income tax 3,379,951 61,798,078 62,123,731 3,054,298
Harmonized sales tax (3,076,273) 25,009,394 24,534,259 (2,601,138)
First Nations sales tax - 7,371 7,371 -
First Nations goods and services tax - 17,123 17,123 -
 
Total taxes payable under tax collection agreements 596,289 100,974,686 100,024,015 1,546,960

The Department ultimately transfers these amounts directly to the participating provinces, territories and Aboriginal governments in accordance with established payment schedules.

Given that the Government of Canada reports information on a fiscal year basis while tax information is calculated on a calendar year basis, there can be transactions related to several tax years during any given fiscal year. Taxes payable therefore include amounts assessed, estimates of assessments based upon cash received, adjustments from reassessments, and adjustments relating to previous tax years payable to provincial, territorial and Aboriginal governments.

7. Interest payable

The following table presents details of interest payable:

Interest payable
$ thousands
  2015 2014
Domestic debt 3,937,770 4,119,423
Retail debt 914,909 1,076,867
Foreign debt 33,015 36,710
International Monetary Fund Balances 846 1,993
 
Total interest payable 4,886,540 5,234,993

8. Notes payable to international organizations

Non-interest bearing demand notes are issued in lieu of cash in respect of subscriptions and contributions to international organizations. The notes are presented for encashment according to their terms of agreement.

At March 31, the amount outstanding is as follows:

Notes payable to international organizations
$ thousands
  2015 2014
International Development Association - 441,610
International Bank for Reconstruction and Development 30,377 26,513
Multilateral Investment Guarantee Agency 4,063 3,547
 
Total notes payable to international organizations 34,440 471,670

9. Matured debt

Matured debt consists of debt that has matured but has not yet been redeemed.

At March 31, the amount outstanding is as follows:

Matured debt
$ thousands
  2015 2014
Retail debt (matured from 1999 to 2015) 345,035 337,513
Marketable bonds (matured from 1999 to 2015) 7,860 12,338
 
Total matured debt 352,895 349,851

10. Unmatured debt

The Department borrows in both domestic and international markets on behalf of the Government of Canada.

Domestic debt consists of treasury bills, marketable bonds and retail debt.

The treasury bills balance at March 31, 2015, was $nil ($3.8 billion in 2014) in odd issue bills, $41.3 billion ($43.7 billion in 2014) in three month bills, $28.3 billion ($29.8 billion in 2014) in six month bills, and $66.1 billion ($75.7 billion in 2014) in 364 day bills.

Marketable bonds consist of outstanding domestic Government of Canada bonds with remaining terms to maturity ranging from 1 to 34 years.

Retail debt includes Canada Savings Bonds which are redeemable on demand by the holder, with accrued interest calculated to the end of the previous month; no interest is paid if redeemed during the first three months following the date of issue.

Foreign debt is issued by the Government of Canada under the government's foreign currency borrowing program. It consists of marketable bonds, Canada bills and medium term notes. Marketable bonds include bonds assumed by Finance Canada on February 5, 2001, on the dissolution of Petro Canada Limited.

Marketable bonds are either issued in US dollars or Euros. They are issued to provide long term foreign funds and have remaining terms to maturity ranging from 1 to 7 years.

Canada bills are short-term certificates of indebtedness issued in the US money market.

Cross-currency revaluation refers to the net notional value of cross-currency swap agreements in place at March 31, 2015 translated into Canadian dollar equivalents using year-end market rates. Cross-currency swap agreements are entered into to effectively convert portions of domestic debt into foreign debt in order to meet foreign funding requirements. Remaining terms to maturity range from 1 to 10 years. Further details are discussed at note 11.

At March 31, unmatured debt is composed of the following:

Unmatured debt
$ thousands
  Face value Unamortized
(discounts)/premiums
Net book value 2015 Net book value 2014
Domestic debt:        
  Treasury bills 135,700,000 (330,974) 135,369,026 152,539,908
  Marketable bonds 487,412,866 4,649,953 492,062,819 476,580,741
  Retail debt 5,659,735 - 5,659,735 6,327,056
 
Total domestic debt 628,772,601 4,318,979 633,091,580 635,447,705
 
Foreign debt:        
  Marketable bonds 14,822,607 (22,688) 14,799,919 13,035,689
  Canada bills 3,788,567 (656) 3,787,911 2,289,610
  Medium term notes 1,724,145 (39) 1,724,106 746,166
 
Total foreign debt 20,335,319 (23,383) 20,311,936 16,071,465
 
Total domestic and foreign debt 649,107,920 4,295,596 653,403,516 651,519,170
 
   
Less: Securities held for the retirement of unmatured foreign debt     (68,251) (59,702)
     
Net domestic and foreign debt     653,335,265 651,459,468
Cross-currency revaluation:    
  Payables     63,091,482 54,113,584
  Receivables     (56,421,924) (51,787,214)
     
Total cross-currency revaluation     6,669,558 2,326,370
     
Total unmatured debt     660,004,823 653,785,838
     
Domestic debt fair value     710,324,513 681,201,967
     
Foreign debt fair value     20,824,485 16,497,332

Contractual maturities of unmatured debt by currency over the next five years, at face value, are as follows:

Contractual maturities of unmatured debt
$ thousands
Maturing year Canadian dollars1 US dollars2 Euro3 Total
2016 193,010,724 3,788,566 - 196,799,290
2017 96,507,849 4,348,547 - 100,856,396
2018 54,966,271 4,433,100 - 59,399,371
2019 32,015,006 3,820,167 - 35,835,173
2020 38,555,206 289,418 2,723,000 41,567,624
2021 to 2025 213,717,545 728,296 204,225 214,650,066
 
Total contractual maturities of unmatured debt 628,772,601 17,408,094 2,927,225 649,107,920
1 Includes Treasury bills, marketable bonds and retail debt.
2 Includes marketable bonds and medium term notes issued in US dollars and Canada bills.
3 Includes marketable bonds and medium term notes issued in Euros.

The effective average annual interest rates are as follows:

Effective average annual interest rates
%
  2015 2014
Treasury bills 0.81 0.96
Marketable bonds—domestic 2.73 2.87
Retail debt 0.71 0.72
Marketable bonds—foreign 1.66 2.10
Canada bills 0.08 0.08
Medium term notes 0.35 0.46

11. Derivative and fair values of financial instruments

a) Derivative financial instruments

i) Swap agreements

Government debt is issued at both fixed and variable interest rates and is denominated in Canadian dollars, US dollars and Euros. The Government has entered into cross-currency swap agreements to facilitate the management of its debt structure. Using cross-currency swap agreements, Canadian dollar and other foreign currency debt has been converted into US dollars or other foreign currencies with either fixed interest rates or variable interest rates. As a normal practice, the Government's swap positions are held to maturity.

