Financial Statements 2011-2012 (Unaudited)

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, 2012, and all information contained in these statements rests with the management of the Transportation Appeal Tribunal of Canada (TATC). These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.

Management of TATC 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 of TATC maintains a set of accounts that provides a centralized record of TATC's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in TATC's Departmental Performance Report, is consistent with these financial statements.

With the support of Transport Canada, management of TATC 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 of TATC  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 and through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout TATC 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.

TATC will be subject to periodic Core Control Audits performed by the Office of the Comptroller General and will use the results on such audits to adhere to the Treasury Board Policy on Internal Control.

In the interim, TATC has undertaken a risk-based assessment of the system of ICFR for the year ended March 31, 2012, in accordance with the Treasury Board Policy on Internal Control, and the action plan is summarized in the annex.

The financial statements of TATC have not been audited.

The Chairperson,

Richard Hall,

Transportation Appeal Tribunal of Canada
Ottawa, Canada

August 29, 2012

The Chief Financial Officer,

André Morency,
Transport Canada
Ottawa, Canada

August  29, 2012

Statement of Financial Position (Unaudited) as at March 31 (in dollars)

  20122011
Restated (note 10)
Liabilities
Accounts payable and accrued liabilities (note 4) 129,900  222,657
Vacation pay and compensatory leave 38,086 50,541
Employee future benefits (note 5) 25,165 116,079
Total liabilities 193,151 389,277
Financial assets
Due from Consolidated Revenue Fund  119,386  165,460
Accounts receivable and advances (note 6) 14,214 60,897
Total financial assets 133,600 226,357
Departmental net debt  59,551 162,920
Non-financial assets
Tangible capital assets (note 7) 8,166 9,423
Total non-financial assets 8,166 9,423
Departmental net financial position  (51,385)  (153,497)

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

The Chairperson,

Richard Hall,

Transportation Appeal Tribunal of Canada
Ottawa, Canada

August 29, 2012

The Chief Financial Officer,

André Morency,
Transport Canada
Ottawa, Canada

August 29, 2012

Statement of Operations and Departmental Net Financial Position (Unaudited) for the Year Ended March 31 (in dollars)

  2012
Planned Results
20122011
Restated (note 10)
Expenses
Review and Appeal Hearings 1,191,408 1,363,051 1,428,488
Internal Services 470,807 586,339 515,292
Total expenses 1,662,215 1,949,390 1,943,780
Net cost of operations before government funding and transfers 1,662,215 1,949,390 1,943,780
Government funding
Net cash provided by Government   1,871,972 1,723,852
Change in due from Consolidated Revenue Fund   (46,074) 7,673
Services provided without charge by other government departments (note 8)   225,604 230,084
Net cost of operations after government funding and transfers   (102,112) (17,829)
Departmental net financial position – Beginning of year   (153,497) (171,326)
Departmental net financial position – End of year   (51,385)  (153,497)

Segmented information (note 9)

The accompanying notes form an integral part of the financial statements

Statement of Change in Departmental Net Debt (Unaudited) for the Year Ended March 31 (in dollars)

  20122011
Net cost of operations after government funding and transfers  (102,112) (17,829)
Change due to tangible capital assets    
Amortization of tangible capital assets (1,257) (1,257)
Net increase (decrease) in departmental net debt (103,369) (19,086)
Departmental net debt – Beginning of year 162,920 182,006
Departmental net debt – End of year  59,551 162,920

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

Statement of Cash Flows (Unaudited) for the Year Ended March 31 (in dollars)

 Operating activities20122011
Restated
(note 10)
Net cost of operations before government funding and transfers 1,949,390 1,943,780
Non-cash items:    
Amortization of tangible capital assets (1,257) (1,257)
Services provided without charge by other government departments (Note 8) (225,604) (230,084)
Variations in Statement of Financial Position:    
Increase (decrease) in accounts receivable and advances (46,683) 33,660
Decrease (increase) in accounts payable and accrued liabilities 92,757 (41,333)
Decrease (increase) in vacation pay and compensatory leave 12,455 (4,822)
Decrease (increase) in future employee benefits 90,914 23,908
Cash used in operating activities 1,871,972 1,723,852
Net cash provided by Government of Canada 1,871,972 1,723,852

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

Notes to the Financial Statements (Unaudited) for the Year Ended March 31, 2012

1. Authority and Objectives

The Transportation Appeal Tribunal of Canada (TATC) is a quasi-judicial body established in accordance with the Transportation Appeal Tribunal of Canada Act, which came into force on June 30, 2003. The Transportation Appeal Tribunal of Canada is funded primarily through annual appropriations received from the Parliament of Canada and is not taxable under the provisions of the Income Tax Act.

The objective of the Transportation Appeal Tribunal of Canada is to provide the aviation, marine and rail communities with the opportunity to have enforcement and licensing decisions of the Minister of Transport reviewed by an independent process.  Also, Transport Canada's decision not to issue or amend a Canadian Aviation Document (CAD) is within TATC's jurisdiction.

The program architecture of the Transportation Appeal Tribunal of Canada consists of two departmental programs:

The Review and Appeal Hearings program: ensure for the operations of an independent tribunal to respond to requests from the transportation community concerning the review of enforcement and licensing decisions taken by the Minister of Transport under various transportation Acts and to conduct hearings into such appeals. At the conclusion of a hearing, TATC may confirm the Minister's decision, substitute its own decision, or refer the matter back to the Minister for reconsideration.

The Internal Services program: Internal Services are groups of related activities and resources that are administered to support the needs of program 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 Management Services; Acquisition Services; and Travel 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.

The Transportation Appeal Tribunal of Canada administers numerous legislative and constitutional authorities including the Aeronautics Act, the Canada Shipping Act, the Marine Transportation Security Act, the Canada Transportation Act, the Railway Safety Act, the International Bridges and Tunnels Act, the Canada Marine Act and the Transportation Appeal Tribunal of Canada Rules.

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 – TATC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to TATC 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 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 Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2011-2012 Reports on Plans and Priorities.

(b) Net Cash Provided by Government – TATC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by TATC is deposited to the CRF, and all cash disbursements made by TATC 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 TATC and departments of the Government.

(c) Amounts due from the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that TATC is entitled to draw from the CRF without further authorities to discharge its liabilities.

(d) Expenses – Expenses are recorded on the accrual basis:

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 and employer contributions to the health and dental insurance plans are recorded as operating expenses at their estimated cost.

(e) Employee future benefits:

  1. Pension benefits: Eligible employees participate in the Public Service Pension Plan administered by the Government. TATC's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan.  TATC's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.
  2. Severance benefits: Employees entitled to severance benefits under labor 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. 

(f) 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.

(g) Tangible capital assets – All tangible capital assets having an initial cost of $5,000 or more are recorded at their acquisition cost. TATC 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 ClassAmortization Period
Material and equipment 5 to 15 years

(h) 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 the liability for employee future benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary Authorities

TATC receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and 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, TATC 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 (in dollars)

  20122011
Net cost of operations before government funding  and transfers 1,949,390 1,943,780
Adjustments for items affecting net cost of operations but not affecting authorities:    
Amortization of tangible capital assets (1,257) (1,257)
Services provided without charge by other government departments (225,604) (230,084)
Decrease (increase) in vacation pay and compensatory leave 12,455 (4,822)
Decrease in employee future benefits 90,914 23,908
Refund of prior years' expenditures 30,307 479
Current year authorities used 1,856,205 1,732,004

b) Authorities provided and used (in dollars)

  20122011
Authorities Provided:    
Vote 65 – Operating expenditures 1,730,188 1,664,362
Statutory amounts 126,182 120,843
Less:    
Lapsed: Operating (165) (53,201)
Current year authorities used 1,856,205 1,732,004

4. Accounts payable and accrued liabilities

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

  2012
(in dollars)
2011
(in dollars)
Accounts payable - Other government departments and agencies 36,999 42,124
Accounts payable - External parties 86,901 137,270
Total accounts payable 123,900 179,394
Accrued liabilities 6,000 43,263
Total accounts payable and accrued liabilities 129,900  222,657

5. Employee Future Benefits

a) Pension benefits

TATC'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 TATC contribute to the cost of the Plan. The 2011-2012 expense amounts to $90,725 ($84,832 in 2010-2011), which represents approximately 1.8 times (1.9 in 2010-2011) the contributions by employees.

