Financial Statements 2012-2013 (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, 2013, 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 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 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 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 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 is subject to periodic Core Control Audits performed by the Office of the Comptroller General and uses the results of such audits to comply with the Treasury Board Policy on Internal Control.

A Core Control Audit was performed in 2012-2013 by the Office of the Comptroller General of Canada (OCG). The Audit Report and related Management Action Plan are posted on the departmental web site at (http://www.tatc.gc.ca/s2/s45/d129/eng/core-control-audit-january and http://www.tatc.gc.ca/s2/s45/d138/eng/management-action-plan-core).

The financial statements of TATC have not been audited.

The Chairperson,
Richard Hall,
Transportation Appeal Tribunal of Canada
Ottawa, Canada
August 30, 2013

The Chief Financial Officer,
André Morency,
Transport Canada
Ottawa, Canada
August 30, 2013

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

  2013 2012
Liabilities  
Accounts payable and accrued liabilities (note 4) 190,095  129,900
Vacation pay and compensatory leave 35,618 38,086
Employee future benefits (note 5) 33,562 25,165
Total liabilities 259,275 193,151
Financial assets  
Due from Consolidated Revenue Fund  179,177  119,386
Accounts receivable and advances (note 6) 14,614 14,214
Total financial assets 193,791 133,600
Departmental net debt  65,484 59,551
Non-financial assets  
Tangible capital assets (note 7) 14,937 8,166
Total non-financial assets 14,937 8,166
Departmental net financial position  (50,547)  (51,385)

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

The Chairperson,
Richard Hall,
Transportation Appeal Tribunal of Canada
Ottawa, Canada
August 30, 2013

The Chief Financial Officer,
André Morency,
Transport Canada
Ottawa, Canada
August 30, 2013

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

  2013 Planned Results 2013 2012
Expenses   
Review and Appeal Hearings 1,137,939 1,314,723 1,363,051
Internal Services 535,361 509,524 586,339
Total expenses 1,673,300 1,824,247 1,949,390
Revenues   
Miscellaneous revenues - 39 -
Total revenues - 39 -
Net cost of operations before government funding 1,673,300 1,824,208 1,949,390
Government funding   
Net cash provided by Government 1,435,397 1,527,788 1,871,972
Change in due from Consolidated Revenue Fund (17,909) 59,791 (46,074)
Services provided without charge by other government departments (note 8) 260,267 237,467 225,604
Net cost of operations after government funding (4,455) (838) (102,112)
Departmental net financial position - Beginning of year (51,385) (51,385) (153,497)
Departmental net financial position - End of year (46,930) (50,547)  (51,385)

Segmented information (note 9)

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

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

  2013 Planned Results 2013 2012
Net cost of operations after government funding (4,455)  (838) (102,112)
Change due to tangible capital assets   
Acquisition of tangible capital assets - 9,037 -
Amortization of tangible capital assets (1,257) (2,266) (1,257)
Total change due to tangible capital assets (1,257) 6,771 (1,257)
Net increase (decrease) in departmental net debt (5,712) 5,933 (103,369)
Departmental net debt - Beginning of year 59,551 59,551 162,920
Departmental net debt - End of year 53,839  65,484 59,551

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

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

  2013 2012
Operating activities  
Net cost of operations before government funding 1,824,208 1,949,390
Non-cash items:  
Amortization of tangible capital assets (2,266) (1,257)
Services provided without charge by other government departments (note 8) (237,467) (225,604)
Variations in Statement of Financial Position:  
Increase (decrease) in accounts receivable and advances 400 (46,683)
Decrease (increase) in accounts payable and accrued liabilities (60,195) 92,757
Decrease (increase) in vacation pay and compensatory leave 2,468 12,455
Decrease (increase) in future employee benefits (8,397) 90,914
Cash used in operating activities 1,518,751 1,871,972
Capital investing activities  
Acquisition of tangible capital assets 9,037 -
Cash used in capital investing activities 9,037 -
Net cash provided by Government of Canada 1,527,788 1,871,972

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

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

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, S.C. 2001, c. 29. 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 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 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.

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 or 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. 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:

  1. 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 2012-2013 Report on Plans and Priorities.