The interest paid or payable and the interest received or receivable on all swap transactions are recorded as part of interest and other costs. Unrealized gains or losses due to fluctuations in the foreign exchange value of the swaps are presented in the cross-currency swap revaluation account and are recognized as part of net foreign currency gain or loss in the Statement of Operations and Departmental Net Financial Position.

Cross-currency swaps with contractual or notional principal amounts outstanding at March 31, stated in Canadian dollars, are as follows:

Cross-currency swaps with contractual or notional principal amounts
$ thousands
Maturing year 2015 2014
2015 - 3,658,020
2016 5,107,043 4,462,748
2017 4,897,865 4,857,038
2018 5,609,915 5,333,129
2019 6,708,436 6,373,160
2020 7,296,075 4,225,305
2021 to 2025 33,472,148 25,204,184
 
Total cross-currency swaps with contractual or notional principal amounts 63,091,482 54,113,584
ii) Foreign exchange forward contracts

The Government funds loans with the International Monetary Fund (IMF) as part of the Foreign Exchange Accounts, which are denominated in special drawing rights (SDRs), with US dollars. Since the currency value of the SDR is based upon a basket of key international currencies (the US dollar, Euro, Japanese yen, and pound sterling), a foreign exchange mismatch results, whereby fluctuations in the value of the loan asset are not equally offset by fluctuations in the value of the related funding liability. Therefore, the Government enters into forward contracts to hedge this foreign exchange risk.

Unrealized gains and losses due to fluctuations in the foreign exchange value of these contracts are recorded in accounts payable and accrued liabilities and are recognized as part of the net foreign currency gain or loss in the Statement of Operations and Departmental Net Financial Position.

Foreign exchange forward contracts with contractual or notional principal amounts outstanding total $1.57 billion ($2.65 billion in 2014), maturing April 15, 2015.

b) Fair value of financial instruments

The following tables present the carrying value and the fair value of certain financial instruments.

Fair values are government estimates and are generally calculated using market conditions at a specific point in time where a market exists. Fair values of instruments with a short lifespan or of a non-negotiable nature are assumed to approximate carrying values. Fair values may not reflect future market conditions nor the actual values obtainable should the instrument be exchanged on the market. The calculations are subjective in nature and involve inherent uncertainties due to unpredictability of future events.

Carrying and fair value of financial instruments
$ thousands
  2015 2014
 

  Carrying value Fair value Carrying value Fair value
Assets        
Foreign exchange accounts 85,018,320 87,955,263 72,262,496 74,315,648
Crown borrowings 46,155,300 46,768,163 54,404,503 54,767,461
Liabilities        
Total domestic and foreign debt 653,335,265 731,148,998 651,459,468 697,699,299

Fair values of the swap and foreign exchange forward contracts are the estimated amount that the Government would receive or pay, based on market factors, if the contracts were terminated on March 31. They are established by discounting the expected cash flows of the swap and foreign exchange forward contracts, calculated from the contractual or notional principal amounts, using year-end market interest and exchange rates. A positive (negative) fair value indicates that the Government would receive (make) a payment if the agreements were terminated on March 31.

Notional and fair value of derivative financial instruments
$ thousands
  2015 2014
 

  Notional value Fair value Notional value Fair value
Cross-currency swaps (net) (6,669,558) (5,756,009) (2,326,370) (2,647,501)
Foreign exchange forward contracts (net) 128,765 128,679 (38,284) (38,218)

12. Financial risk

a) Credit risk related to swap and foreign exchange forward contracts

The Department manages its exposure to credit risk by dealing principally with financial institutions having credit ratings from at least two recognized rating agencies, one of which must be Standard & Poor's or Moody's. At the time of inception of the agreement, the credit rating of the institution must be at least A–. Credit risk is also managed through collateral provisions in swap and foreign exchange forward contracts. Counterparties must pledge collateral to the Government, which, in the event of default, could be liquidated to mitigate credit losses.

The Department does not have a significant concentration of credit risk with any individual institution and does not anticipate any counterparty credit loss with respect to its swap and foreign exchange forward contracts.

The following table presents the contractual or notional principal amounts of the swap and foreign exchange forward contracts organized by credit ratings based on published Standard & Poor's credit ratings and stand-alone credit profiles at year-end:

Notional amounts of swap and foreign exchange forward contracts
$ thousands
  2015 2014
A+ 17,774,261 16,706,789
A 14,039,764 14,781,985
A- 26,518,779 16,702,483
BBB+ 4,764,981 6,768,965
BBB 1,565,834 1,803,257
 
Total notional amounts of swap and foreign exchange forward contracts 64,663,619 56,763,479

b) Managing foreign currency risk and sensitivity analysis to foreign currency exposures

Interest rate and foreign currency risks are managed using a strategy of matching the duration and the currency of the Exchange Fund Account assets and the related foreign currency borrowings of the Government. As at March 31, 2015, the impact of price changes affecting the Exchange Fund Account assets and the liabilities funding these assets naturally offset each other, resulting in no significant impacts to the Government's net debt. Assets related to the IMF are only partially matched by related foreign currency borrowings, as they are denominated in SDR; however, foreign exchange risks relating to loans to the IMF have been managed through entering into various foreign exchange forward contracts.

The majority of the Exchange Fund Account foreign currency assets and liabilities are held in four currency portfolios: the US dollar, the Euro, Pound sterling and the Japanese yen. At March 31, 2015, a one percent appreciation in the Canadian dollar as compared to the US dollar, the Euro, Pound sterling and the Japanese yen would result in a foreign exchange loss of $9 million ($8 million in 2014) due to the exposure of the US dollar portfolio, a foreign exchange loss of $3 million ($3 million in 2014) due to the exposure of the Euro portfolio and a foreign exchange gain of $2 million ($nil in 2014) due to the exposure of the Pound sterling. There is no significant exposure related to the Japanese yen portfolio.

13. Employee future benefits

a) Pension benefits

The Department's employees participate in the public service pension plan (the "Plan"), which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plan benefits and they are indexed to inflation.

Both the employees and the Department contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to the 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 expense amounts to $7.95 million ($8.49 million in 2014). For Group 1 members, the expense represents approximately 1.4 times (1.6 times in 2014) the employee contributions and, for Group 2 members, approximately 1.4 times (1.5 times in 2014) the employee contributions.

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 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.

Severance benefits
$ thousands
  2015 2014
Accrued benefit obligation, beginning of year 4,473 5,407
Expense for the year 2,360 1,058
Benefits paid during the year (872) (1,992)
 
Accrued benefit obligation, end of year 5,961 4,473

14. Liabilities and financial assets held on behalf of Government

a) Liabilities held on behalf of Government

Notes payable to international organizations are related to investments made in those entities. Since the Department must obtain separate authorities to make these investments these items are considered liabilities held on behalf of Government.

b) Financial assets held on behalf of Government

A distinction is made between financial assets that are available to discharge the Department's liabilities and those that are not. Financial assets that are not available to discharge the Department's liabilities are considered to be held on behalf of the Government and are therefore presented as a reduction of the Department's gross financial assets.