TATC'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  

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

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.

  2012
(in dollars)
2011
(in dollars)
Accrued benefit obligation - beginning of year  116,079  139,987
Expense for the year (3,514) (23,908)
Benefits paid during the year (87,400) -
Accrued benefit obligation - end of year  25,165 116,079

6. Accounts receivable and advances

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

  2012
(in dollars)
2011
(in dollars)
Restated (note 10)
Receivables - Other government departments and agencies 10,384 57,197
Receivables- External parties 130 -
Employee advances 3,700 3,700
Net accounts receivable 14,214 60,897

7. Tangible Capital Assets (in dollars)

 Capital Asset ClassCostAccumulated AmortizationNet Book Value
Opening BalanceAcquisitionsDisposals and  Write-offsClosing BalanceOpening BalanceAmortizationDisposals and  Write-offsClosing Balance20122011
Materials & Equipment 20,954 - - 20,954 11,531 1,257 - 12,788 8,166 9,423

8. Related Party Transactions

TATC is related as a result of common ownership to all government departments, agencies, and Crown corporations.  TATC enters into transactions with these entities in the normal course of business and on normal trade terms.  In addition, TATC has an agreement with Transport Canada related to the provision of finance and administration services. During the year, TATC 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, TATC received services without charge from certain common service organizations, related to accommodation and the employer's contribution to the health and dental insurance plans.  These services provided without charge have been recorded in TATC's Statement of Operations and Departmental Net Financial Position as follows:

  20122011
(in dollars)
Accommodation 190,537 188,610
Employer's contribution to the health and dental insurance plans 35,067 41,474
Total 225,604 230,084

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 the other departments and agencies without charge. The costs of these services, such as 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 TATC's Statement of Operations and Departmental Net Financial Position.

b) Other transactions with related parties

  20122011
(in dollars)
Expenses - Other government departments and agencies 196,070 110,452

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

9. Segmented information

Presentation by segment is based on TATC'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 for the main program activities, by major object of expense. The segment results for the period are as follows:

Operating expensesReview & Appeal HearingsInternal Services2012 Total2011 Total Restated
(note 10)
Salaries and employee benefits  884,062  -  884,062 852,122
Professional and special services 312,520 296,587 609,107 607,738
Accommodation - 190,537 190,537 188,610
Travel 156,648 5,617 162,265 158,955
Utilities, materials and supplies 9,046 57,337 66,383 86,974
Communication 775 35,004 35,779 48,124
Amortization of tangible capital assets - 1,257 1,257 1,257
Total operating expenses 1,363,051  586,339 1,949,390 1,943,780

10. Accounting changes

During 2011, amendments were made to Treasury Board Accounting Standard 1.2––Departmental and Agency Financial Statements to improve financial reporting by government departments and agencies. The amendments are effective for financial reporting of fiscal years ending March 31, 2012, and later. The significant changes to TATC's financial statements are described below. These changes have been applied retroactively, and comparative information for 2010-11 has been restated.

Net debt (calculated as liabilities less financial assets) is now presented in the Statement of Financial Position. Accompanying this change, TATC now presents a Statement of Change in Net Debt and no longer presents a Statement of Equity.

Government funding and transfers, as well as the credit related to services provided without charge by other government departments are now recognized in the Statement of Operations and Departmental Net Financial Position below "Net cost of operations before government funding and transfers." In previous years, TATC recognized these transactions directly in the Statement of Equity of Canada. The effect of this change was to decrease the net cost of operations after government funding and transfers by $­­ 2,051,502 for 2012 ($1,961,609 for 2011).

  2011 as previously stated
(in dollars)
Effect of changes
(in dollars)
2011 Restated
(in dollars)
Statement of Financial Position:      
Departmental financial position (153,497) - (153,497)
Statement of Operations and Departmental Net Financial Position:      
Expenses 1,943,780 - 1,943,780
Government funding and transfers      
Net cash provided by Government - 1,723,852 1,723,852
Change in due from Consolidated Revenue Fund - 7,673 7,673
Services provided without charge by other government departments - 230,084 230,084

11. Comparative Information

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