  2. 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.

  3. 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.

  4. Revenues

    Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

  5. 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.

  6. 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 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.
  7. 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.

  8. 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 Class Amortization Period
    Material and equipment 5 to 15 years
    Computer hardware 3 to 5 years
  9. 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)

  2013 2012
Net cost of operations before government funding 1,824,208 1,949,390
Adjustments for items affecting net cost of operations but not affecting authorities:  
Amortization of tangible capital assets (2,266) (1,257)
Services provided without charge by other government departments (237,467) (225,604)
Decrease (increase) in vacation pay and compensatory leave 2,468 12,455
Decrease (increase) in employee future benefits (8,397) 90,914
Refund of prior years' expenditures 526 30,307
Revenues not available for spending in the fiscal year 39 -
Other (3,230) -
Total items affecting net cost of operations but not affecting authorities (248,327) (93,185)
Adjustments for items not affecting net cost of operations but affecting authorities:  
Acquisition of tangible capital assets 9,037 -
Total items not affecting net cost of operations but affecting authorities 9,037 -
Current year authorities used 1,584,918 1,856,205

(b) Authorities provided and used (in dollars)

  2013 2012
Authorities Provided:  
Vote 55 - Operating expenditures 1,534,899 1,730,188
Statutory amounts 123,553 126,182
Less:  
Authorities available for future years (39) -
Lapsed: Operating (73,495) (165)
Current year authorities used 1,584,918 1,856,205

4. Accounts payable and accrued liabilities

The following table presents details of TATC's accounts payable and accrued liabilities (in dollars):

  2013 2012
Accounts payable - Other government departments and agencies 17,640 36,999
Accounts payable - External parties 134,969 86,901
Total accounts payable 152,609 123,900
Accrued liabilities 37,486 6,000
Total accounts payables and accrued liabilities 190,095 129,900

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 2012-2013 expense amounts to

$88,189 ($90,725 in 2011-2012), which represents approximately 1.7 times (1.8 in 2011-2012) 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.

  (in dollars)
2013 2012
Accrued benefit obligation - Beginning of year  25,165  116,079
Expense for the year 8,397 (3,514)
Benefits paid during the year - (87,400)
Accrued benefit obligation - End of year 33,562 25,165

6. Accounts receivable and advances

The following table presents details of TATC's accounts receivable and advances balances (in dollars):

  2013 2012
Receivables - Other government departments and agencies 10,784  10,384
Receivables - External parties 130 130
Employee advances 3,700 3,700
Net accounts receivable  14,614 14,214

7. Tangible Capital Assets (in dollars)

Capital Asset Class Cost Accumulated Amortization Net Book Value
Opening Balance Acquisitions Disposals and Write-offs Closing Balance Opening Balance Amorti-zation Disposals and Write-offs Closing Balance 2013 2012
Material & Equipment 20,954 - - 20,954 12,788 1,362 - 14,150 6,804 8,166
Computer Hardware - 9,037 - 9,037 - 904 - 904 8,133 -
Total 20,954 9,037 - 29,991 12,788 2,266 - 15,054 14,937 8,166

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 (in dollars):

  2013 2012
Accommodation  192,884  190,537
Employer's contribution to the health and dental insurance plans 44,583 35,067
Total 237,467 225,604

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 (in dollars)

  2013 2012
Expenses - Other government departments and agencies  58,363  196,070

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 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 expense and major type of revenue. The segment results for the period are as follows (in dollars):

  Review and Appeal Hearings Internal Services 2013 Total 2012 Total
Operating expenses    
Salaries and employee benefits  905,167  -  905,167 884,062
Professional and special services 313,903 231,358 545,261 609,107
Accommodation - 192,884 192,884 190,537
Travel 90,779 7,386 98,165 162,265
Utilities, materials and supplies 4,874 58,997 63,871 66,383
Communication - 16,633 16,633 35,779
Amortization of tangible capital assets - 2,266 2,266 1,257
Total operating expenses 1,314,723  509,524 1,824,247 1,949,390
Revenues    
Miscellaneous revenues - 39 39 -
Total revenues - 39 39 -
Net cost from continuing operations 1,314,723 509,485 1,824,208 1,949,390