Financial assets held on behalf of Government include amounts related to non-respendable revenues as well as loans receivable and investments and capital share subscriptions which if repaid could not be used to discharge other liabilities.

The following table presents details of the liabilities and financial assets held on behalf of Government:

Liabilities and financial assets held on behalf of Government
$ thousands
  2015 2014
Liabilities held on behalf of Government:    
  Notes payable to international organizations (note 8) 34,440 471,670
 
Total liabilities held on behalf of Government 34,440 471,670
 
Financial assets held on behalf of Government:    
  Accounts receivable (note 15) 147,970 194,917
  Foreign exchange accounts (note 17) 839,711 1,504,766
  Loans receivable (note 19) 1,488,965 1,948,968
  Investments and capital share subscriptions (note 20) 263,096 263,096
 
Total financial assets held on behalf of Government 2,739,742 3,911,747

15. Accounts receivable

The following table presents details of the Department accounts receivable:

Accounts receivable
$ thousands
  2015 2014
Accrued interest income - Crown borrowings 76,009 98,193
Accrued investment income 66,481 88,441
Receivables - Other government departments and agencies 5,377 8,182
Receivables - External parties 103 101
 
Total accounts receivable 147,970 194,917

16. Taxes receivable under tax collection agreements

Taxes receivable include taxes collected or collectible by the CRA on behalf of provincial, territorial or Aboriginal governments that have not yet been remitted to the Department.

The following table presents details of taxes receivable under tax collection agreements:

Taxes receivable under tax collection agreements
$ thousands
  2015 2014
Corporate income taxes 3,267,904 3,060,466
Personal income taxes 5,643,575 3,698,094
Harmonized Sales Tax (3,000,546) (3,978,976)
First Nations Goods and Services Tax 1,472 1,417
First Nations Sales Tax 554 476
Provincial benefit programs (141,039) (126,974)
 
Total taxes receivable under tax collection agreements 5,771,920 2,654,503

The Department ultimately transfers these amounts directly to the participating provincial, territorial or Aboriginal governments in accordance with established payment schedules. Amounts payable are described at note 6.

Provincial benefit programs include benefit amounts paid by CRA directly to recipients on behalf of provincial governments. Transfers to the provincial governments are ultimately reduced by these amounts.

17. Foreign exchange accounts

The foreign exchange accounts represent the largest component of the official international reserves of the Government of Canada and consist of the following:

Foreign exchange accounts
$ thousands
  2015 2014
Investments held in the Exchange Fund Account 91,121,067 75,860,312
Accrued net revenue from the Exchange Fund Account 839,711 1,504,766
 
Total investments held in Exchange Fund Account (note 17a) 91,960,778 77,365,078
Subscriptions to the International Monetary Fund (note 17b) 11,128,648 10,882,988
Loans receivable from the International Monetary Fund (note 17c) 1,353,467 1,665,221
Notes payable to the International Monetary Fund (note 17d) (8,961,840) (7,419,018)
Special drawing rights allocations (note 17e) (10,462,733) (10,231,773)
 
Total foreign exchange accounts 85,018,320 72,262,496
 
Fair value 87,955,263 74,315,648

a) Investments held in Exchange Fund Account

This account records the funds advanced from the Government to the Exchange Fund Account, in Canadian and other currencies, for the purchase of gold, foreign currencies and securities, and SDRs. The Exchange Fund Account is operated in accordance with provisions of the Currency Act. Total advances are limited to US$150 billion as of March 2015.

The following table details international reserves held in and advances to the Exchange Fund Account:

Investments held in Exchange Fund Account
$ thousands
  2015 2014
US dollar cash on deposit 441,039 390,649
US dollar short-term deposits - 222,662
US dollar marketable securities 60,557,977 46,635,458
Euro cash on deposit 188,929 51,431
Euro marketable securities 17,684,503 19,902,954
British pound sterling cash on deposit 48,141 1,995
British pound sterling marketable securities 2,405,314 198,964
Japanese yen cash on deposit 17,221 10,401
Japanese yen marketable securities 794,137 316,722
Special drawing rights 9,817,653 9,628,107
Gold 5,864 5,735
 
Total investments held in Exchange Fund Account 91,960,778 77,365,078

b) Subscriptions to the International Monetary Fund

This account records the value of Canada's subscription ("quota") to the capital of the IMF. The IMF is an international organization of 188 member countries that operates in accordance with its Articles of Agreement. It has a large pool of liquid assets, or resources, comprising convertible national currencies, special drawing rights, and other widely used international currencies provided by its members that it makes available to help members finance temporary balance of payments problems.

Upon joining the IMF and following periodic quota reviews, member countries are assigned a quota, based broadly on their relative size in the world economy.

c) Loans receivable from the International Monetary Fund

This account records the value of interest-bearing loans made under Canada's multi-lateral and bi-lateral borrowing arrangements with the IMF. The purpose of these arrangements is to provide temporary resources for IMF-member countries requiring balance of payment assistance.

There are two outstanding lending arrangements with the IMF outside of the quota system: the multi-lateral New Arrangements to Borrow (NAB) and General Arrangements to Borrow (GAB).

Canada's participation in the expanded NAB became effective on March 11, 2011. The maximum lending by Canada to the IMF under these arrangements is limited to SDR 7.62 billion. As at March 31, 2015, SDR 775 million (SDR 975 million in 2014) or $1.35 billion ($1.67 billion in 2014) in lending has been provided to the IMF under the NAB.

Canada also participates in the GAB which was most recently renewed in December, 2013. The maximum lending by Canada to the IMF under these arrangements is limited to SDR 893 million. As at March 31, 2015, no lending had been provided to the IMF under the GAB.

Collectively, the outstanding loans under multi-lateral arrangements with the IMF cannot exceed SDR 8.52 billion at any given time. This reflects the maximum commitment under both the NAB and GAB.

At March 31, 2015, a total of SDR 775 million or $1.35 billion was outstanding under these arrangements. Amounts advanced under these arrangements are considered part of the Official International Reserves of Canada.

d) Notes payable to the International Monetary Fund

This account records non-marketable, non-interest bearing notes issued by the Government to the IMF. These notes are payable on demand and are subject to redemption or re-issue, depending on the needs of the IMF for Canadian currency.

Canadian dollar holdings of the IMF include these notes and a small working balance (initially equal to one-quarter of one percent of Canada's subscription) held on deposit at the Bank of Canada. In 2015, notes payable to the IMF increased by $1.54 million (increased by $760 million in 2014).

e) Special drawing rights allocations

This account records the value of SDRs allocated to Canada by the IMF. A SDR is an international reserve asset created by the IMF to supplement existing official international reserves of member countries. It represents a liability of Canada, as circumstances could arise whereby Canada could be called upon to repay these allocations, in part or in total.

