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Future-oriented Statement of Operations and Notes 2015-2016

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Year ended March 31

Table of Contents

Future Oriented Statement of Operations (Unaudited)

Future Oriented Statement of Operations
For the Year Ended March 31 (in thousands of dollars)Estimated Results 2014-15Planned Results 2015-16*
* As per the new 2015-16 Program Alignment Architecture, programs under Strategic Outcomes 1 and 4 have been renamed. New programs were created under Strategic Outcome 3 and authorities realigned accordingly.
Expenses
Diplomacy, Advocacy and International Agreements1,101,022939,555
Integrated Foreign Affairs, Trade and Development Policy87,55980,600
Fragile States and Crisis-affected Communities853,766-
Low-income Countries763,187-
Mission Network Governance, Strategic Direction and Common Services669,555700,722
Global Engagement and Strategic Policy1,057,114-
Canadian Engagement for Development268,048-
Middle-income Countries352,172-
Management of Government of Canada Terms and Conditions of Employment Abroad200,513201,774
International Commerce175,815186,013
Internal Services263,846289,890
Consular Services and Emergency Management54,18253,919
International Security and Democratic Development-383,238
International Development-2,530,148
International Humanitarian Assistance-395,008
Expenses incurred on behalf of Government(291,323)(244,147)
Total Expenses5,555,4565,516,720
Revenues
Gain on disposal of tangible capital assets (net)73,902163,281
Sales of goods and services136,619138,013
Amortization of discount on loans19,07519,036
Gain on foreign exchange50,76010,135
Miscellaneous revenues6,2656,154
Revenues earned on behalf of Government(241,860)(291,452)
Total Revenues44,76145,167
Net cost of operations5,510,6955,471,553

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 (FOSO) 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 2014-15 is based on actual results as at November 30, 2014 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2015-16 (future year) fiscal year.

The main assumptions are as follows:

  1. DFATD's activities will remain substantially the same as for the previous years.
  2. Expenses and revenues are based on the forecasted authorities as stated in the RPP. The general historical expense and revenue patterns of ex-DFAIT and ex-CIDA  are expected to continue under the new Department;
  3. Forecasted acquisitions and disposals of capital assets are as per the RPP. Related expenses and revenues were derived from these forecasts and historical patterns.
  4. 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.
  5. The allowances for uncollectibility are based on historical experience. The general historical pattern is expected to continue.   

These assumptions are adopted as at January 5, 2015.

2. Variations and Changes to the Forecast Financial Information

In preparing this 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 capital assets, which may affect amortization expense and gains/losses on disposals.
  2. The implementation of new collective agreements, which would affect salaries and employee future benefits.
  3. Further changes to the transfer payment and operating budgets through additional new initiatives or technical adjustments later in the year, which would affect forecasted expenditures.
  4. Economic conditions that may affect both the amount of revenue earned and the collectibility of receivables.
  5. Interest rates in effect at the time of issue, which will affect the net present value of non-interest bearing or concessionary 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

DFATD's 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 standard 1.2 in effect at the time of the preparation of this FOSO, 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'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 cost as estimated by the departments providing these services.  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 and provision for valuation on loans, investments and advances, or liabilities, including contingent liabilities to the extent that the future event is likely to occur and a reasonable estimate can be made at the time of the preparation of the FOSO.

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.

Expenses related to assets that are not available to discharge the Department's liabilities are considered to be incurred on behalf of the Government of Canada and are therefore presented in reduction of the entity's gross expenses.

(b) 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, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in 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 do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Items recognized in the Department's 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

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 2014-15Planned Results 2015-16
Net cost of operations5,510,6955,471,553
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (Less):
Services provided without charge by other government departments(88,023)(87,751)
Amortization of tangible capital assets(95,169)(109,908)
Refunds of previous years' expenditures21,71925,401
Decrease in workforce adjustment costs847169
Gain (loss) on disposal/write-off of tangible capital assets(1,076)(2,058)
Bad debt expense(827)(670)
Icrease in vacation pay and compensatory leave(703)(328)
Decrease in accrued employee future benefits21,4041,255
Total items affecting net cost of operations but not affecting authorities(141,828)(173,890)
Adjustments for items not affecting net cost of operations but affecting appropriations:
Add (Less):
Acquisitions of tangible capital assets231,734171,943
Increase (decrease) in prepaid expenses(9,680)922
Transfer payments to IFI issued on behalf of Government245,000245,000
Debt forgiveness on behalf of Government47,67061,761
Loss on foreign exchange on behalf of Government50,76010,135
Total items not affecting net cost of operations but affecting authorities565,484489,761
Estimated lapses and other adjustments102,891-
Requested authorities6,037,2425,787,424

(b) Authorities requested

Parliamentary Authorities - Authorities requested
Authorities requested (in thousands of dollars)Estimated 2014-15Planned 2015-16
Vote 1 - Operating expenditures1,535,8821,570,710
Vote 5 - Capital expenditures323,434171,943
Vote 10 - Grants & contributions3,667,0753,573,410
Vote 15 - LES pensions and benefits52,53250,779
Statutory amounts410,649358,821
Authorities available from previous years
Debt forgiveness172,252124,582
Authorities available for future years
Debt forgiveness(124,582 )(62,821)
Requested authorities6,037,2425,787,424
Date Modified: