Idea Transcript
Financial Statements (unaudited) for the Year Ended March 31, 2011 Statement of Management Responsibility Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2011, and all information contained in these statements rests with the management of Western Economic Diversification Canada (WD). These financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. 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 WD's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in WD'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 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 WD. The Departmental Audit Committee is advisory to the Deputy Minister. Based on recommendations from the Departmental Audit Committee, the Deputy Minister approves the departmental risk-based audit plan, internal audit reports, as well as management action plans developed to address audit recommendations. The Departmental Audit Committee exercises oversight of core areas of departmental management, control and accountability, including reporting. The financial statements of Western Economic Diversification Canada have not been audited. Jim Saunderson Chief Financial Officer
Daniel Watson Deputy Minister Edmonton, Canada August 15, 2011 Date
Statement of Financial Position (Unaudited) As of March 31 (in thousands of dollars) 2011
2010 Restated (Note 13)
ASSETS Financial assets Due from Consolidated Revenue Fund
$ 237,499
$ 184,160
161
905
21,702
21,056
259,362
206,121
Prepayments (note 6)
9,517
10,716
Tangible capital assets (note 7)
2,407
2,405
11,924
13,121
$ 271,286
$ 219,242
$ 237,619
$ 184,759
Vacation pay and compensatory leave
1,868
2,062
Employee future benefits (note 9)
7,470
8,701
246,957
195,522
24,329
23,720
$ 271,286
$ 219,242
Accounts receivable and advances (note 4) Repayable contributions (note 5) Total financial assets Non-financial assets
Total non-financial assets LIABILITIES AND EQUITY OF CANADA Liabilities Accounts payable and accrued liabilities (note 8)
Equity of Canada Contractual obligations (note 10) The accompanying notes form an integral part of these financial statements.
Jim Saunderson Chief Financial Officer
Daniel Watson Deputy Minister Edmonton, Canada August 15, 2011 Date
Statement of Operations (Unaudited) For the Year Ended March 31 (in thousands of dollars) top of page 2011
2010
Expenses Transfer payments Business Development
$ 39,303
$ 39,322
72,758
81,573
276,685
218,882
317
369
389,063
340,146
10,254
11,368
5,699
5,508
Community Economic Development
20,014
15,868
Policy, Advocacy and Coordination
9,535
10,614
Internal Services
29,944
31,570
Total operating expenses
75,446
74,928
464,509
415,074
Business Development
165
611
Innovation
468
2,089
Community Economic Development
35
-
Internal Services
44
20
Total revenues
712
2,720
$ 463,797
$ 412,354
Innovation Community Economic Development Policy, Advocacy and Coordination Total transfer payments Operating expenses Business Development Innovation
Total expenses Revenues
Net cost of operations Segmented information (note 12) The accompanying notes form an integral part of these financial statements.
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Statement of Equity of Canada (Unaudited) For the Year Ended March 31 (in thousands of dollars) 2011
2010 Restated (Note 13)
Equity of Canada, beginning of year Net cost of operations Net cash provided by Government Change in due from the Consolidated Revenue Fund Services provided without charge by other government departments (note 11) Equity of Canada, end of year
$ 23,720
$ 13,805
(463,797)
(412,354)
403,757
337,191
53,339
77,809
7,310
7,269
$ 24,329
$ 23,720
The accompanying notes form an integral part of these financial statements.
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Statement of Cash Flows (Unaudited) For the Year Ended March 31 (in thousands of dollars) 2011
2010
Operating activities Net cost of operations
$ 463,797
$ 412,354
(516)
(525)
(7,310)
(7,269)
(744)
19
646
12,772
(1,199)
74
(52,860)
(78,281)
194
(353)
1,231
(2,205)
403,239
336,586
Acquisitions of tangible capital assets
518
605
Cash used by capital investing activities
518
605
$ 403,757
$ 337,191
Non-cash items: Amortization of tangible capital assets Services provided without charge by other government departments (note 11) Variations in Statement of Financial Position: Increase (decrease) in accounts receivable and advances Increase (decrease) in repayable contributions Increase (decrease) in prepayments Decrease (increase) in accounts payable and accrued liabilities Decrease (increase) in vacation pay and compensatory leave Decrease (increase) in future employee benefits Cash used in operating activities Capital investing activities:
Net cash provided by Government of Canada The accompanying notes form an integral part of these statements.