SDR allocations are repayable to the IMF if they are cancelled by the IMF's Board of Governors, the Special Drawing Rights Department is liquidated, the IMF is liquidated, or if Canada chooses to withdraw from the IMF or terminate its participation in the Special Drawing Rights Department.

Canada's cumulative SDR allocations at March 31, 2015 are SDR 5.99 billion (SDR 5.99 billion in 2014).

18. Crown borrowings

The following table presents details of Crown borrowings issued as at March 31:

Crown borrowings
$ thousands
  Face value Unamortized discounts Net book value 2015 Net book value 2014
Canada Mortgage and Housing Corporation 7,792,071 - 7,792,071 18,056,277
Farm Credit Canada 22,691,430 (3,901) 22,687,529 22,028,427
Business Development Bank of Canada 15,675,700 - 15,675,700 14,319,799
 
Total Crown borrowings 46,159,201 (3,901) 46,155,300 54,404,503
 
Fair value     46,768,163 54,767,461

Contractual maturities of outstanding loans with Crown corporations over the next five years, at face value, are as follows:

Contractual maturities of unmatured loans by Crown corporations
$ thousands
Maturing year Canada Mortgage and Housing Corporation Farm Credit Canada Business Development Bank Total
2016 873,854 13,340,180 15,577,600 29,791,634
2017 1,126,469 6,117,250 92,500 7,336,219
2018 1,075,882 1,986,000 5,600 3,067,482
2019 1,182,415 1,071,000 - 2,253,415
2020 998,204 36,000 - 1,034,204
2021 and thereafter 2,535,247 141,000 - 2,676,247
 
Total contractual maturities of unmatured loans by Crown corporations 7,792,071 22,691,430 15,675,700 46,159,201

The effective average annual interest rates are as follows:

Effective average annual interest rates
  Canada Mortgage and Housing Corporation Farm Credit Canada Business Development Bank
Short Term fixed interest rate - % 0.55% - %
Long Term fixed interest rate 2.37% 1.34% 1.00%
Short Term floating interest rate - % 0.53% 0.54%
Long Term floating interest rate - % 0.54% - %

19. Loans receivable

The following table presents the various components of loans receivable due to the Department.

Loans receivable
$ thousands
  Face value Unamortized discounts/
Valuation allowance
Net book value 2015 Net book value 2014
Government business enterprises        
Canada Lands Company Ltd. (note 19a) 274,521 27,749 246,772 66,460
Downsview Park Inc. (note 19b) 58,000 17,240 40,760 55,058
Financial Consumer Agency of Canada (note 19c) 4,000 - 4,000 -
 
Total Government business enterprises 336,521 44,989 291,532 121,518
 
Provincial and territorial governments        
Federal-Provincial fiscal arrangements (note 19d) 841,840 49,067 792,773 1,244,875
Municipal Development and Loan Board (note 19e) 315 - 315 315
Winter Capital Projects Fund (note 19f) 2,900 2,900 - -
British Columbia - Comprehensive Integrated Tax Coordination Agreement (note 19g) 319,800 3,648 316,152 628,638
 
Total Provincial and territorial governments 1,164,855 55,615 1,109,240 1,873,828
 
International and other organizations        
International Monetary - Fund's Poverty Reduction and Growth Trust (note 19h) 118,895 3,170 115,725 75,140
International Finance Corporation - Global Agriculture and Food Securities Program (note 19i) 47,721 47,721 - -
Global Environment Facility (note 19j) 10,000 10,000 - -
Canadian Commercial Bank (note 19k) 42,202 42,202 - -
 
Total International and other organizations 218,818 103,093 115,725 75,140
 
National governments        
Ukraine (note 19l) 400,000 136,000 264,000 -
 
Total National governments 400,000 136,000 264,000 -
 
Total loans receivable 2,120,194 339,697 1,780,497 2,070,486

The breakdown of loans receivable by organizational body is outlined as follows.

Loans receivable by enterprise type
$ thousands
  Face value Unamortized discounts/
Valuation allowance
Net book value 2015 Proportion
%
Total Government business enterprises 336,521 44,989 291,532 16%
Total Provincial and territorial governments 1,164,855 55,615 1,109,240 62%
Total International and other organizations 218,818 103,093 115,725 7%
Total National governments 400,000 136,000 264,000 15%
 
Total Loans receivable by enterprise type 2,120,194 339,697 1,780,497 100%

The amount of loans receivable outstanding in foreign currencies, the Canadian dollar equivalent and the basis of translation is outlined in the table below.

Loans receivable by currency
$ thousands
  Net Book Value CAD Equivalent Exchange Rate 2015
%
Proportion
%
CAD 1,661,602 1,661,602 N/A 93%
SDR 68,047 118,895 1.7473 7%
   
 
    1,780,497   100%

Government business enterprises

a) Canada Lands Company Ltd. (CLC)

Canada Lands Company CLC Limited (CLC) manages, redevelops and/or sells strategic Government of Canada properties across Canada that are no longer required for program purposes.

CLC issues promissory notes, which do not bear interest and are repayable from the proceeds of the sale of the properties in respect of which they were issued.

The promissory notes are discounted using the CRF lending rate applicable to Crown corporations at the time of issuance and are recorded at their discounted value at March 31, 2015.

b) Downsview Park Inc.

Located in Toronto, Downsview Park is a unique urban recreational green space, a safe and peaceful place developed according to the principles of environmental, economic and social sustainability, for Canadians to enjoy in all seasons.

Parc Downsview Park Inc. issued a promissory note which is non-interest bearing and is repayable in full on July 31, 2050.

The promissory notes are discounted using the CRF lending rate applicable to Crown corporations at the time of issuance and are recorded at their discounted value at March 31, 2015.

c) Financial Consumer Agency of Canada

These amounts represent advances to the Financial Consumer Agency of Canada in accordance with Section 13(1) of the Financial Consumer Agency of Canada Act. The advances bear interest at the applicable CRF lending rate to Crown corporations.

Provincial and territorial governments

d) Federal-Provincial fiscal arrangements

These amounts represent net overpayments in respect of transfer payments to provinces under the Constitutions Acts 1867 to 1982, the Federal-Provincial Arrangements Act, and other statutory authorities.

The overpayments are non-interest bearing and are paid in subsequent years.

e) Municipal Development and Loan Board

The Department issued various loans to municipalities in the 1960s for infrastructure development purposes.

The loans bear interest at rates from 5.250 to 5.375 percent per annum and are repayable in annual or semi-annual instalments over 15 to 50 years.

f) Winter Capital Projects Fund

The loans bear interest at rates from 7.4 to 9.5 percent per annum and are repayable either in annual instalments over 5 to 20 years, or at maturity.

The loans are fully provisioned.

g) British Columbia - Comprehensive Integrated Tax Coordination Agreement

Transitional assistance that had been paid to British Columbia as part of a Comprehensive Integrated Tax Coordination Agreement with Canada is being recovered in equal annual instalments with final payment due in March 2016. The Government has not collected interest on these amounts.

