2017/2018 Future-Oriented Statement of Operations

Future-Oriented Statement of Operations (Unaudited)
For the year ending March 31
(in thousands of dollars)
Forecast results
2016-2017
Planned results
2017-2018
Expenses
Empty
Conservation of Canada's Natural Environment
$ 397,944
$ 371,339
Weather Information
240,983
242,009
Threats from Pollution Minimized
323,250
304,732
Internal Services
215,169
222,450
Total expenses
1,177,346
1,140,530
Revenues
Empty
Sales of goods and services
85,156
75,641
Other revenues
19,751
20,807
Revenues earned on behalf of Government
(16,311)
(16,917)
Total revenues
88,596
79,531
Empty
Net cost of operations before government funding and transfers
$ 1,088,750
$ 1,060,999

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

Notes to the Future-Oriented Statement of Operations (unaudited)

1.  Methodology and significant assumptions

The Future-Oriented Statement of Operations has been prepared on the basis of government priorities and departmental plans as described in the Departmental Plan.

The information in the forecast results for fiscal year 2016-17 is based on actual results as at December 31, 2016 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for fiscal year 2017-18 .

The main assumptions underlying the forecasts are as follows:

  1. The department’s activities will remain substantially the same as in the previous year;
  2. 2016-17 estimated expenses and revenues, including the determination of amounts internal and external to the government, are based on historical data and trends, up-to-date Annual Reference Level Update (ARLU) information and supplementary estimates. Figures for the forecast and planned results do not include items such as carry-forward funding. The general historical pattern is expected to continue;
  3. 2017-18 planned expenses and revenues, including the determination of amounts internal and external to the government, are based on historical data and trends and up-to-date Annual Reference Level Update (ARLU) information. The general historical pattern is expected to continue; and
  4. Estimated year end information for 2016-17 is used as the opening position for the 2017-18 forecasts.

These assumptions are made as at December 28, 2016.

2.  Variations and changes to the forecast financial information

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

In preparing this Future-Oriented Statement of Operations, Environment and Climate Change 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 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 property, plant and equipment, 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 issue, which will affect the net present value of non-interest-bearing loans; and
  5. other changes to the operating budget, such as new initiatives or technical adjustments later in the fiscal year.

After the Departmental Plan is tabled in Parliament, Environment and Climate Change 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 Government of Canada's accounting policies in effect for fiscal year 2016-17, 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:

(a) Expenses

The department records expenses 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, 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 terms of employment.

Transfer payments are recorded as expenses when the recipients have met all the eligibility criteria and 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, provision for valuation on loans, investments and advances and inventory obsolescence, or liabilities, 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.

(b) Revenues

Revenues from regulatory fees are recognized in the accounts based on the services provided in the fiscal 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 revenue takes place.

Revenues that are non-respendable are not available to discharge the Department's liabilities. Although the deputy head is expected to maintain accounting control, he 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 requested authorities:

(in thousands of dollars)Forcast results
2016-17
Planned results
2017-18
Net cost of operations before government funding and transfers
$ 1,088,750
$ 1,060,999
Adjustment for items affecting net cost of operations but not affecting authorities:
Empty
Amortization of tangible capital assets
(42,462)
(46,096)
Services provided without charge by other government departments
(111,611)
(114,688)
Refunds/adjustments to previous years' expenses
4,326
4,171
Decrease (increase) in liabilities related to the workforce adjustment
360
(253)
Decrease (increase) in accrued liabilities not charged to authorities
(4,566)
(4,953)
Decrease (increase) in vacation pay and compensatory leave
1,023
438
Decrease (increase) in employee future benefits
359
(1,044)
Decrease (increase) in environmental liabilities
2,940
3,500
Increase (decrease) in inventory
5,519
2,087
Total items affecting net cost of operations but not affecting authorities
(144,112)
(156,838)
Empty
Adjustment for items not affecting net cost of operations but affecting authorities:
Empty
Acquisition of tangible capital assets
53,224
82,361
Capital lease payments
712
752
Total items not affecting net cost of operations but affecting authorities
53,936
83,113
Empty
Requested authorities
$ 998,574
$ 987,274

(b) Authorities requested:

(in thousands of dollars)Forcast results
2016-17
Planned results
2017-18
Authorities requestedEmpty
Vote 1 - Operating expenditures
$ 701,965
$ 700,977
Vote 5 - Capital expenditures
53,224
82,361
Vote 10 - Grants and Contributions
149,433
119,486
Statutory amounts
93,952
84,451
Total authorities requested :
$ 998,574
$ 987,275

Requested authorities for the year ending March 31, 2018 are the planned spending amounts presented in the 2017-18 Departmental Plan. Requested authorities for the year ending March 31, 2017 include amounts presented in the 2016-17 Main Estimates and Supplementary Estimates (A) and (B) and amounts planned for presentation in Supplementary Estimates (C); it does not include items such as the carry-forward funding.

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