Indigenous and Northern Affairs Canada – Future-Oriented Statements of Operations for the Year Ending March 31, 2018

Table of contents

Future-Oriented Statement of Operations (Unaudited)
For the Year Ended March 31

(in thousands of dollars) Forecast Results
2016-17
Planned Results
2017-18
Expenses
People
4,359,415 4,917,344
Government
3,062,757 464,256
Land and Economy
2,288,812 2,656,247
North
332,187 276,491
Internal Services
355,778 260,977
Expenses incurred on behalf of Government
2,069 6,626
Total expenses
10,401,018 8,581,941
Revenues
Norman Wells project profits
10,288 10,300
Resource royalties
333 10,000
Interest on loans
5,107 4,486
Finance and administrative services
2,229 2,392
Miscellaneous
3,645 3,475
Leases and rentals
1,221 996
Revenues earned on behalf of Government
(18,774) (27,648)
Total revenues
4,049 4,001
Net cost of operations before government funding and transfers 10,396,969 8,577,940
  • The accompanying notes form an integral part of the Future-Oriented Statement of Operations.

Notes to the Future-Oriented Statement of Operations (Unaudited)
For the Year Ended March 31

1. Methodology and Significant Assumptions

The future-oriented statement of operations has been prepared on the basis of the government priorities and the plans of the department as described in the Departmental Plan.

The information in the forecasted results for fiscal year 2016-17 is based on actual results as at September 30, 2016 and forecasts for the remainder of the fiscal year. Planned results for fiscal year 2017-18 have also been forecasted

The main assumptions underlying the forecasts are as follows:

  1. The department’s activities will remain substantially the same as the previous year on an accrual basis even though the department’s budget has increased;
  2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on past experience. The general historical pattern is expected to continue;
  3. Accruals for new environmental liabilities cannot be reasonably foreseen or quantified and have therefore been excluded from the forecast;
  4. Allowances for uncollectible are based on historical experience.

These assumptions are adopted as of December 31, 2016.

2. Variations and changes to the forecast financial information

Although every attempt has been made to forecast the final results for the remainder of 2016-17 and for 2017-18, actual results achieved for both years are likely to differ from the forecasted information presented, and this variation could be material.

In preparing this Future-Oriented Statement of Operations, Indigenous and Northern Affairs Canada has made estimates and assumptions about the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are based on past experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are continually re-evaluated.

Factors that could lead to material differences between the Future-Oriented Statement of Operations and the historical statement of operations include:

  1. The timing and the amount of acquisitions and disposals of tangible capital assets, which may affect gains, losses and amortization expense.
  2. The implementation of new collective agreements;
  3. Economic conditions, which may affect both the amount of revenue earned and the collectability of loan receivables;
  4. Interest rates in effect at the time of the future-oriented statement of operations, which will affect the net present value of non-interest-bearing loans;
  5. Other changes to the operating budget, such as new initiatives or technical adjustments later in the fiscal year.

After the Department Plan is tabled in Parliament, Indigenous and Northern Affairs Canada will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Results Report.

3. Summary of significant accounting policies

The Future-Oriented Statement of Operations has been prepared using the Government of Canada’s accounting policies in effect for the fiscal year 2016-2017, and is 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. Expenses

    The department records expenses on an accrual basis.

    The department records expenses when goods are received or services are rendered including services provided without charge for accommodation, employer contributions to health and dental insurance plans, legal services and workers’ compensation, which are recorded as expenses at their estimated cost. Vacation pay and compensatory leave, as well as severance benefits, are accrued, and expenses are recorded as the benefits are earned by employees under their respective terms of employment.

    Transfer payments are recorded as expenses when the recipients have met all the eligibility criteria or the transfers are authorized by March 31. In the case of transfers that do not form part of an existing program, the transfers are considered to be authorized when the government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements.

    Expenses also include provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivable and provisions for valuation of loans and advances, or a liability, including contingent liabilities and environmental liabilities to the extent the future event is likely to occur and a reasonable estimate can be made.

    Expenses also include amortization of tangible capital assets which are capitalized at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset.

  2. Revenues

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

    Revenues that are non-respendable are not available to discharge department’s liabilities. Although the deputy head is expected to maintain accounting control, he or she has no authority over the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented as a reduction of the department’s gross revenues.

4. Parliamentary authorities

The department is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the department differs from financial reporting according to generally accepted accounting principles because authorities are based mainly on cash flow requirements. Items recognized in the Future-Oriented Statement of Operations in one year may be funded through parliamentary authorities in prior, current, or future years. Accordingly, the department has different net cost 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 authorities requested (in thousands of dollars)
  Forecast Results
2016-17
Planned Results
2017-18
Net cost of operations before government funding and transfers 10,396,969 8,577,940
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets
(10,401) (9,331)
Gain (loss) on disposal of tangible capital assets
1,819 1,609
Contingent liability expense for guaranteed Loans
30 15
Transfer of land held for future claims settlements
(457) (496)
Services provided without charge by other government departments
(76,448) (69,139)
Bad debt expense (not incurred on behalf of government)
(6,417) (7,081)
Decrease (increase) in vacation pay and compensatory leave
350 503
Decrease (increase) in liability for settled claims
(49,009) 0
Decrease (increase) in provision for claims and litigation
(1,654,472) (1,132,196)
Decrease (increase) in environmental liabilities
(130,371) (66,902)
Decrease (increase) in employee future benefits
(35) 1,004
Decrease (increase) in finance and administrative services
0 1,682
Refunds/adjustments to prior years' expenditures
35,438 53,728
Total items affecting net cost of operations but not affecting authorities (1,889,973) (1,226,604)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets
55,426 44,496
Acquisition of land held for future claims settlements
0 1,785
Expenditures related to settled claims
68,672 62,089
Expenditures related to claims and litigation
574,694 2,301,842
Expenditures reducing environmental liabilities
180,851 295,243
Total items not affecting net cost of operations but affecting authorities 879,643 2,705,455
Requested authorities 9,386,639 10,056,791
b. Authorities requested (in thousands of dollars)
  Forecast Results
2016-17
Planned Results
2017-18
Authorities requested:
Vote 1 – Operating expenditures 915,849 892,343
Vote 5 – Capital expenditures 55,426 44,496
Vote 10 – Grants and contributions 8,240,824 8,966,693
Statutory amounts 174,540 153,259
Total authorities requested 9,386,639 10,056,791

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

Forecast authorities requested for the year ending March 31, 2018 are the planned spending amounts presented in the 2017-2018 Departmental Plan. Estimated authorities requested for the year ending March 31, 2017 include amounts presented in the 2016-2017 Main Estimates and Supplementary Estimates (A) and (B), planned for presentation in Supplementary Estimates (C) and estimates of amounts to be allocated at year-end from Treasury Board central votes.

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