International and other organizations

h) International Monetary Fund - Poverty Reduction and Growth Trust

This account records the loan to the International Monetary Fund's Poverty Reduction and Growth Trust (formerly the Poverty Reduction and Growth Facility) in order to provide assistance to qualifying low-income countries as authorized by the Bretton Woods and Related Agreements Act, and various appropriation acts.

The total loan authority pursuant to the Bretton Woods and Related Agreements Act was set at $550 million or such greater amount as may be fixed by the Governor in Council. The Governor in Council subsequently increased the limit to SDR 1.2 billion.

As at March 31, 2015, Canada has lent a total of $1.33 billion ($1.24 billion in 2014) (SDR 762.9 million) (SDR 728.5 million in 2014) to the Poverty Reduction and Growth Trust. Of this amount, $1.21 billion ($1.16 billion in 2014) (SDR 694.9 million) (SDR 684.5 million in 2014) has been repaid.

The outstanding balance of $118.9 million ($75.1 million in 2014) (SDR 68 million) (SDR 44 million in 2014) was translated into Canadian dollars at the year-end closing rate of exchange of $1.74726 ($1.70867 in 2014) [CDN to SDR Rate] per SDR. During the year, transactions included repayments and an exchange valuation adjustment.

Separately, Canada has also made budgetary contributions towards an interest subsidy that over time have amounted to SDR 215.2 million (SDR 215.2 million in 2014).

i) International Finance Corporation - Global Agriculture and Food Securities Program (IFC-FSI)

This account records Canada's financial assistance to the IFC for participation in the G8 Food Security Initiative (FSI) as authorized by the Bretton Woods and related Agreements Act and various appropriation acts.

During the year amounts for front-end and commitment fees and interest were repaid in accordance with the administration agreement signed between the IFC and the Government of Canada.

As at March 31, 2015, advances to the IFC-FSI amounted to $48 million ($48 million in 2014).

j) Global Environment Facility (GEF)

This account records the funding of a facility for environmental funding in developing countries in the areas of ozone, climate change biodiversity and international waters as authorized by the Bretton Woods and Related Agreements Act, and various appropriation acts. Advances to the GEF are made in non-negotiable, non-interest bearing demand notes that are later encashed.

As at March 31, 2015, advances to the GEF amounted to $10 million ($10 million in 2014).

k) Canadian Commercial Bank

Advances have been made to the Canadian Commercial Bank representing the Government's participation in the support group as authorized by the Canadian Commercial Bank Financial Assistance Act. These funds represent the Government's participation in the loan portfolio that was acquired from the Bank and the purchase of outstanding debentures from existing holders.

National governments

l) Ukraine

Pursuant to section 8.3(1) of the Bretton Woods and Related Agreements Act, the Minister of Finance, by order of the Governor in Council, is authorized to extend certain forms of financial assistance to a foreign state. The provision of such financial assistance is contingent upon that state having an arrangement with the International Monetary Fund and upon the satisfactory participation of other countries with Canada in the provision of financial assistance.

Funding for such transactions is provided by the Minister of Finance out of the CRF. The maximum amount of financial assistance that can be provided under legislation is US$2.5 billion in respect of any particular foreign state and US$5 billion in respect of all foreign states.

During the year, the Government provided $400 million in financial assistance in the form of interest-bearing loans to Ukraine. As at March 31, 2015, the outstanding loan balance to the Ukraine was $400 million ($nil for 2014). There were no other balances or transactions in respect of Ukraine or other foreign states during the year.

These loans bear interest at rates ranging between 1.4% and 2.1% and have repayment term of 5 years.

20. Investments and capital share subscriptions

The following table presents details of investments and capital share subscriptions that the Department participates in:

Investments and capital share subscriptions
$ thousands
  Face value Unamortized discounts/
Valuation allowance
Net book value 2015 Net book value 2014
International and other organizations        
Subscriptions and contributions to the International Development Association (note 20a) 10,730,948 10,730,948 - -
Subscriptions to the European Bank for Reconstruction and Development (note 20b) 273,836 273,836 - -
Subscriptions to the International Bank for Reconstruction and Development (note 20c) 545,558 545,558 - -
Subscriptions to the International Finance Corporation (note 20d) 103,028 103,028 - -
International Finance Corporation-Financial Mechanisms for Climate Change Facility (note 20e) 327,642 64,546 263,096 263,096
Subscriptions to the Multilateral Investment Guarantee Agency (note 20f) 13,593 13,593 - -
 
Total investments and capital share subscriptions 11,994,605 11,731,509 263,096 263,096

a) International Development Association (IDA)

This account records Canada's contributions and subscriptions to the IDA, as authorized by the Bretton Woods and Related Agreements Act, and various appropriation acts. The contributions and subscriptions to the IDA, which is part of the World Bank Group, are used to lend funds to the poorest developing countries for development purposes, on highly favourable terms (no interest, with a 35 to 40 years maturity and 10 years of grace).

As at March 31, 2015, Canada's total participation in IDA amounted to $10.73 billion ($10.29 billion in 2014).

b) European Bank for Reconstruction and Development

This account records Canada's subscriptions to the capital of the European Bank for Reconstruction and Development (EBRD), as authorized by the European Bank for Reconstruction and Development Agreement Act, and various appropriation acts.

At year-end, Canada has subscribed to 102,049 shares (102,049 shares in 2014) of the EBRD's authorized capital valued at EUR 1.02 billion (EUR 1.02 billion in 2014).

Only EUR 212.9 million (EUR 212.9 million in 2014) or about 21 percent (21 percent in 2014) of Canada's share subscription is considered "paid-in". The balance is callable meaning the institution can request the resources in the unlikely event that it requires them to meet its financial obligations to bondholders. Payments for the share subscription are authorized by the Act. Each payment to the EBRD is comprised of cash and a promissory note.

Canada's contingent liability for the callable portion of its shares was EUR 807.6 million (EUR 807.6 million in 2014).

Up to and including March 31, 2015 Canada's total cash contributions into the "paid-in" capital of the EBRD total US$216.2 million (US$216.2 million in 2014).

c) International Bank for Reconstruction and Development (World Bank)

This account records Canada's subscriptions to the capital of the International Bank for Reconstruction and Development, as authorized by the Bretton Woods and Related Agreements Act, and various appropriation acts.

As at March 31, 2015, Canada has subscribed to 58,354 shares (58,354 shares in 2014 ). The total value of these shares is US$7.04 billion (US$7.04 billion in 2014), of which US$417.8 million (US$417.8 million in 2014) plus $16.4 million ($16.4 million in 2014) has been paid-in. The remaining portion is callable.

The callable portion is subject to call by the Bank under certain circumstances. Canada's contingent liability for the callable portion of its shares is US$6.61 billion (US$6.61 billion in 2014).

d) International Finance Corporation

This account records Canada's subscription to the capital of the International Finance Corporation, which is part of the World Bank Group, as authorized by the Bretton Woods and Related Agreements Act, and various appropriation acts.

