Archived information

Archived information is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.

Archived - Department of Finance Canada
Future-oriented financial statements

For the year ended
March 31

Statement of Management Responsibility

Departmental management is responsible for these future-oriented financial statements, including responsibility for the appropriateness of the assumptions on which these statements are prepared. These statements are based on the best information available and assumptions adopted as at March 15, 2013 and reflect the plans described in the Report on Plans and Priorities.

Michael Horgan, Deputy Minister  
Ottawa, Canada
March 15, 2013
Sherry Harrison, Chief Financial Officer
Department of Finance Canada
Future-oriented Statement of Financial Position
As at March 31
$ thousands 
  Estimated
Results
2013
Planned
Results
2014
Liabilities    
  Accounts payable and accrued liabilities (Note 6) 3,669,697 2,185,445
  Taxes payable under tax collection agreements (Note 7) 9,970,107 7,297,546
  Interest payable 5,218,556 5,365,698
  Notes payable to international organizations 468,733 468,733
  Market debt (Note 8) 661,510,436 643,615,222
  Employee future benefits (Note 9) 4,426 4,158
 
Total gross liabilities 680,841,955 658,936,802
Liabilities held on behalf of Government (Note 10) (468,733) (468,733)
 
Total net liabilities 680,373,222 658,468,069
Financial assets    
  Due from the Consolidated Revenue Fund 5,511,239 5,661,121
  Coin inventory 29,117 29,500
  Accounts receivable (Note 11) 274,031 201,859
  Taxes receivable under tax collection agreements (Note 12) 8,817,997 8,478,350
  Foreign exchange accounts (Note 13) 58,538,773 58,551,253
  Crown borrowings (Note 14) 94,090,338 57,089,939
  Loans, advances and investments (Note 15)  3,094,418 2,226,818
 
Total gross financial assets 170,355,913 132,238,840
Financial assets held on behalf of Government (Note 10) (4,224,333) (3,294,054)
 
Total net financial assets 166,131,580 128,944,786
 
Departmental net debt 514,241,642 529,523,283
Non‑financial assets    
  Tangible capital assets (Note 16)   258   159
 
Total non‑financial assets   258   159
 
Departmental net financial position  (514,241,384)  (529,523,124)

Contractual obligations (Note 17)
Contingent liabilities (Note 18)

The accompanying notes form an integral part of these future-oriented financial statements.

Michael Horgan, Deputy Minister  
Ottawa, Canada
March 15, 2013
Sherry Harrison, Chief Financial Officer
Department of Finance Canada
Future-oriented Statement of Operations and
Departmental Net Financial Position
For the Year Ended March 31
$ thousands
  Estimated
Results
2013
Planned
Results
2014
Expenses (Note 20)    
  Transfer and taxation payment programs 57,368,386 58,746,888
  Treasury and financial affairs 27,026,000 27,260,500
  Economic and fiscal policy framework        72,789        74,613
  Internal services        75,444        71,026
 
Total expenses 84,542,619 86,153,027
     
Revenues (Note 20)    
  Investment income 3,528,236 2 978,293
  Interest on bank deposits 205,416 296,496
  Sale of domestic coinage 121,758 130,758
  Other 59,105 58,977
  Revenues earned on behalf of Government (Note 21) (3,914,347) (3,464,484)
 
Total revenues 168  40
 
Net cost of operations before government funding and transfers 84,542,451 86,152,987
Government funding and transfers    
  Net cash provided by Government 51,954,701 70,701,282
  Changes in due from Consolidated Revenue Fund (893,839) 149,882
  Services provided without charge by other government
   departments (Note 19)
20,002 20,083
 
Net cost of operations after government funding and transfers 33,461,587 15,281,740
Departmental net financial position - Beginning of year (480,779,797) (514,241,384)
 
Departmental net financial position - End of year (514,241,384) (529,523,124)

Segmented information (Note 21)

The accompanying notes form an integral part of the future-oriented financial statements.