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Notes to the Financial Statements (Unaudited) For the Year Ended March 31 1. Authority and Objectives Western Economic Diversification Canada (WD), a department of the Government of Canada operates under the authority of the Western Economic Diversification Act of 1988 that works to strengthen Western Canada's economy and advance its interests in national economic policy. Through the Act, WD is mandated to: promote the development and diversification of the economy of Western Canada; and advance the interests of the West in national economic policy, program and project development and implementation. WD works strategically through partnerships with all orders of government, academic and research institutes, industry associations, and not-for-profit organizations to implement initiatives that leverage funds and expertise for the benefit of the West and westerners. WD's Deputy Minister is based in the department's Headquarters office in Edmonton, Alberta. WD's programs encourage business development, innovation and community economic development in rural and urban communities. The department plays an important leadership and coordination role in furthering western interests and responding to western challenges. The strategic outcome of WD is: “The western Canadian economy is developed and diversified.” The department's four program activities and management related program activity (Internal Services) support the achievement of its strategic outcome. Specifically, they are: 1. Business Development: strong small- and medium-sized enterprises (SMEs) in Western Canada with improved capacity to remain competitive in the global marketplace. 2. Innovation: a stronger knowledge-based economy. 3. Community Economic Development: communities have increased economic opportunities and capacity to respond to challenges, as well as the necessary investments in public infrastructure. 4. Policy, Advocacy and Coordination: policies and programs that strengthen the western Canadian economy. 5. Internal Services: effective and efficient support for the delivery of the organizational strategic outcome. As part of WD's mandate to co-ordinate federal economic activities in the West, WD implements some programs on behalf of other federal departments and agencies. These programs are implemented under arrangements where the other federal department provides the authorities and funding from Parliament. Related grant and contribution costs are reported in the accounts of other federal departments; they are not reflected as expenses in these Financial Statements. top of page
2. Summary of Significant Accounting Policies These financial statements have been prepared in accordance with the Treasury Board accounting policies stated below, which are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any differences from Canadian generally accepted accounting principles. Significant accounting policies are as follows: (a) Parliamentary authorities – WD is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to WD do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. (b) Net Cash Provided by Government – WD operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by WD is deposited to the CRF and all cash disbursements made by WD 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 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 WD is entitled to draw from the CRF without further appropriations to discharge its liabilities. (d) Revenues: I. Revenues from regulatory fees are recognized in the accounts based on the services provided in the year. II. Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenue takes place. Sources of revenues include: Interest charges on repayment of contributions. (e) Expenses - Expenses are recorded on the accrual basis: I. Transfer Payments: Grants are recognized in the year in which the conditions for payment are met. In the case of grants which do not form part of an existing program, the expense is recognized when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements. Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement, provided that the transfer is authorized and a reasonable estimate can be made. II. Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment. III. Services provided without charge by other government departments for accommodation, employer contributions to the health and dental insurance plans, legal services and workers' compensation are recorded as operating expenses at their estimated cost. (f) Employee future benefits I. Pension benefits: Eligible employees participate in the Public Service Pension Plan (The Public Service Superannuation Act), a multiemployer plan administered by the Government. WD's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligations to the Plan. Current legislation does not require WD to make contributions for any actuarial deficiencies of the Plan. II. Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole. (g) Accounts receivables and advances are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain. (h) Repayable contributions are contributions where the recipient is expected to repay the amount advanced. Depending on their nature, they are classified as either unconditionally repayable or conditionally repayable and are accounted for accordingly. I. Unconditionally repayable contributions are contributions that must be repaid without qualification. Normally, these contributions are provided with a low or no interest clause. Due to their concessionary nature, they are recorded on the Statement of Financial Position as loans at their estimated present value. A portion of the unamortized discount is recorded as revenue each year to reflect the change in the present value of the contributions outstanding. An estimated allowance for uncollectibility is recorded where appropriate. II. Conditionally repayable contributions are contributions that, all or part of which becomes repayable, if conditions specified in the contribution agreement come into effect. Accordingly, they are not recorded on the Statement of Financial Position until such time as the conditions specified in the agreement come into effect at which time, they are recorded as a receivable and a reduction in transfer payment expenses. An estimated allowance for uncollectibility is recorded where appropriate. (i) Contingent liabilities – Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements. (j) Tangible capital assets – All tangible assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. WD does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows: Asset class
Amortization period
Machinery and equipment
10 years
Vehicles
5 years
Computer Hardware
3 years
Computer Software
3-7 years
Leasehold improvements
Lesser of the remaining term of the lease or useful life of the improvement
Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use. k) Measurement uncertainty - The preparation of these 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 allowance for doubtful accounts, the liability for employee severance benefits, the useful life of tangible capital assets and unamortized discount related to unconditionally repayable contributions. 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. top of page
3. Parliamentary Authorities WD receives most of its funding through annual Parliamentary authorities. Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, WD 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: 2011
2010 (in thousands of dollars)
Net cost of operations
$ 463,797
$ 412,354
(516)
(525)
(7,310)
(7,269)
194
(353)
Increase (decrease) in employee future benefits
1,231
(2,205)
Adjustments to prior year accruals
1,984
1,565
Revenue not available for spending
2,009
3,947
(8,523)
(3,557)
199
(729)
(10,732)
(9,126)
518
605
Unconditionally repayable contributions
14,107
17,396
Increase (decrease) in prepayments
(1,199)
74
13,426
18,075
$ 466,491
$ 421,303
Adjustments for items affecting net cost of operations but not affecting authorities: Amortization of tangible capital assets Services provided without charge by other government departments Increase (decrease) in vacation pay and compensatory leave
Bad debts Other Adjustments for items not affecting net cost of operations, but affecting authorities: Acquisitions of tangible capital assets
Current year authorities used
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(b) Appropriations provided and used: 2011
2010 (in thousands of dollars)
Authorities Provided: Vote 1 - Operating expenditures
$ 60,298
$ 59,483
405,316
277,461
24,659
140,166
(5,823)
(4,493)
(17,959)
(51,314)
$ 466,491
$ 421,303
Vote 5 - Transfer Payments Statutory amounts Less: Lapsed: Operating Lapsed: Transfer payments Current year authorities used
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4. Accounts receivables and advances The following table presents details of WD's accounts receivable and advance balances: 2011
2010 (in thousands of dollars)
External Parties Accrued interest
$ 82
$ 667
26
-
2,834
5,970
4
8
2,946
6,645
(2,901)
(6,332)
45
313
116
592
$ 161
$ 905
Non-repayable contributions Other receivables Employee advances Allowance for doubtful accounts Subtotal - External parties Other government departments
5. Repayable Contributions The following table presents details of WD's repayable contributions receivable balances: 2011
2010 (in thousands of dollars)
Unconditionally repayable contributions
$ 37,062
$ 33,527
(3,937)
(2,527)