As at March 31, 2015, Canada has subscribed to 81,342 shares (81,342 shares in 2014). These shares have a total value of US$81.3 million (US$81.3 million in 2014), all of which has been paid-in.

e) International Finance Corporation - Financial Mechanisms for Climate Change Facility

This account records Canada's financial support of the IFC's - Financial Mechanisms for Climate Change (FMCC) facility as authorized by the Bretton Woods and related Agreements Act and various appropriation acts. The FMCC supports private sector engagement in climate change mitigation and adaptation activities through the provision of concessional financing arrangements.

As at March 31, 2015 advances to the IFC-FMCC amount to $327.6 million ($328.9 million in 2014). Amounts are recovered through the FMCC trust mechanism based on the terms and conditions of project funding which is administered by the IFC in accordance with the administration agreement signed between IFC and the Government of Canada.

f) Subscriptions to the Multilateral Investment Guarantee Agency

This account records Canada's subscriptions to the capital of the Multilateral Investment Guarantee Agency, as authorized by the Bretton Woods and Related Agreements Act, and various appropriation acts.

As at March 31, 2015, Canada has subscribed to 5,225 shares (5,225 shares in 2014). The total value of these shares is US$56.5 million (US$56.5 million in 2014), of which US$10.7 million (US$10.7 million in 2014) is paid-in and the remaining portion is callable.

The callable portion is subject to call by the Agency under certain circumstances. Canada's contingent liability for the callable portion of its shares is US$45.8 million (US$45.8 million in 2014).

21. Tangible capital assets

Tangible capital assets
$ thousands
  Cost Accumulated amortization Net book value
 


Capital asset class Opening balance Acquisitions Adjustments Disposals and
write-offs
Closing balance Opening balance Amortization Adjustments Disposals and
write-offs
Closing balance 2015 2014
Informatics equipment 260 - 3,533 - 3,793 144 439 - - 583 3,210 116
Informatics software 44 - - - 44 - 15 - - 15 29 44
Leasehold improvements - - 11,516 - 11,516 - 307 - - 307 11,209 -
Machinery and equipment 308 110 2,603 - 3,021 289 191 - - 480 2,541 19
Motor vehicles 83 - - - 83 32 25 - - 57 26 51
Assets under construction 9,954 7,698 (17,652) - - - - - - - - 9,954
 
Total capital assets 10,649 7,808 - - 18,457 465 977 - - 1,442 17,015 10,184

22. Contractual obligations

The nature of the Department's activities can result in some large multi-year contracts and obligations whereby the Department will be obligated to make future payments in order to carry out its transfer payments programs or when the services/goods are received.

Significant contractual obligations that can be reasonably estimated are summarized as follows:

Contractual obligations
$ thousands
  2016 2017 2018 2019 2020 and thereafter Total
Transfer payment            
  International Development Association 492,810 492,820 51,200 51,200 771,390 1,859,420
  African Development Fund - - - - 401,708 401,708
 
Total contractual obligations 492,810 492,820 51,200 51,200 1,173,098 2,261,128

23. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. They are grouped in to two categories as follows:

a) Callable share capital

The Department has callable share capital in certain international organizations that could require payments to those organizations.

The following table presents details of callable share capital as at March 31:

Callable share capital
$ thousands
  2015 2014
European Bank for Reconstruction and Development 1,099,602 1,230,036
International Bank for Reconstruction and Development 8,367,741 7,303,440
Multilateral Investment Guarantee Agency 58,014 50,635
 
Total callable share capital 9,525,357 8,584,111

b) Loan guarantees

Mortgage or Hypothecary Protection Insurance

The Protection of Residential Mortgage or Hypothecary Insurance Act (PRMHIA) received Royal Assent on June 26, 2011 and came into force on January 1, 2013.

The PRMHIA authorizes the Minister of Finance to provide protection in respect of certain mortgage or hypothecary insurance contracts written by approved mortgage insurers. Under the PRMHIA, a payment in respect of this guarantee would only be made if a winding-up order were made in respect of an approved mortgage insurer that had written an insurance contract guaranteed under the PRMHIA. In that case, the Minister would honour lender claims for insured mortgages in default, subject to: (1) any proceeds the beneficiary has received from the underlying property or the insurer's liquidation, and (2) a deductible of 10 percent of the original principal amount of the insured mortgage.

As at March 31, 2015, the aggregate outstanding principal amount of loans that are guaranteed under the PRMHIA is estimated at $205.8 billion ($174.9 billion in 2014). Any payment made by the Minister is subject to a deductible equal to 10 percent of the original principal amount of these loans, or $23.3 billion ($19.7 billion in 2014). The principal amount outstanding does not refer to anticipated losses or payments in respect of the guarantee. No provision has been made in these accounts for payments under the guarantee.

As at March 31, 2015, there are two approved mortgage insurers under the PRMHIA: Genworth Financial Mortgage Insurance Company Canada, and Canada Guaranty Mortgage Insurance Company.

Canadian Wheat Board

The Department manages guarantees to the Canadian Wheat Board for the repayment of the principal and interest of all receivables resulting from sales made under the Credit Grain Sale Program for an amount of $16.8 million ($178 million in 2014) and a portion of credit sales made under the Agri-Food Credit Facility, which amounted to $nil ($4 million in 2014).

A total allowance of $6 million ($50 million in 2014) was recorded under both programs and is included in accounts payable and accrued liabilities (note 5).

During the year, the Department completed a transfer of the majority of its guarantees provided for under this program to the Canada Account. Subsequent to year-end, all remaining guarantees were transferred.

24. 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. In addition, the Department has an agreement with Treasury Board of Canada Secretariat related to the provision of accounting services. During the year, the Department received common services which were obtained without charge from other government departments as disclosed below.

a) Common services received without charge from other government departments

During the year, the Department received services without charge from certain common service organizations, related to accommodation, legal services, and the employer's contribution to the health and dental insurance plans. These services received without charge have been recorded in the Department's Statement of Operations and Departmental Net Financial Position as follows:

Services received without charge
$ thousands
  2015 2014
Accommodation 11,996 9,468
Employer's contribution to the health and dental insurance plans 6,177 6,328
Legal services 1,929 2,496
 
Total services received without charge 20,102 18,292

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 cost of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General, are not included in the Department's Statement of Operations and Departmental Net Financial Position.

b) Transfer of transition payments for implementing salary payments in arrears

The Government of Canada implemented salary payments in arrears in 2014-15. As a result, a one-time payment was issued to employees and will be recovered from them in the future. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the Department. However, it did result in the use of additional spending authorities by the Department. Prior to year-end, the transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Works and Government Services Canada, who is responsible for the administration of the Government pay system.

c) Other transactions with related parties

Other transactions with related parties
$ thousands
  2015 2014
Expenses - Other government departments and agencies 8,155,320 8,604,816
Revenues - Other government departments and agencies 26,054 26,530

Expenses disclosed exclude common services provided without charge, which are disclosed in note 24a. These amounts include expenses and revenues pertaining to assets and liabilities held on behalf of Government as well as interest on superannuation and other accounts.

