Aboriginal Affairs and Northern Development Canada - Future-Oriented Statements of Operations for the Year Ending March 31, 2016

Table of contents

Future-Oriented Statement of Operations (Unaudited)
For the year ended March 31
(in thousands of dollars)
  Estimated
Results
2015
Planned
Results
2016
Expenses
People 3,709,982 3,679,735
Government 1,603,186 1,243,093
Land and Economy 1,580,536 1,584,873
Internal Services 382,099 267,088
North 510,202 207,960
Expenses incurred on behalf of Government (4,693) 6,249
Total expenses 7,781,312 6,988,998
Revenues
Norman Wells project profits 83,500 68,500
Resource royalties 60,284 19,500
Interest on loans 3,065 3,063
Miscellaneous 5,641 5,099
Leases and rentals 2,747 2,747
Finance and administrative services 710 710
Revenues earned on behalf of Government (153,478) (97,427)
Total revenues 2,469 2,192
Net cost of operations 7,778,843 6,986,806

The accompanying notes form an integral part of the future-oriented statement of operations.

Notes to the Future-Oriented Financial Statements (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 RPP.

The information in the estimated results for fiscal year 2014-15 is based on actual results as at December 31, 2014 and forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2015-16 fiscal year.

The main assumptions are as follows:

  1. AANDC's activities will remain substantially the same as the previous year.
  2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
  3. Accruals for new contingent liabilities and new environmental liabilities cannot be reasonably foreseen or quantified and have therefore been excluded from the forecast.
  4. Allowances for uncollectibility are based on historical experience. The general historical pattern is expected to continue.

These assumptions are adopted as of December 31, 2014.

2. Variations and changes to the forecast financial information

In preparing the Future-Oriented Statement of Operations AANDC has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results and this variation may be material. 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 statement of operations and the historical statement of operations include:

  1. The timing and amounts of acquisitions and disposals of tangible capital assets, which would affect gains/losses and amortization expense.
  2. The implementation of new collective agreements, which would affect salaries and employee future benefits.
  3. Interest rates, which would affect the net present value of settled claims.
  4. Economic conditions, which would affect the amount of revenue earned and the collectibility of loans receivable.
  5. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year, which would affect forecasted expenditures.

Once the RPP is presented, AANDC will not be updating the forecast for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

3. Summary of significant accounting policies

The future-oriented statement of operations has been prepared in accordance with the Government's accounting policies that came into effect for the 2011-12 fiscal year, 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) Expenses – Expenses are recorded on an accrual basis. Expenses for the Department operations are recorded when goods are received or services are rendered including services provided without charges for accommodation, employee contributions to health and dental insurance plans, legal services and worker's 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 authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses 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 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 liabilities, including contingent liabilities and environmental liabilities to the extent that 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.

b) Revenues – Revenues from regulatory fees are recognized in the accounts based on the services provided in the year. Other revenues are accounted for in 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 AANDC's liabilities. While the Deputy Minister is expected to maintain accounting control, he has no authority regarding 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 therefore presented in reduction of AANDC's gross revenues.

4. Parliamentary authorities

AANDC is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to AANDC do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based 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)
  Estimated
Results
2015
Planned
Results
2016
Net cost of operations 7,778,843 6,986,806
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (8,125) (7,263)
Gain (loss) on disposal of tangible capital assets 1,759 1,482
Contingent liability expense for Guaranteed Loans (5)
Transfer of land held for future claim settlements 112
Services provided without charge by other government departments (82,832) (77,518)
Bad debt expense (not incurred on behalf of government) (1,301) (1,215)
Decrease (increase) in vacation pay and compensatory leave (73) 1,889
Decrease (increase) in liability for settled claims 81,664 53,231
Decrease (increase) in provision for claims and litigation 855,915 976,151
Decrease (increase) in environmental liabilities (102,947) 151,171
Decrease (increase) in employee future benefits 2,251 2,541
Refunds/adjustments to prior years' expenditures 53,085 53,085
Total items affecting net cost of operations but not affecting authorities 799,391 1,159,666
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets 46,442 35,946
Acquisition of land held for future claims settlements 1,035 5,000
Total items not affecting net cost of operations but affecting authorities 47,477 40,946
Authorities requested 8,625,711 8,187,418

 

b) Authorities requested
(in thousands of dollars)
  Estimated
Results
2015
Planned
Results
2016
Authorities requested
Vote 1 – Operating expenditures 1,355,274 1,069,155
Vote 5 – Capital expenditures 46,442 35,946
Vote 10 – Grants and Contributions 7,031,483 6,936,152
Statutory amounts 192,512 146,165
Total requested authorities 8,625,711 8,187,418

 

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.

Forecast authorities requested for the year ending March 31, 2016 are the planned spending amounts presented in the 2015-16 RPP. Estimated authorities requested for the year ending March 31, 2015 include amounts presented in the 2014-15 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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