(11,423)
(10,078)
21,702
20,922
5,158
7,435
(5,158)
(7,301)
$ 21,702
$ 21,056
Unamortized discount on unconditionally repayable contributions Allowance for doubtful accounts - repayable contributions Net unconditionally repayable contributions Accrued interest -unconditionally repayable contributions Allowance for doubtful accounts - accrued interest receivable
(a) Repayable contributions: Repayable contributions relate to contributions made to outside parties which are repayable based on the recipient having met certain conditions. An allowance of $11.4M ($10.1M in 2009-2010) relating to these loans has been recorded. top of page
6. Prepayments 2011
2010 (in thousands of dollars)
Loss support contributions
$ 13,489
$ 13,993
(4,950)
(3,521)
8,539
10,472
978
226
-
18
$ 9,517
$ 10,716
Allowance for losses on loss support contributions Net loss support contributions Non-repayable, conditionally & repayable contributions Prepaid expenses
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7. Tangible capital assets (in thousands of dollars) Capital asset class
Cost Opening balance
Acquisitions
Transfers
$ 521
$ 25
$ 57
Computer Hardware
438
-
Computer Software
2,342
Accumulated Amortization Closing balance
Opening balance
Amortization
Transfers
$ -
$ 603
$ 104
$ 53
$ 57
$ -
$ 214
$ 389
$ 417
(57)
48
333
269
59
(57)
48
223
110
169
23
-
-
2,365
931
308
-
-
1,239
1,126
1,411
112
-
-
-
112
70
15
-
-
85
27
42
Assets under construction
13
385
(13)
-
385
-
-
-
-
-
385
13
Leasehold improvements
860
85
13
-
958
507
81
-
-
588
370
353
$ 4,286
$ 518
$ -
$ 48
$ 4,756
$ 1,881
$ 516
$ -
$ 48
$ 2,349
$ 2,407
$ 2,405
Machinery and equipment
Vehicles
Total
Disposals and write-offs
Net Book Value
Disposals and write-offs
Closing balance
2011
2010
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8. Accounts Payable and Accrued Liabilities The following table presents details of WD's accounts payable and accrued liabilities: 2011
2010 (in thousands of dollars)
Accounts payable to other government departments
$ 19,909
$ 2,355
214,401
179,954
Operating
2,146
1,265
Accrued salaries and wages
1,163
1,185
217,710
182,404
$ 237,619
$ 184,759
Accounts payable to external parties Transfer payments
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9. Employee future benefits (a) Pension benefits: WD's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plans benefits and they are indexed to inflation. Both the employees and WD contribute to the cost of the Plan. The 2010-2011 expense amounts to $4,672,799 ($4,486,185 in 2009-2010), which represents approximately 1.9 times (1.9 times in 20092010) the contributions by employees. WD'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: WD provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows: 2011
2010 (in thousands of dollars)
Accrued benefit obligation, beginning of year
$ 8,701
$ 6,496
Expense for the year
(375)
2,808
Benefits paid during the year
(856)
(603)
$ 7,470
$ 8,701
Accrued benefit obligation, end of year
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10. Contractual Obligations The nature of the WD's activities can result in some large multi-year contracts and obligations whereby WD will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows: 2012
2013
2014
2016 and thereafter
2015
Total
(in thousands of dollars) Transfer Payments Alberta & Saskatchewan centenaries
$ 16,000
$ 4,000
$ -
$ -
$ -
$ 20,000
Core programming
93,389
35,382
10,222
422
-
139,415
Recreational Infrastructure Canada
14,492
-
-
-
-
14,492
4,500
4,500
-
-
-
9,000
$ 128,381
$ 43,882
$ 10,222
$ 422
$ -
$ 182,907
Rick Hansen Foundation Total estimated future commitments
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11. Related party transactions WD is related as a result of common ownership to all Government departments, agencies and Crown Corporations. WD enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, WD received common services, which were obtained without charge from other Government departments as disclosed below.
(a) Common services provided without charge by other government departments: During the year, WD received without charge from certain common service organizations, related to accommodation, legal services, the employer's contribution to the health and dental insurance plans and workers' compensation coverage. These services provided without charge have been recorded in WD's Statement of Operations as follows: 2011
2010 (in thousands of dollars)
Employer's contribution to the health and dental insurance plan
$ 3,375
$ 3,330
3,823
3,745
Legal services
71
153
Workers' Compensation
41
41
$ 7,310
$ 7,269
Accommodation
Total
The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General, are not included in the WD's Statement of Operations.
