Financial Statements 2013-2014 (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, 2014, and all information contained in these statements rests with the management of the Transportation Appeal Tribunal of Canada (the Tribunal). 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 Tribunal's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Tribunal'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 the Tribunal 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.

The Tribunal 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 the Tribunal have not been audited.

Acting Chairperson,
John Badowski,

Transportation Appeal Tribunal of Canada
Ottawa, Canada
August 29, 2014

Chief Financial Officer,
André Lapointe,
Transport Canada
Ottawa, Canada
August 29, 2014

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

  2014 2013
Liabilities  
Accounts payable and accrued liabilities (note 4) 83,383 190,095
Vacation pay and compensatory leave 35,261 35,618
Employee future benefits (note 5) 6,854 33,562
Total liabilities 125,498 259,275
Financial assets  
Due from Consolidated Revenue Fund 42,626  179,177
Accounts receivable and advances (note 6) 40,958 14,614
Total financial assets 83,584 193,791
Departmental net debt 41,914  65,484
Non-financial assets  
Tangible capital assets (note 7) 11,872 14,937
Total non-financial assets 11,872 14,937
Departmental net financial position (30,042)  (50,547)

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

Acting Chairperson,
John Badowski,

Transportation Appeal Tribunal of Canada
Ottawa, Canada
August 29, 2014

Chief Financial Officer,
André Lapointe,
Transport Canada
Ottawa, Canada
August 29, 2014

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

  2014 Planned Results 2014 2013
Expenses   
Review and appeal hearings 1,393,778 1,228,986 1,314,723
Internal services 285,000 472,833 509,524
Total expenses 1,678,778 1,701,819 1,824,247
Revenues   
Miscellaneous revenues - - 39
Total revenues - - 39
Net cost of operations before government funding 1,678,778 1,701,819 1,824,208
Government funding
Net cash provided by Government 1,447,411 1,597,986 1,527,788
Change in due from Consolidated Revenue Fund (11,615) (136,551) 59,791
Services provided without charge by other government departments (note 8) 263,937 260,889 237,467
Net cost of operations after government funding (20,955) (20,505) (838)
Departmental net financial position - Beginning of year (65,358) (50,547) (51,385)
Departmental net financial position - End of year (44,403) (30,042) (50,547)

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)

  2014 Planned Results 2014 2013
Net cost of operations after government funding (20,955) (20,505)  (838)
Change due to tangible capital assets   
Acquisition of tangible capital assets - - 9,037
Amortization of tangible capital assets (3,065) (3,065) (2,266)
Total change due to tangible capital assets (3,065) (3,065) 6,771
Net increase (decrease) in departmental net debt (24,020) (23,570) 5,933
Departmental net debt - Beginning of year 80,551 65,484 59,551
Departmental net debt - End of year 56,531 41,914  65,484

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

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

  2014 2013
Operating activities  
Net cost of operations before government funding 1,701,819 1,824,208
Non-cash items:  
Amortization of tangible capital assets (3,065) (2,266)
Services provided without charge by other government departments (note 8) (260,889) (237,467)
Variations in Statement of Financial Position:  
Increase (decrease) in accounts receivable and advances 26,344 400
Decrease (increase) in accounts payable and accrued liabilities 106,712 (60,195)
Decrease (increase) in vacation pay and compensatory leave 357 2,468
Decrease (increase) in future employee benefits 26,708 (8,397)
Cash used in operating activities 1,597,986 1,518,751
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 1,597,986 1,527,788

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 (the Tribunal) is a quasi-judicial body established in accordance with the Transportation Appeal Tribunal of Canada Act, S.C. 2001, c. 29. The Tribunal is funded primarily through annual appropriations received from Parliament and is not taxable under the provisions of the Income Tax Act.

The Tribunal 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 Tribunal 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 alignment architecture of the Tribunal consists of two departmental programs:

The Review and Appeal Hearings program: ensures 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, the Tribunalmay 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:

(a) Parliamentary authorities - the Tribunal is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Tribunal 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 2013-2014 Report on Plans and Priorities.

(b) Net cash provided by Government - the Tribunal operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Tribunal is deposited to the CRF, and all cash disbursements made by the Tribunal 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 or 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 Tribunal is entitled to draw from the CRF without further authorities to discharge its liabilities.

(d) Revenues

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

(e) Expenses - Expenses are recorded on the accrual basis:

  1. Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
  2. 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.

(f) Employee future benefits:

  1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The Tribunal's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Tribunal'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.

(g) 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.

