Indigenous and Northern Affairs Canada – Future-Oriented Statements of Operations for the Year Ending March 31, 2017

Table of contents

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

(in thousands of dollars) Forecast Results
2016
Planned Results
2017
Expenses
People
3,445,706 3,634,071
Government
2,563,853 1,251,647
Land and Economy
1,699,184 1,498,860
North
597,321 116,033
Internal Services
322,878 253,041
Expenses incurred on behalf of Government
8,173 6,394
Total expenses
8,637,115 6,760,046
Revenues
Norman Wells project profits
74,961 67,465
Resource royalties
16,588 2,000
Interest on loans
6,034 5,845
Finance and administrative services
3,394 1,654
Miscellaneous
3,282 4,152
Leases and rentals
535 537
Revenues earned on behalf of Government
(101,326) (79,428)
Total revenues
3,468 2,225
Net cost of operations 8,633,647 6,757,821
  • 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 Report on Plans and Priorities.

    The information in the forecast results for fiscal year 2015-16 is based on actual results as at December 31, 2015 and forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2016-17 fiscal year.

    The main assumptions underlying the forecasts are as follows:
    1. Indigenous and Northern Affairs Canada's (INAC) 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 uncollectibles are based on historical experience. The general historical pattern is expected to continue.

    These assumptions are adopted as of December 31, 2015.
  2. Variations and changes to the forecast financial information

    In preparing this future-oriented statement of operations, INAC 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 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 the following:
    1. The timing and amount of acquisitions and disposals of tangible capital assets, which may affect gains/losses and amortization expense.
    2. The implementation of new collective agreements, which may affect salaries and employee future benefits.
    3. Interest rates, which may affect the net present value of settled claims.
    4. Economic conditions, which may affect the amount of revenue earned and the collectability of loan receivables.
    5. Further changes to the operating budget through the addition of new initiatives or technical adjustments later in the year, which may affect forecasted expenditures.

    Once the Report on Plans and Priorities is presented, INAC will not be updating the forecasts 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:

    1. Expenses – Expenses are recorded on an accrual basis. Expenses for the Department's operations are recorded when goods are received or services are rendered including services provided without charge 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. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.

      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.

    2. Revenues – 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 INAC's liabilities. While the Deputy Minister is expected to maintain accounting control, she 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 are therefore presented as a reduction of INAC's gross revenues.
  4. Parliamentary authorities

    INAC is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to INAC 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)
  Forecast Results
2016
Planned Results
2017
Net cost of operations before government funding and transfers 8,633,647 6,757,821
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets
(7,992) (7,909)
Gain (loss) on disposal of tangible capital assets
1,017 1,515
Contingent liability expense for guaranteed Loans
(140)  
Transfer of land held for future claims settlements
(804) (457)
Services provided without charge by other government departments
(78,821) (67,772)
Bad debt expense (not incurred on behalf of government)
(4,183) (4,510)
Decrease (increase) in vacation pay and compensatory leave
1,096 1,400
Decrease (increase) in provision for claims and litigation
(1,022,315) 0
Decrease (increase) in environmental liabilities
(413,079) (35,512)
Decrease (increase) in employee future benefits
1,206 4,510
Refunds/adjustments to prior years' expenditures
52,521 58,706
Total items affecting net cost of operations but not affecting authorities (1,471,494) (50,029)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets
57,703 41,432
Acquisition of land held for future claims settlements
967  
Expenditures related to settled claims
56,943 68,672
Expenditures related to claims and litigation
625,023 533,100
Expenditures reducing environmental liabilities
170,188 154,556
Total items not affecting net cost of operations but affecting authorities 910,824 797,760
Requested authorities 8,072,977 7,505,552
b. Authorities requested (in thousands of dollars)
  Forecast Results
2016
Planned Results
2017
Authorities requested:
Vote 1 – Operating expenditures 1,369,373 658,201
Vote 5 – Capital expenditures 57,703 41,432
Vote 10 – Grants and contributions 6,489,458 6,652,766
Statutory amounts 156,443 153,153
Requested authorities 8,072,977 7,505,552

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, 2017 are the planned spending amounts presented in the 2016-17 RPP. Estimated authorities requested for the year ending March 31, 2016 include amounts presented in the 2015-16 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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