(b) Administration of programs on behalf of other government departments: Part of WD's mandate is to coordinate federal economic activities in the West. In this regard, WD implements programs on behalf of other federal departments and agencies. The following is a list of programs valued at greater than one million dollars in federal contributions administered by WD over the last two fiscal years. These grant and contribution expenses are reflected in the financial statements of the other government departments and not those of WD. 2011
2010 (in thousands of dollars)
Building Canada Fund (Community Component)
$ 144,886
$ -
Canada Strategic Infrastructure Fund - Infrastructure Canada
24,883
51,457
Municipal Rural Infrastructure Fund - Infrastructure Canada
47,881
81,932
$ 217,650
$ 133,389
Total
WD provided project and administration service for the Building Canada Fund (BCF) Program for Infrastructure Canada. In fiscal year 2009-2010, all claims and expenditures were processed by Infrastructure Canada. The arrangement changed in fiscal year 2010-2011 where all claims and expenditures were processed by Western Economic Diversification. Claims and expenditures will continue to be reported by Infrastructure Canada.
(c) Other transactions with related parties: 2011
2010 (in thousands of dollars)
Expenses - Other Government Departments and Agencies
$ 2,644
$ 3,077
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12. Segmented information Presentation by segment is based on WD's program activity 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 program activities, by major object of expenses and by major type of revenues. The segment results for the period are as follows:
Business Development
Community Economic Development
Innovation
Policy, Advocacy and Coordination
2011 Total
Internal Services
2010 Total
(in thousands of dollars ) Transfer payments Transfer payments
$ 39,303
$ 72,893
$ 277,328
$ 317
$ -
$ 389,841
$ 341,250
-
(135)
(643)
-
-
(778)
(1,104)
39,303
72,758
276,685
317
-
389,063
340,146
5,978
3,926
10,926
7,579
19,842
48,251
51,692
154
1,150
7,219
-
-
8,523
3,557
2,628
56
773
342
3,031
6,830
7,434
Transportation and communications
386
110
437
548
2,464
3,945
3,962
Accommodation
612
378
470
654
1,709
3,823
3,745
Acquisition of machinery and equipment
105
26
45
141
1,380
1,697
1,398
Rentals
130
8
43
47
480
708
764
Utilities, materials and supplies
133
22
38
170
228
591
701
-
-
-
-
516
516
525
Information
98
8
45
32
204
387
693
Repairs and maintenance
13
4
5
8
79
109
333
Other
17
11
13
14
11
66
124
Total operating expenses
10,254
5,699
20,014
9,535
29,944
75,446
74,928
Total expenses
49,557
78,457
296,699
9,852
29,944
464,509
415,074
164
308
35
-
-
507
2,276
Other fees and charges (compensatory repayments)
1
160
-
-
-
161
57
Other
-
-
-
-
44
44
387
165
468
35
-
44
712
2,720
$ 49,392
$ 77,989
$ 296,664
$ 9,852
$ 29,900
$ 463,797
$ 412,354
Repaid contributions Total transfer payments Operating expenses Salaries and employee benefits Bad debts Professional and special services
Amortization of tangible capital assets
Revenues Interest
Total revenues Net cost from operations
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13. Adoption of new accounting policies During the year, WD adopted the revised Treasury Board accounting policy TBAS 1.2: Departmental and Agency Financial Statements which is effective for WD for the 2010-11 fiscal year. The major change in the accounting policies of WD required by the adoption of the revised TBAS 1.2 is the recording of amounts due from the Consolidated Revenue Fund as an asset on the Statement of Financial Position. The adoption of the new Treasury Board accounting policies have been accounted for retroactively with the following impact on comparatives for 2009-2010:
2010 As previously stated
2010 Restated
Effect of changes (in thousands of dollars)
Statement of Financial Position Assets Equity of Canada
$ 35,082
$ 184,160
$ 219,242
(160,440)
184,160
23,720
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14. Comparative information Comparative figures have been reclassified to conform to the current year's presentation.
Date Modified: 2017-10-25