Department of Finance Canada
Future-oriented Statement of Change in Departmental Net Debt
For the Year Ended March 31
$ thousands
  Estimated
Results
2013
Planned
Results
2014
Net cost of operations after government funding and transfers 33,461,587 15,281,740
Changes due to tangible capital assets    
  Acquisition of tangible capital assets 261 -
  Amortization of tangible capital assets (59) (99)
 
Total change due to tangible capital assets 202 (99)
Change due to prepaid expenses (161,142) -
 
Net increase (decrease) in department net debt 33,300,647 15,281,641
Department net debt - Beginning of year 480,940,995 514,241,642
 
Department net debt - End of year 514,241,642   529,523,283

The accompanying notes form an integral part of these future-oriented financial statements.

Department of Finance Canada
Future-oriented Statement of Cash Flow
For the Year Ended March 31
$ thousands
  Estimated
Results
2013
Planned
Results
2014
Operating activities    
  Net cost of operations before government funding and transfers 84,542,451 86,152,987
  Non‑cash items:    
    Amortization of tangible capital assets (59) (99)
    Services provided without charge by other government
     departments (Note 19)
(20,002) (20,083)
  Variations in Statement of Financial Position:    
    Increase (decrease) in assets 3,245,867   (339,264)
    (Increase) decrease in liabilities 1,922,430 4,009,939
 
Cash used in operating activities 89,690,687 89,803,480
Capital investing activities    
  Acquisition of tangible capital assets (Note 16) 261 -
 
Cash used in capital investing activities 261 -
Investing activities    
  Net change in the Foreign exchange accounts
   and other borrowings
2,296,250 2,987
  Net issuance of Crown borrowings   (835,994) (37,000,399)
 
Cash used in investing activities 1,460,256 (36,997,412)
Financing activities    
  Net change in market debt (39,196,503) 17,895,214
 
Cash provided by financing activities (39,196,503) 17,895,214
 
Net cash provided by Government of Canada 51,954,701 70,701,282

The accompanying notes form an integral part of these future-oriented financial statements.

Notes to the Future-oriented financial statements

1. Authority and objectives

The Department of Finance Canada (the Department) is established under the Financial Administration Act as a Department of the Government of Canada.

The Department contributes to a strong economy and sound public finances for Canadians. It does so by monitoring developments in Canada and around the world to provide first-rate analysis and advice to the Government of Canada and by developing and implementing fiscal and economic policies that support the economic and social goals of Canada and its people. The Department also plays a central role in ensuring that government spending is focused on results and delivers value for taxpayer dollars. The Department interacts extensively with other federal organizations and acts as an effective conduit for the views of participants in the economy from all parts of Canada.

Transfer and taxation payment programs: The Department’s mandate includes the supervision, control and direction of all matters relating to the financial affairs of Canada that are not by law assigned to the Treasury Board or any other Minister. This program includes the administration and payment of transfers to provinces and territories, including fiscal equalization, the Canada Health Transfer and the Canada Social Transfer, in support of health and social programs. In addition, it includes the administration of taxation payments to provinces and territories as well as to Aboriginal governments in accordance with legislation and negotiated agreements. Also included in this program are commitments and agreements with international financial organizations aimed at supporting the economic advancement of developing countries. In addition, from time to time, the federal government will enter into agreements or enact legislation to respond to unforeseen pressures. These commitments can result in payments, generally statutory transfer payments, to a variety of recipients, including individuals, organizations, and other levels of government.

Treasury and financial affairs: This program contributes to the Government of Canada’s effective debt and other cost management on behalf of Canadians. It provides direction for Canada’s debt management activities, including the funding of interest costs for the debt and service costs for new borrowings. In addition, the program manages investments in financial assets needed to establish a prudent liquidity position. This program supports the ongoing refinancing of government debt coming to maturity, the execution of the budget plan, and other financial operations of the government, including governance of the borrowing activities of major government-backed entities, such as Crown corporations. This program is also responsible for the system of circulating Canadian currency (bank notes and coins), to ensure efficient trade and commerce across Canada.

Economic and fiscal policy framework: This program is the primary source of advice and recommendations to the Minister of Finance on issues, policies and programs of the Government of Canada related to the areas of economic, fiscal and social policy; federal-provincial relations; financial affairs; taxation; and international trade and finance. The work conducted by this program involves extensive research, analysis, and consultation and collaboration with partners in both the public and private sectors, including the Cabinet and the Treasury Board; Parliament and parliamentary committees; the public and Canadian interest groups; departments, agencies and Crown corporations; provincial and territorial governments; financial market participants; the international economics and finance community; and the international trade community. In addition, this program includes policy advice on the development of Memoranda to Cabinet, negotiation of agreements, drafting of legislation and sponsoring of bills through the parliamentary process, which are subsequently administered by other programs within the Department and by other government departments and agencies. The aim of this program is to create a sound and sustainable fiscal and economic framework that will generate sufficient revenues and provide for the management of expenditures in line with the Budget Plan and financial operations of the Government of Canada.

Internal services: Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; Acquisition Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

2. Methodology and significant assumptions

These future-oriented financial statements have 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 main assumptions employed in order to complete these future-oriented financial statements are as follows:

  • Operations and statutory requirements of the Department will remain substantially the same as the previous year;
  • Significant management estimates are consistent with those disclosed in the most recently published departmental financial statements unless otherwise indicated;
  • Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. This general historical pattern is expected to continue;
  • Financial requirements of the Government of Canada are assumed to remain consistent with those outlined in the 2013-2014 Debt Management Strategy and impact departmental-level financial assets and liabilities accordingly;
  • External economic and other market variables which can impact the net cost of operations of the Department are assumed to be consistent throughout the projection period in order to permit comparability of financial results. These variables can fluctuate significantly.
  • Estimated year end information for 2013 is used as the opening position for 2014 planned results.

These assumptions are employed solely for the completion of these future-oriented financial statements and are adopted as at March 15, 2013.

3. Variations and changes to the forecast financial information

While every attempt has been made to forecast final results for the remainder of 2013 and for 2014, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material. Where necessary, the level of detail provided in these future-oriented financial statements has been summarized to accommodate the manner in which departmental balances are forecasted. Actual financial results with accompanying detailed disclosures are reported on annually in the departmental financial statements and Departmental Performance Report.

In preparing these future-oriented financial statements 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 financial statements and the historical financial statements include:

  • Foreign-exchange and interest rates;
  • The financial requirements of the Government of Canada;
  • Future legislative changes or changes in policy requirements;
  • Borrowing requirements of Crown corporations participating in the Crown Borrowing Program;
  • Material changes in the levels or mix of the Official International Reserves of Canada; and,
  • Further changes to the departmental budget through additional new initiatives or technical adjustments later in the year. This could include but is not limited to Federal Budget announcements or changes to the anticipated timing of agreements.

Once the Report on Plans and Priorities is presented, the Department will not be updating the forecast for any changes to authorities or forecast financial information made in ensuing supplementary estimates.

4. Summary of significant accounting policies

The future-oriented financial statements have been prepared using the Government’s accounting policies stated below, 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) 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. Consequently, items recognized in the future-oriented Statement of Operations and Departmental Net Financial Position and the future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a reconciliation between the bases of reporting.

b) Net cash provided by Government

The Department operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Department is deposited to the CRF and all cash disbursements made by the Department are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the Government.

c) Amounts due from / to the Consolidated Revenue Fund

Amounts due from / to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the Department is entitled to draw from the CRF without further authorities to discharge its liabilities.

d) Revenues

The Department reports revenues on an accrual basis:

  • Investment income is recognized as revenue in accordance with the terms and conditions of underlying agreements or relevant legislations as applicable.
  • Sale of domestic coinage is recognized in the period that the sale took place.
  • Interest on bank deposits is recognized as revenue when earned.
  • 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 as a reduction of the entity's gross revenues.
  • Guarantee fees are recognized when earned and are determined by reference to the terms of the guarantee program or underlying contract.
  • Uncashed Receiver General cheques, warrants and bank account cheques for all departments and agencies are recognized as revenue of the Department if they remain outstanding 10 years after the date of issue.
  • Unclaimed matured bonds are recognized as revenue if they remain unredeemed 15 years after the date of call or maturity, whichever is earlier.
  • Unclaimed bank balances are recognized as revenue when there has been no owner activity in relation to the balance for a period of 40 years.
  • Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

e) Expenses

The Department reports expenses on an accrual basis:

  • 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.
  • Interest and other costs are recognized when incurred and include interest, amortization of debt discounts, premiums and commissions, and servicing and issue costs. Amortization of discounts and premiums is performed on a straight line basis.
  • Operating expenses are recognized as incurred.
  • The cost of domestic coinage sold is recognized in the period in which the related sale took place.
  • Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
  • Services provided without charge by other government departments for accommodation, employer contributions to the health and dental insurance plans and legal services are recorded as operating expenses at their estimated cost.

f) Employee future benefits

Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The Department’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Department’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan’s sponsor.

Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

g) Coin inventory

Coin inventory is valued at the lower of cost and net realizable value. Cost is determined using the average cost method.

h) Accounts receivable

Accounts receivable are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for receivables where recovery is considered uncertain.

i) Foreign exchange accounts

Financial instruments that comprise the foreign exchange accounts are recorded at cost. Marketable securities are adjusted for amortization of purchase discounts and premiums. Purchases and sales of securities are recorded at the settlement date. Write-downs to reflect other than temporary impairment in the fair value of securities, if any, are included in Exchange Fund Account revenues on the future-oriented Statement of Operations and Departmental Net Financial Position.

j) Foreign currency transactions

Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars using the rate of exchange in effect at year-end.

k) Loans, advances and investments

Loans and advances are initially recorded at cost and are adjusted to reflect the concessionary terms of those loans made on a long-term, low interest, or interest-free basis. An allowance for valuation is further used to reduce the carrying value of loans, advances and investments to amounts that approximate their net realizable value. The allowance is determined based on estimated probable losses that exist on the remaining portfolio.

When the terms of a loan are concessionary, such as those provided with a low or no interest clause, they are recorded at their estimated net present value. A portion of the unamortized discount is recorded as revenue each year to reflect the change in the present value of loans outstanding.

Investments and share subscriptions are recorded at cost net of allowances. Allowances are determined based on a combination of expected return and likelihood of capital recovery. Given their nature, investments in certain international financial institutions are not expected to generate a financial direct return nor to be recovered. Accordingly they are typically fully provisioned.

l) Derivative financial instruments

Derivative financial instruments are financial contracts that derive their value from underlying changes in interest rates, foreign exchange rates or other financial measures specified in the underlying contracts. Derivative financial instruments that the Department is currently party to include cross-currency swap agreements and foreign exchange forward contracts.

Cross-currency swaps and foreign exchange forward contracts are initially recorded at cost and are translated into Canadian dollars at the exchange rate employed for the future-oriented Statement of Financial Position date. The translated values of cross-currency swap agreements are included as part of Market debt reflecting their longer-term nature.

Interest paid and payable, and interest received and receivable on cross-currency swaps is included in interest on Market debt.

m) Tangible capital assets

All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The Department does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

Tangible capital assets
Asset class Amortization Period
Machinery and equipment Three to five years
Motor vehicles Three years

n) Market debt

Premiums and discounts on public debt are amortized on a straight-line basis over the term to maturity of the respective debt instrument. The corresponding amortization is recorded as part of Interest and other costs.

The unamortized premium or discount arising on the buyback of bonds that are subsequently refinanced with similar debt with the intent of sustaining market liquidity is amortized over the remaining life of the old debt or the life of the new debt, whichever is shorter.

o) Contingent liabilities

Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the future-oriented financial statements.

p) Liabilities and financial assets held on behalf of Government

Financial assets and liabilities held on behalf of Government are presented in these future-oriented financial statements as the deputy head must maintain accounting control for these elements.

