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Consolidated Future-oriented Statement of Operations and Notes 2014-2015

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Year ended March 31

Table of Contents

Consolidated Future Oriented Statement of Operations (Unaudited)

Table 1: Consolidated Future Oriented Statement of Operations
For the Year Ended March 31 (in thousands of dollars)Estimated Results 2013-14Planned Results 2014-15
Expenses
Diplomacy and Advocacy1,004,563990,630
Fragile Countries and Crisis-affected Communities970,102689,688
Low-income Countries671,108762,305
Governance, Strategic Direction and Common Service Delivery635,783648,529
Global Engagement and Strategic Policy592,0431,056,919
Internal Services277,052294,322
Middle-income Countries244,004352,414
Canadian Engagement for Development223,859267,601
Government of Canada Benefits218,732196,823
International Commerce173,638183,882
Passport Canada86,147-
International Policy Advice and Integration83,22099,040
Consular Services and Emergency Management62,55257,408
Expenses incurred on behalf of Government(92,540)(309,337)
Total Expenses5,150,2635,290,224
Revenues
Gain on disposal of tangible capital assets487,09610,929
Sales of goods and services241,095166,672
Amortization of discount on loans14,30619,075
Gain on foreign exchange13,75015,618
Miscellaneous revenues4,0975,104
Revenues earned on behalf of Government(636,635)(168,110)
Total Revenues123,70949,288
Net cost of operations5,026,5545,240,936

The accompanying notes form an integral part of this future-oriented Statement of Operations.

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 (RPP).

The information in the estimated results for fiscal year 2013-14 is based on actual results as at November 30, 2013 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2014-15 (future year) fiscal year.

The main assumptions are as follows:

  1. With the exception of Passport Canada, the Department's activities, will remain substantially the same as the previous year.
  2. Expenses and revenues are based on the RPP. The general historical pattern is expected to continue.
  3. Gains and losses from revaluation of investments and advances to International Financial Institutions in foreign currencies were estimated using private sector banking projected exchange rates.
  4. The allowances for uncollectibility are based on historical experience. The general historical pattern is expected to continue.
  5. Estimated year end information for 2013-14 is used as the opening position for the 2014-15 planned results.

These assumptions are adopted as at December 24, 2013.

2. Variations and Changes to the Forecast Financial Information

In preparing this consolidated future-oriented statement of operations, the Department 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 statement of operations and the historical statement of operations include:

  1. The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.
  2. Implementation of new collective agreements.
  3. Further changes to the transfer payments and operating budgets through additional new initiatives or technical adjustments later in the year.
  4. Economic conditions may affect both the amount of revenue earned and the collectability of loans receivables.
  5. Interest rates in effect at the time of issue will affect the net present value of non-interest bearing loans.
  6. Emergency response to possible natural disasters, hostile actions or civil unrest.

Once the RPP is presented, the Department will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report (DPR).

3. Summary of Significant Accounting Policies

The consolidated future-oriented statement of operations has been prepared using the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using Treasury Board accounting policies do not result in any significant differences from Canadian public sector accounting standards (CICA).

Significant accounting policies are as follows:

(a) Consolidation

The consolidated future-oriented statement of operations includes the accounts of the Passport Canada Revolving Fund for which the deputy head was accountable until the date of the transfer of Passport operations to the Department of Citizenship and Immigration Canada and the Department of Employment and Social Development Canada (July 2, 2013). All inter-organizational balances and transactions have been eliminated (Note 4).

(b) 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 the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement or, in the case of transactions which do not form part of an existing program, 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 statement. 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 also include provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivable, provision for valuation on loans, investments and advances and inventory obsolescence or liabilities, including contingent 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.

(c) Revenues

Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.

Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.

Funds that have been received are recorded as deferred revenue, provided the Department has an obligation to other parties for the provision of goods, services or the use of assets in the future.

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 the Department's liabilities. While the Deputy Head is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, nonrespendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the entity's gross revenues.

4. Government Reorganization

(a) Merger of the Canadian International Development Agency and the Department of Foreign Affairs and International Trade:

In Canada’s Economic Action Plan 2013, the government announced its intention to amalgamate the Department of Foreign Affairs and International Trade (DFAIT) and the Canadian International Development Agency (CIDA). The new department, the Department of Foreign Affairs, Trade and Development (DFATD), will continue to serve the same functions as those of previously served by DFAIT and CIDA.

Economic Action Plan 2013 Act, No. 1., the act that implemented the amalgamation, received Royal Assent on June 26, 2013. As a result of this amalgamation, the assets and liabilities of CIDA have been transferred to DFATD as of this date. The consolidated future-oriented statement of operations includes the actual results and financial projections of the new department.

b) Transfer of the Passport Revolving Fund to the Department of Citizenship and Immigration Canada and the Department of Employment and Social Development Canada:

Pursuant to Order in Council P.C. 2013-0540, effective July 2, 2013, authority to make expenditures out of the Consolidated Revenue Fund for the purpose of the operation of the central and regional passport offices in Canada and the authority to spend any revenue received for this purpose was transferred to the Department of Citizenship and Immigration Canada and the Department of Employment and Social Development Canada. As such, only the actual expenses and revenues of Passport Canada up to the transfer date have been included in the estimated results for 2013-14.

5. Parliamentary Authorities

The Department 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. Items recognized in the Consolidated 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 requested authorities

Table 2: Parliamentary Authorities - Reconciliation of net cost of operations to requested authorities
Reconciliation of net cost of operations to requested authorities (in thousands of dollars)Estimated Results 2013-14Planned Results 2014-15
Net cost of operations5,026,5545,240,936
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (Less):
Services provided without charge by other government departments(91,735)(95,779)
Amortization of tangible capital assets(100,416)(84,328)
Refunds of prior years' expenditures21,15022,861
Decrease in workforce adjustment costs22,170513
Gain on disposal of tangible capital assets(1,144)(978)
Bad debt expense(1,652)(1,778)
Decrease in vacation pay and compensatory leave7,822273
Decrease in accrued employee future benefits13,8986,194
Total items affecting net cost of operations but not affecting authorities(129,907)(153,022)
Adjustments for items not affecting net cost of operations but affecting appropriations:
Add (Less):
Acquisitions of tangible capital assets151,238183,413
Interdepartmenal transactions1,225-
Increase (decrease) in inventory held for resale(12,920)-
Increase (decrease) in consumable inventory(4,042)-
Increase (decrease) in prepaid expenses(5,073)76
Advances and subscriptions to IFI on behalf of Goverment52,30450,082
Transfer payments to IFI issued on behalf of Government30,744245,000
Debt forgiveness on behalf of Government71,51538,553
Loss on foreign exchange on behalf of Government13,75015,618
Total items not affecting net cost of operations but affecting authorities298,741532,742
Estimated lapses227,227-
Requested authorities5,422,6155,620,656

(b) Authorities requested

Table 3: Parliamentary Authorities - Authorities requested
Authorities requested (in thousands of dollars)Estimated Results 2013-14Planned Results 2014-15
Vote 1 - Operating expenditures1,527,2261,489,947
Vote 5 - Capital expenditures212,330183,413
Vote 10 - Grants & contributions3,256,6383,431,944
Vote 15 - LES pensions and benefits65,38050,779
Statutory amounts289,527426,020
Debt forgiveness8,306-
Authorities available from previous years
Debt forgiveness262,183198,975
Authorities available for future years
Debt forgiveness(198,975)(160,422)
Requested authorities5,422,6155,620,656
Date Modified: