Future-oriented Financial Statements for the year ending March 31, 2014

Statement of Management Responsibility

Responsibility for the compilation, content and presentation of the accompanying future-oriented financial statements for the year ending March 31, 2014 rests with the management of the Transportation Appeal Tribunal of Canada (TATC). The future-oriented financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector. The future-oriented financial information is submitted in Part III of Estimates (Report on Plans and Priorities) and will be used in TATC's Departmental Performance Report to compare with actual results.

Management of TATC is responsible for the information contained in the future-oriented financial statements and for the process of developing assumptions. Assumptions and estimates are based on information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in TATC's mandate and strategic outcomes. Much of the future-oriented financial information is based on these assumptions, best estimates and judgment and gives due consideration to materiality. At the time of preparation of the future-oriented financial statements, management believes the estimates and assumptions to be reasonable. However, as with all such assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

The actual results achieved for the fiscal years covered in the accompanying future-oriented financial statements will vary from the forecast information presented and the variations may be material.

The future-oriented financial statements of TATC have not been audited.

The Chairperson,

Richard Hall,
Chairperson, TATC
Ottawa, Canada

February 12, 2013

The Chief Financial Officer,

André Morency,
Chief Financial Officer, Transport Canada
Ottawa, Canada

February 12, 2013

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

  Forecast 2014 Estimated Results 2013
Liabilities   
Accounts payable and accrued liabilities (Note 6) 65,143 101,345
Vacation pay and compensatory leave 38,086 38,086
Employee future benefits  (Note 7) 25,165 25,165
Total net liabilities 128,394 164,596
Financial assets  
Due from Consolidated Revenue Fund 65,687 77,302
Accounts receivable and advances  (note 8) 6,176 6,743
Total net financial assets 71,863 84,045
Departmental net debt 56,531 80,551
Non-financial assets  
Tangible capital assets  (note 9) 12,128 15,193
Total non-financial assets 12,128 15,193
Departmental net financial position -44,403 -65,358

Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012.

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

The Chairperson,

Richard Hall,
Chairperson, TATC
Ottawa, Canada

February 12, 2013

The Chief Financial Officer,

André Morency,
Chief Financial Officer, Transport Canada
Ottawa, Canada

February 12, 2013

Future-oriented Statement of Operations and Departmental Net Financial Position (Unaudited) for the Year Ending March 31 (in dollars)

  Forecast 2014 Estimated Results 2013
Expenses
Review and Appeal Hearings 1,393,778 1,393,494
Internal Services 285,000 498,500
Total expenses 1,678,778 1,891,994
Revenues
Internal Services - 39
Total revenues - 39
Net cost of operations before government funding and transfers 1,678,778 1,891,955
Government funding
Net cash provided by Government 1,447,411 1,664,469
Change in due from the Consolidated Revenue Fund -11,615 -42,084
Services provided  without charge by other government departments  (note 10) 263,937 255,597
Net cost of operations after government funding and transfers -20,955 13,973
Departmental net financial position – Beginning of year -65,358 -51,385
Departmental net financial position – End of year -44,403 -65,358

Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012. 

Segmented information (note 11)

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

Future-oriented Statement of Change in Departmental Net Debt (Unaudited) for the Year Ending March 31 (in dollars)

  Forecast 2014 Estimated Results 2013
Net cost of operations after government funding and transfers -20,955 13,973
Change due to tangible capital assets
Acquisition of tangible capital assets - 9,037
Amortization  of tangible capital assets -3,065 -2,010
Net increase (decrease) in departmental net debt -24,020 21,000
Departmental net debt – Beginning of year 80,551 59,551
Departmental net debt – End of year 56,531 80,551

Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012. 

The accompanying notes form an integral part of these future-oriented financial statement

Future-oriented Statement of Cash Flow (Unaudited) for the Year Ending March 31 (in dollars)

  Forecast 2014 Estimated Results 2013
Operating activities  
Net cost of operations before government funding and transfers 1,678,778 1,891,955
Non-cash items:  
Amortization of tangible capital assets -3,065 -2,010
Services provided without charge by other government departments (note 10) -263,937 -255,597
Variations in Future-oriented Statement of Financial Position:  
Increase (decrease)  in accounts receivable and advances -567 -7,471
Decrease (increase) in accounts payable and accrued liabilities 36,202 28,555
Decrease (increased) in vacation pay and compensatory leave - -
Decrease (increase) in employee future benefits - -
Cash used in operating activities 1,447,411 1,655,432
Capital investing activities  
Acquisitions of tangible capital assets - 9,037
Net cash provided by Government of Canada 1,447,411 1,664,469

Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012. 

The accompanying notes form an integral part of these future-oriented financial statements

Notes to the Future-oriented Financial Statements (Unaudited) for the Year Ending March 31, 2014

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 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. Methodology and significant assumptions

The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of the department as described in the Report on Plans and Priorities.

The information in the estimated results for fiscal year 2012-13 is based on actual results as at December 31, 2012 and forecasts for the remainder of the fiscal year.  Estimated year end information for 2012-13 is used as the opening position for the 2013-14 planned results, and forecasts have been made for the planned results for the 2013-14 fiscal year.

The main assumptions underlying the forecasts are as follows:

  • The department's activities will remain substantially the same as for the previous year;
  • Expenses, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.

These assumptions are adopted as at February 12, 2013.