25. Segmented Information

Presentation by segment is based on the Department's program alignment architecture. 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 programs, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

Segmented information
$ thousands
  Transfer and Taxation Payment Programs Treasury and Financial Affairs Economic and Fiscal Policy Framework Internal Services 2015 Total 2014 Total
Expenses            
Transfer payments            
  Provinces and territories (note 25a) 61,166,332 - - - 61,166,332 58,747,730
  International organizations 757,454 - - - 757,454 568,112
  Non-profit institutions and organizations 5,000 - 52,570 - 57,570 19,199
  Allowances on loan guarantees (246) - - - (246) 1,434
 
Total transfer payments 61,928,540 - 52,570 - 61,981,110 59,336,475
Interest and other costs            
  Interest on unmatured debt (note 25b) - 15,332,318 - - 15,332,318 16,416,407
  Interest on superannuation
  and other accounts (note 25c)
- 8,136,045 - - 8,136,045 8,583,879
  Other Interest and costs - 19,554 - - 19,554 11,315
 
Total interest and other costs - 23,487,917 - - 23,487,917 25,011,601
Operating expenses (note 25d) - - 70,865 66,971 137,836 141,894
Cost of domestic coinage sold - 106,171 - - 106,171 127,663
Other expenses - - - 8 8 9
 
Total expenses 61,928,540 23,594,088 123,435 66,979 85,713,042 84,617,642
Revenues            
Investment income            
  Crown borrowings-interest - 653,409 - - 653,409 1,725,071
  Exchange Fund Account-net revenues - 839,711 - - 839,711 1,504,766
  Other interest 51,250 2,901 59 - 54,210 73,903
 
Total investment income 51,250 1,496,021 59 - 1,547,330 3,303,740
Sale of domestic coinage - 112,733 - - 112,733 84,975
Guarantee fees 94,716 - - - 94,716 23,535
Interest on bank deposits - 312,728 - - 312,728 330,518
Unclaimed cheques and other - 38,549 1,261 129 39,939 54,613
Net foreign currency gain 38,219 515,279 - (17) 553,481 116,996
Revenues earned on behalf of Government (note 26) (184,185) (2,475,310) (1,320) (10) (2,660,825) (3,914,295)
 
Total revenues - - - 102 102 82
 
Net cost from operations 61,928,540 23,594,088 123,435 66,877 85,712,940 84,617,560

a) Transfer payments to provinces and territories

Transfer payments to provinces and territories are paid pursuant to the Federal-Provincial Fiscal Relations Act, Budget Implementation Acts, and other statutory authorities.

For the period ending March 31, transfer payments to provinces and territories include the following:

Transfer payments to provinces and territories
$ thousands
  2015 2014
Canada Health Transfer 32,114,006 30,292,952
Fiscal Equalization 17,001,668 16,454,912
Canada Social Transfer 12,581,729 12,215,271
Quebec Abatement (4,233,806) (4,222,802)
Territorial Financing 3,469,217 3,288,282
Establishment of a Canadian Securities Regulation Regime and a Canadian Regulatory Authority 169,000 -
Statutory Subsidies 34,363 34,119
Incentive for Provinces to Eliminate Taxes on Capital 27,471 22,876
Obligation to Ontario - General Motors 2,684 356,314
Canada Health Transfer - Wait Times Reduction - 250,000
Fiscal Equalization - Total Transfer Protection - 55,806
 
Total transfer payments to provinces and territories 61,166,332 58,747,730

b) Interest on unmatured debt

Interest on unmatured debt includes interest incurred, amortization of debt discounts, premiums and net interest on cross-currency and interest rate swaps.

For the period ending March 31, interest on unmatured debt includes the following:

Interest on unmatured debt
$ thousands
  2015 2014
Interest on domestic debt:    
  Marketable bonds 13,639,959 14,321,825
  Treasury bills 1,417,598 1,815,475
  Retail debt 47,472 58,904
 
Total interest on domestic debt 15,105,029 16,196,204
 
Interest on foreign debt:    
  Marketable bonds 220,670 216,956
  Medium term notes 4,644 836
  Canada bills 1,975 2,411
 
Total interest on foreign debt 227,289 220,203
 
Total interest on unmatured debt 15,332,318 16,416,407

c) Interest on superannuation and other accounts

For the period ending March 31, interest on superannuation and other accounts includes the following:

Interest on superannuation and other accounts
$ thousands
  2015 2014
  Superannuation accounts 7,796,297 8,228,849
  Other specified purpose accounts 220,153 230,641
  Retirement compensation arrangement accounts 109,741 112,360
  Special drawing rights allocations 6,927 8,882
  Canada Pension Plan account 2,927 3,147
 
Total interest on superannuation and other accounts 8,136,045 8,583,879

The Department funds interest on interest-bearing specified purpose accounts established by all departments and agencies, including superannuation accounts and retirement compensation arrangement accounts established for the benefit of public service employees and members of the Royal Canadian Mounted Police and the Canadian Forces, the Canada Pension Plan Account, and other accounts.

d) Operating expenses

The following table presents details of operating expenses by category:

Operating expenses
$ thousands
  2015 2014
Salaries and wages 82,084 81,732
Professional and special services 14,630 18,791
Accommodation 11,996 9,468
Contribution to employee benefit plans 11,630 12,081
Information services 9,892 11,896
Transportation and telecommunications 2,816 2,846
Machinery and equipment 1,912 3,175
Rentals 1,348 1,422
Amortization of tangible capital assets 977 112
Repairs and maintenance 519 333
Other subsidies and payments 32 38
 
Total operating expenses 137,836 141,894

26. Revenues earned on behalf of Government

The following table presents details of the revenues earned on behalf of Government:

Revenues earned on behalf of Government
$ thousands
  2015 2014
Crown borrowing-interest 653,409 1,725,071
Exchange Fund Account-net revenues 839,711 1,504,766
Other interest 54,210 73,903
Sale of domestic coinage 112,733 84,975
Guarantee fees 94,716 23,535
Interest on bank deposits 312,728 330,518
Unclaimed cheques and other 39,837 54,531
Net foreign currency gain 553,481 116,996
 
Total revenues earned on behalf of Government 2,660,825 3,914,295

Revenues earned on behalf of Government represent revenue which the Department cannot re-spend to fund other departmental activities.

27. Comparative information

Comparative figures have been reclassified where necessary to conform to the current year's presentation.

Department of Finance Canada

Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting of the Department of Finance Canada for Fiscal Year 2014-15 (unaudited)

1. Introduction

This document provides summary information on the measures taken by the Department of Finance Canada (the Department) to maintain an effective system of internal control over financial reporting (ICFR) as well as information on internal control management, assessment results and related action plans.