(h) Tangible capital assets - All tangible capital assets having an initial cost of $5,000 or more are recorded at their acquisition cost. The Tribunal 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

(i) 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

The Tribunal 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, the Tribunal 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)

  2014 2013
Net cost of operations before government funding 1,701,819 1,824,208
Adjustments for items affecting net cost of operations but not affecting authorities:  
Amortization of tangible capital assets (3,065) (2,266)
Services provided without charge by other government departments (260,889) (237,467)
Decrease (increase) in vacation pay and compensatory leave 357 2,468
Decrease (increase) in employee future benefits 26,708 (8,397)
Refund of prior years' expenditures 18,950 526
Revenues not available for spending in the fiscal year - 39
Other (12,843) (3,230)
Total items affecting net cost of operations but not affecting authorities (230,782) (248,327)
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 1,471,037 1,584,918

(b) Authorities provided and used (in dollars)

  2014 2013
Authorities Provided:  
Vote 55 - Program expenditures 1,380,467 1,534,899
Statutory amounts 130,122 123,553
Less:  
Authorities available for future years - (39)
Lapsed: Operating (39,552) (73,495)
Current year authorities used 1,471,037 1,584,918

4. Accounts payable and accrued liabilities

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

  2014 2013
Accounts payable - Other government departments and agencies 14,701 17,640
Accounts payable - External parties 44,116 134,969
Total accounts payable 58,817 152,609
Accrued liabilities 24,566 37,486
Total accounts payable and accrued liabilities 83,383 190,095

5. Employee future benefits

a) Pension benefits

The Tribunal'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 Tribunal contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Canada's 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 2013-2014 expense amounts to $91,462 ($88,189 in 2012-2013).  For Group 1 members, the expense represents approximately 1.6 times (1.7 times in 2012-2013) the employee contributions and, for Group 2 members, approximately 1.5 times (1.6 times in 2012-2013) the employee contributions.

The Tribunal'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 Tribunal 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.

  2014 (in dollars) 2013 (in dollars)
Accrued benefit obligation - Beginning of year 33,562  25,165
Expense for the year (13,994) 8,397
Benefits paid during the year (12,714) -
Accrued benefit obligation - End of year 6,854 33,562

6. Accounts receivable and advances

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

  2014 2013
Receivables - Other government departments and agencies 40,758 10,784
Receivables - External parties - 130
Employee advances 200 3,700
Total accounts receivable and advances 40,958  14,614

7. Tangible capital assets (in dollars)

Capital Asset Class Cost Accumulated Amortization Net Book Value
Opening Balance Acquisitions Closing Balance Opening Balance Amortization Closing Balance 2014 2013
Material & Equipment 20,954 - 20,954 14,150 1,257 15,407 5,547 6,804
Computer Hardware 9,037 - 9,037 904 1,808 2,712 6,325 8,133
Total 29,991 - 29,991 15,054 3,065 18,119 11,872 14,937

8. Related party transactions

The Tribunal is related as a result of common ownership to all government departments, agencies, and Crown corporations. The Tribunal enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Tribunal has an agreement with Transport Canada related to the provision of finance and administration services. During the year, the Tribunal 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, the Tribunal 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 the Tribunal's Statement of Operations and Departmental Net Financial Position as follows (in dollars):

  2014 2013
Accommodation 198,557  192,884
Employer's contribution to the health and dental insurance plans 62,332 44,583
Total 260,889 237,467

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 the Tribunal's Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties (in dollars)

  2014 2013
Expenses - Other government departments and agencies 60,679 58,363

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 the Tribunal'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 2014 Total 2013 Total
Operating expenses    
Salaries and employee benefits 947,629 - 947,629  905,167
Professional and special services 191,883 195,863 387,746 545,261
Accommodation - 198,557 198,557 192,884
Travel 84,323 6,470 90,793 98,165
Utilities, materials and supplies 5,151 53,191 58,342 63,871
Communication - 15,687 15,687 16,633
Amortization of tangible capital assets - 3,065 3,065 2,266
Total operating expenses 1,228,986 472,833 1,701,819 1,824,247
Revenues    
Miscellaneous revenues - - - 39
Total revenues - - - 39
Net cost from continuing operations 1,228,986 472,833 1,701,819 1,824,208

10. Subsequent events

In Canada's Economic Action Plan 2014, the Government announced its intention to create the Administrative Tribunals Support Service of Canada (ATSSC).  This new organization, which consolidates operations of several administrative tribunals, will provide support services to the Tribunal.  The Tribunal will retain its adjudication powers but will transfer all human and financial resources to the ATSSC. 

The Economic Action Plan 2014 Act, No. 1 received Royal Assent on June 19, 2014.  As a result, the ATSSC is expected to come into force on November 1, 2014.  The net assets and net liabilities that will be transferred to the ATSSC as of this date cannot be estimated at this time.