3. Variations and changes to the forecast financial information

While every attempt has been made to accurately forecast final results for the remainder of 2012-2013 and for 2013-2014, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these future-oriented financial statements, TATC has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the future-oriented financial statements and the historical financial statements include:

  • The timing and amounts of acquisitions and disposals of assets that may affect gains/losses and amortization expense. 
  • Implementation of new collective agreements.
  • Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, TATC will not be updating the forecasts for any changes to authorities or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of significant accounting policies

These future-oriented 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 the department 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 Future-oriented financial Statement of Operations and Departmental Net Financial Position and the Future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a reconciliation between the bases of reporting.
  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 the department 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.
  3. 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 TATC is entitled to draw from the CRF without further authorities to discharge its liabilities.
  4. 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, the employer contribution to the health and dental insurance plans, legal and workers' compensation are recorded as operating expenses at their estimated cost.
  5. Employee future benefits
    • Pension benefits: Eligible employees participate in the Public Service Pension Plan (Plan), a multiemployer pension plan administered by the Government. TATC's contributions to the plan are charged to expenses in the year incurred and represent the TATC's total obligation to the plan.  The department'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.
    • Severance benefits:  Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as the 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.
  6. 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.
  7. 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

The future-oriented financial statements are prepared on the assumption that TATC will not make any capital asset purchases during fiscal year 2013-2014.

5. Parliamentary authorities

TATC receives most of its funding through annual parliamentary authorities. Items recognized in the Future-oriented financial statements 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 requested authorities (in dollars)

  Forecast 2014 Estimated Results 2013
Net cost of operation before government funding and transfers
Adjustments for items affecting net cost of operations but not affecting authorities:
Add (Less):
Amortization of tangible capital assets -3,065 -2,010
Services provided without charge by other government departments -263,937 -255,597
Decrease (increase) in vacation pay and compensatory leave - -
Decrease (increase) in employee severance benefits - -
Refund of prior years expenditures - -
Total items affecting net cost of operations but not affecting authorities -267,002 -257,607
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
Forecast authorities available 1,411,776 1,643,385

(b) Authorities requested (in dollars)

  Forecast 2014 Estimated Results 2013
Authorities requested 1,284,898 1,534,898
Vote 55 – Operating expenditures  
Statutory amounts 126,878 126,878
Less:  
Frozen allotment - -3,413
Authorities available for future years - -14,978
Forecast authorities available 1,411,776 1,643,385

Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in Estimates documents and, when reasonable estimates can be made, estimates of amounts to be allocated from Treasury Board central votes. 

6. Accounts payable and accrued liabilities

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

  Forecast 2014 Estimated  Results 2013
Accounts payables - External parties 28,053 33,004
Accounts payables - Other government departments and agencies 37,090 68,341
Total accounts payables 65,143 101,345
Accrued liabilities - -
Total accounts payable and accrued liabilities 65,143 101,345

7. Employee future benefits

(a) Pension benefits:

TATC's employees participate in the Public Service Pension Plan (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 Plans benefits and they are indexed to inflation.

Both the employees and TATC contribute to the cost of the Plan. The 2013-2014 forecast expenses amounts to $90,591 ($90,591 in 2012-13), which represents approximately 1.9 times (1.9 times in 2012-2013) 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 of March 31st, is as follow (in dollars)

  Forecast 2014 Estimated  Results 2013
Accrued benefit obligation, beginning of year 25,165 25,165
Expense for the year - -
Accrued benefit obligation , end of year 25,165 25,165

8. Accounts receivable and advances

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

(in dollars) Forecast 2014 Estimated  Results 2013
Accounts receivable – External  parties - 130
Accounts receivables - Other government departments and agencies 2,476 2,913
Employee advances 3,700 3,700
Net accounts receivables and advances 6,176 6,743

9. Tangible capital assets (in dollars)

  Cost 2014 Accumulated Amortization 2014 Net book value
Opening balance Acquisitions Transfer Disposals and write-offs Closing balance Opening balance Amortization Disposals and write-offs Closing balance Forecast 2014 Estimated Results 2013
Material & Equipment 29,991 - - - 29,991 14,798 3,065   17,863 12,128 15,193
TOTAL 29,991 - - - 29,991 14,798 3,065 - 17,863 12,128 15,193

10. 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.  During the year, the TATC forecasts to receive services obtained without charge from other government departments as presented below.

(a) Common services provided without charge by other government departments

During the year, TATC forecasts to receive without charge from certain common service organizations related to accommodation and the employer contributions to the health and dental insurance plans.  These services provided without charge have been recorded in the TATC's Future-Oriented Financial Statements of Operations and Departmental Net Financial Position as follows (in dollars):

  Forecast 2014 Estimated Results 2013
Accommodation 196,474 193,000
Employer contributions to the health and dental insurance plans 67,463 62,597
Total 263,937 255,597

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 TATC's Future-oriented Statement of Operations and Departmental Net Financial Position.

11. 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 for the main program activities, by major object of expense. The segment results for the period are as follows (in dollars):

  Forecast 2014 Estimated Results 2013
Internal Services Review & Appeal Hearings Total Internal Services Review & Appeal Hearings Total
Operating expenses
Salaries and employee benefits 1,019,884 - 1,019,884 946,321 - 946,321
Professional and special services 109,155 205,200 314,355 167,663 391,547 559,210
Accommodation 196,474 - 196,474 193,000 - 193,000
Travel 18,500 68,400 86,900 31,500 85,331 116,831
Utilities, material and supplies 33,000 11,400 44,400 30,000 21,622 51,622
Telecommunication 13,700 - 13,700 23,000 - 23,000
Amortization of tangible capital assets 3,065 - 3,065 2,010 - 2,010
Total operating expenses 1,393,778 285,000 1,678,778 1,393,494 498,500 1,891,994
Revenues
Miscellaneous revenues - - - 39 - 39
Total revenues - - - 39 - 39
Net cost of operations 1,393,778 285,000 1,678,778 1,393,455 498,500 1,891,955