Detailed information on the Department's authority, mandate and program activities can be found in the Departmental Performance Report and Report on Plans and Priorities.

2. Departmental system of internal control over financial reporting

2.1 Internal control management

The Department has an established governance and accountability structure to support departmental assessment efforts and oversight of its system of internal control.

A departmental internal control framework approved by the Deputy Minister and the Chief Financial Officer (CFO) is in place which includes:

  • Accountability structures relating to internal control management to support sound financial management including clear roles and responsibilities for employees in their areas of responsibility for control management;
  • Ongoing communication and training on statutory requirements, policies and procedures for sound financial management and control;
  • A group dedicated to ICFR under the direction of the CFO with a primary focus on maintaining documentation in support of business processes and associated key risk and control points;
  • A risk based internal audit plan which includes audits and reviews related to business processes assessed under the Policy on Internal Control;
  • An Office of Values and Ethics to provide service and guidance on values and ethics issues, discuss ethical dilemmas in accordance with the Values and Ethics Code for the Public Sector and the Conflict of Interest Code for the Department of Finance to underline the need for employees to avoid, and if necessary, resolve conflicts of interest between their official duties and their personal interests. Mandatory annual reporting is an important feature of the code;
  • A Disclosure Protection Officer, housed within the Office of Values and Ethics, to facilitate protected disclosures of wrongdoing in accordance with the Public Servants Disclosure Protection Act;
  • Monitoring and regular updates on internal control management plus assessment results and action plans presented to the Audit and Evaluation Committee (AEC) and senior management.
  • Advice provided by the AEC to the Deputy Head on the adequacy and functioning of the Department's risk management, control and governance frameworks and processes.
2.2 Service arrangements relevant to the financial statements

The Department relies on other organizations for the processing of certain transactions that are recorded in its financial statements.

Common-to-government arrangements:

  • Public Works and Government Services Canada (PWGSC) centrally administers banking arrangements and related processes, the payment of salaries and the procurement of goods and services consistent with the Department's delegation of authority;
  • Treasury Board of Canada Secretariat (TBS) provides the Department with information used to calculate various accruals and allowances, such as loan guarantees and the accrued severance liability;
  • The Department of Justice provides legal services to the Department;
  • Shared Services Canada (SSC) provides information technology (IT) infrastructure services in the area of data centre and network services.

Specific departmental arrangements:

  • The Bank of Canada has shared responsibility with the Department for maintaining the financial records and accounts for the domestic debt of Canada and the Exchange Fund Account of Canada for which the Bank acts as fiscal agent. These responsibilities include ensuring all related financial systems and processes are effectively designed and operating;
  • Canada Revenue Agency (CRA) provides the financial information used by the Department to determine taxes receivable from CRA under tax collection agreements, including accrual-based methodologies to determine amounts receivable at year-end;
  • TBS provides financial management and accounting services for operating expenses, managed through a shared-services arrangement; and,
  • TBS provides the Department and other departments with its SAP financial system platform through which it captures and reports on financial transactions. As the service provider, TBS is responsible for ensuring that IT-general controls over the SAP environment are designed and operating effectively. As the client, the Department retains responsibility of certain IT-general controls over the SAP environment, such as user access controls and segregation of duties.

3. Departmental assessment results during fiscal year 2014-15

The key findings and significant adjustments required from the current year's assessment activities are summarized below.

New or significantly amended key controls –in the current year, there were no new or significantly amended key controls in existing processes which required a reassessment.

Ongoing monitoring program – As is its practice, the Department assesses the design and operational effectiveness of its high-risk business processes on an annual basis as part of its rotational ongoing monitoring program (OGM). This year, the Department completed its reassessment of entity-level controls, IT-general controls under departmental management and the following business processes:

Departmental assessment results
Key control area Assessed level of financial- reporting risk Approach to assessment
Transfer payments High Design and operational effectiveness
Domestic debt High Design and operational effectiveness
Crown borrowing High Design and operational effectiveness
International organizations High Design and operational effectiveness
Official International Reserves High Design and operational effectiveness
Operating expenses Medium Operational effectiveness
Domestic coinage Medium Design and operational effectiveness
Payroll & benefits Low Design effectiveness
Entity-level controls High Design effectiveness
IT-general controls under departmental management High Design and operational effectiveness

Based on the work performed, key controls tested performed as intended.

Internal audit – The Department took the results of two internal audits completed during the year into consideration to aid in supporting its own assessment results for fiscal 2014-15.

  • Audit of Acquisition Cards;
  • Audit of the Control Framework for Transfer Payments.

These internal audit reports are published on the departmental website.

Service arrangements relevant to the financial statements - In 2013-14, the Department reported on required enhancements to controls within the SAP environment, which is provided by TBS to the Department and other government departments through a shared-service arrangement and supported by SSC in its role as a network provider (see Section 2.2). These observations focused on the areas of user access and information security. During 2014-15, observations of the Office of the Auditor General (OAG) were finalized and acknowledged by the service providers. The service providers and the Department have committed to resolution of these issues in 2015-16.

During 2014-15, the OAG examined aspects of the departmental travel and hospitality process, managed by TBS on behalf of the Department. Although no significant issues were identified as a result of this examination, the OAG noted areas where steps need to be taken to improve overall compliance with relevant policies and has provided this information to management. The Department will ensure that these issues are addressed in 2015-16.

4. Departmental action plan

4.1 Progress during fiscal year 2014-15

The Department continued to conduct its ongoing monitoring according to the previous fiscal year's rotational plan as shown in the following table:

Progress during fiscal year 2014-15
Previous year's rotational ongoing monitoring plan for current year Status
Transfer payments Completed as planned and no remedial actions required
Domestic debt Completed as planned and no remedial actions required
Crown borrowing Completed as planned and no remedial actions required
International organizations Completed as planned and no remedial actions required
Official International Reserves Completed as planned and no remedial actions required
Operating expenses Completed as planned and no remedial actions required
Domestic coinage Completed as planned and no remedial actions required
Payroll & benefits Completed as planned and no remedial actions required
Entity-level controls Completed as planned and no remedial actions required
IT-general controls under departmental management Completed as planned and no remedial actions required
4.2 Action plan for the next fiscal year and subsequent years

The Department's rotational ongoing monitoring plan over the next three years, based on an annual validation of high-risk processes and controls are shown in the following table:

Action plan for the next fiscal year and subsequent years
Key control area Assessed level of
financial-reporting risk
2015-16 assessment scope 2016-17 assessment scope 2017-18 assessment scope
Transfer payments High Yes Yes Yes
Domestic debt High Yes Yes Yes
Crown borrowing High Yes Yes Yes
International organizations High Yes Yes Yes
Official International Reserves High Yes Yes Yes
Operating expenses Medium No Yes No
Domestic coinage Medium Yes No Yes
Payroll & benefits Low No Yes No

Entity-level and IT-general controls will be validated on an annual basis.