Financial Statements 2010-2011 (Unaudited)

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 the Transportation Appeal Tribunal of Canada (TATC) and Transport Canada. 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 of the TATC and Transport Canada 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, Transport Canada, on behalf of TATC maintains a set of accounts that provides a centralized record of the TATC's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the TATC's Departmental Performance Report, is consistent with these financial statements.

Transport Canada works with the TATC to maintain 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 of the TATC and Transport Canada seek 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.

The financial statements of the Tribunal have not been audited.

The Chairperson,

The Chief Financial Officer,

Richard Hall,

Transportation Appeal Tribunal of Canada
Ottawa, Canada

August 29, 2011

André Morency,
Transport Canada
Ottawa, Canada

August 29, 2011

     

2011

2010

Restated

(Note 10) 

     

(in Dollars)

ASSETS

       

Financial assets

       
 

Due from Consolidated Revenue Fund

 

$ 165,460

$ 157,787

 

Accounts receivable and advances (note 4)

60,897

27,237

       

Total financial assets

 

226,357

185,024

         

Non-financial assets

     
 

Tangible capital assets (note 5)

 

9,423

10,680

         

Total non-financial assets

 

9,423

10,680

       
         

TOTAL ASSETS

   

$235,780

$195,704

         

LIABILITIES AND EQUITY OF CANADA

     

Liabilities

       
 

Accounts payable and accrued liabilities (note 8)

$ 222,657

$ 181,324

 

Vacation pay and compensatory leave

 

50,541

45,719

 

Employee future benefits (note 6)

 

116,079

139,987

         

Total Liabilities

   

389,277

367,030

         

EQUITY OF CANADA

 

(153,497)

(171,326)

         

TOTAL LIABILITIES AND EQUITY

 

$ 235,780

$ 195,704

         
               

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

The Chairperson,

The Chief Financial Officer,

Richard Hall,

Transportation Appeal Tribunal of Canada
Ottawa, Canada

August 29, 2011

André Morency,
Transport Canada
Ottawa, Canada

August 29, 2011

   

2011

2010

   

(in Dollars)

Expenses

     
 

Review and Appeal Hearings

$ 1,428,488

$ 1,153,328

 

Internal Services

515,292

458,635

       

Total expenses

1,943,780

1,611,963

       

Net cost of operations

$ 1,943,780

$ 1,611,963

     
             

Segmented information (note 9)

The accompanying notes form an integral part of the financial statements

     

2011

2010

Restated

(Note 10) 

     

(in Dollars)

         

Equity of Canada, beginning of year

$ (171,326)

$ (215,057)

     

Net cost of operations

(1,943,780)

(1,611,963)

Net cash provided by the Government

1,723,852

1,380,203

Change in due from the Consolidated Revenue Fund

7,673

36,753

Services received without charge by other government departments (Note 7)

230,084

238,738

     

Equity of Canada, end of year

 

$ (153,497)

$ (171,326)

         
           

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


   

2011

2010

     

(in Dollars)

Operating activities

   
 

Net cost of operations

$ 1,943,780

$ 1,611,963

 

Non-cash items:

   
 

Amortization of tangible capital assets

(1,257)

(1,257)

 

Services provided without charge by other Government Departments (Note 7)

(230,084)

(238,738)

       
 

Variations in Statement of Financial Position:

   
 

Increase (decrease) in accounts receivable and advances

33,660

(11,465)

 

Decrease (increase) in accounts payable and accrued liabilities

(41,333)

(25,287)

 

Decrease (increase) in vacation pay and compensatory leave

(4,822)

11,723

 

Decrease (increase) in future employee benefits

23,908

33,264

Cash used in operating activities

1,723,852

1,380,203

 

Net cash provided by Government of Canada

$ 1,723,852

$ 1,380,203

       
             

1. Authority and Objectives

The Transportation Appeal Tribunal of Canada (Tribunal) 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 body. Also, Transport Canada's decision not to issue or amend a Canadian Aviation Document (CAD) is within the Tribunal's jurisdiction.

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

The Review and Appeal Hearings program: provides for the operation of an independent tribunal to respond to requests from the transportation community for 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, the Tribunal 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 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 and the Canada Marine Act and the Transportation Appeal Tribunal of Canada Rules.

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 significant differences from Canadian generally accepted accounting principles.

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 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 – 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 the Tribunal and 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 the Tribunal is entitled to draw from the CRF without further appropriations 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 the employer's contribution to the health and dental insurance plans are recorded as operating expenses at their estimated cost.  

(e) Employee future benefits:

  • Pension benefits: Eligible employees participate in the Public Service 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 Tribunal obligation to the Plan. Current legislation does not require the Tribunal to make contributions for any actuarial deficiencies of the Plan.

2. Summary of Significant Accounting Policies (cont'd)

  • Severance benefits: Employees are entitled to severance benefits under labor 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.

(f) Accounts receivables are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables 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. 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

 

(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 severance 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 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: 

3. Parliamentary Authorities (cont'd)

(a) Reconciliation of net cost of operations to current year authorities used

     

2011

2010

     

(in Dollars)

       

Net cost of operations

$ 1,943,780

$ 1,611,963

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

(230,084)

(238,738)

 

Increase in vacation pay and compensatory leave

(4,822)

11,723

 

Decrease in employee future benefits

23,908

33,264

 

Refund of prior years' expenditures

479

12,266

 

Current year authorities used

$ 1,732,004

$ 1,429,221

       
           

(b) Authorities provided and used

     

2011

2010

     

(in Dollars)

Authorities Provided:

   
 

Vote 65 – Operating expenditures

$ 1,664,362

$ 1,673,138

 

Statutory amounts

120,843

115,735

Less:

   
 

Lapsed: Operating

(53,201)

(359,652)

 

Current year authorities used

$ 1,732,004

$ 1,429,221

       
           

4. Accounts Receivable and Advances

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

     

2011

2010

     

(in Dollars)

Receivable from other government departments and agencies

$ 57,197

$ 23,537

Employee advances

3,700

3,700

     
   

$ 60,897

$ 27,237

5. Tangible Capital Assets

(in Dollars)

 

Cost

Accumulated Amortization

Net Book Value

Capital Assets Class

Opening Balance

Acquisitions

Disposals & Write-offs

Closing Balance

Opening Balance

Amortization

Disposals & Write-offs

Closing Balance

2011

2010

Materials & Equipment

20,954

-

-

20,954

10,274

1,257

-

11,531

9,423

10,680

6. Employee Benefits

(a) Pension benefits

The Tribunal'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 the Tribunal contribute to the cost of the Plan. The 2010-2011 expense amounts to $84,832 ($83,560 in 2009-2010), which represents approximately 1.9 times (1.9 in 2009-2010) the contributions by employees.

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 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 Dollars)

Accrued benefit obligation, beginning of year

$ 139,987

$ 173,251

Expense for the year

(23,908)

(33,264)

     

Accrued benefit obligation, end of year

 

$ 116,079

$ 139,987

7. 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 Department 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.

  1. 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 as follows:

     

2011

2010

     

(in Dollars)

Accommodation

$ 188,610

$ 187,604

Employer's contribution to the health and dental insurance plans

41,474

51,134

     

Total

 

$ 230,084

$ 238,738

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.

  1. b. Other transactions with related parties
     

2011

2010

     

(in Dollars)

Expenses - Other Government departments and agencies

$ 110,452

$ 126,507

     

Total

 

$ 110,452

$ 126,507

8. Accounts payable and accrued liabilities

The following table presents details of the Tribunals accounts payable and accrued liabilities:

     

2011

2010

     

(in Dollars)

       

Accounts payable to other government departments and agencies

$ 42,124

$ 23,279

Accounts payable to external parties

137,270

125,149

     
 

179,394

148,428

Accrued liabilities

43,263

32,896

 

Total

$ 222,657

$ 181,324

       

9. Segmented information

Presentation by segment is based on the Tribunal'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 expenses. The segment results for the period are as follows:

 

Review & Appeal Hearings

Internal Services

2011 Total

2010 Total

 

(in Dollars)

Operating expenses

   
 

Salaries and employee benefits

$ 852,122

-

$ 852,122

$777,104

 

Professional and special services

416,442

191,296

607,738

374,041

 

Accommodation

-

188,610

188,610

187,604

 

Travel

152,390

6,565

158,955

134,154

 

Utilities, materials and supplies

7,534

79,440

86,974

106,277

 

Communication

-

48,124

48,124

31,526

 

Amortization of tangible capital assets

-

1,257

1,257

1,257

Total operating expenses

$1,428,488

$ 515,292

$ 1,943,780

$1,611,963

10. Adoption of new accounting policies

During the year, the Tribunal adopted the revised Treasury Board accounting policy TBAS 1.2: Departmental and Agency Financial Statements which is effective for the Tribunal for the 2010-2011 fiscal year. The major change in the accounting policies of the Tribunal 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 policy has been accounted for retroactively with the following impact on the comparatives for 2009-2010:

 

2010 As previously stated

Effect of changes

2010 Restated

 

(in Dollars)

Statement of Financial Position:

 

Assets

 

$37,917

$157,787

$195,704

 

Equity of Canada

 

(329,113)

157,787

(171,326)

11. Comparative Information

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