The classification of financial assets as held on behalf of Government is determined based on the ability to discharge that financial asset or financial assets against the Department’s liabilities or to increase the value of those financial assets without further authority from Parliament. The classification of liabilities as held on behalf of Government is determined based on the ability to increase the value of those liabilities without further authorities or within prescribed limits or ceilings.

5) Parliamentary authorities ($ thousands)

The Department receives most of its funding through annual parliamentary authorities. Items recognized in the future-oriented Statement of Operations and the Departmental Net Financial Position and the future-oriented Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the Department has different net results 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) Authorities requested

Authorities requested
($ thousands)
  Estimated
Results
2013
Planned
Results
2014
Authorities requested    
Vote 1 – Operating expenditures 120,441 111,169
Vote 5 – Grants and contributions 224,987 5,035
Statutory amounts 84,874,869 87,495,637
 
Forecast authorities available 85,220,297 87,611,841

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.

b) Reconciliation of net cost of operations to requested authorities

Reconciliation of net cost of operations to requested authorities
($ thousands)
  Estimated
Results
2013
Planned
Results
2014
Net cost of operations before government funding and transfers 84,542,451 86,152,987
Adjustments for items affecting net cost of operations but not affecting authorities:    
  Inventory charged to program expense 6,013 (6,720)
  Employee future benefits 4,426 4,158
  Amortization of tangible capital assets (59) (99)
  Services provided without charge by other government departments (20,002) (20,083)
  Other   (180,171) 598
 
Total adjustments for items affecting net costs of operation but not affecting authorities   (189,793) (22,146)
 
Adjustments for items not affecting net cost of operations but affecting authorities:    
  Acquisition of tangible capital assets 261 -
  Accounts payable external 807,100 1,481,000
  Loans, investments and advances 60,278 -
 
Forecast authorities available 85,220,297 87,611,841

6. Accounts payable and accrued liabilities ($ thousands)

The following table presents details of accounts payable and accrued liabilities:

Accounts payable and accrued liabilities
($ thousands)
  Estimated
Results
2013
Planned
Results
2014
Accounts payable ‑ external (Note 6a) 3,395,519 1,911,267
Accounts payable ‑ other government departments and agencies 269,657 269,657
Accrued vacation pay 4,521 4,521
 
Total accounts payable and accrued liabilities 3,669,697 2,185,445

a) Accounts payable - external

Included in accounts payable-external is an estimated $1,481 million payable with respect to transitional assistance for sales tax harmonization provided for under Comprehensive Integrated Tax Coordination Agreements (CITCA) with the provinces of Quebec and Prince Edward Island as at March 31, 2013. These amounts are planned to be fully paid in 2014.

Also included is an estimated and planned liability to the Province of Ontario which reflects Canada's estimated and planned obligation to Ontario for the province's one third interest in the Government's equity holdings in General Motors and Chrysler. These equity investments are currently registered to wholly-owned subsidiaries of the Canada Development Investment Corporation (CDIC), a Crown corporation.

In light of Ontario's one-third contribution to the total Canadian financial assistance provided to General Motors and Chrysler, Canada has entered into an agreement with Ontario to transfer one-third of amounts received as a result of holding these investments, including dividends and proceeds from dispositions.

Amounts estimated and planned to be held on account of collateral cash deposits are also included in accounts payable. These amounts are offset by cash balances held in the Consolidated Revenue Funds.

7. Taxes payable under tax collection agreements

Pursuant to various tax collection agreements, the Canada Revenue Agency (CRA) collects and administers personal income tax, corporate income and capital taxes, harmonized sales tax, sales tax, and goods and services sales tax on behalf of certain provinces, territories and Aboriginal governments. Amounts collectible by the CRA, but not yet remitted to the Department, are described at note 12.

The Department ultimately transfers these amounts directly to the participating provinces, territories and Aboriginal governments in accordance with established payment schedules.

Given that the Government of Canada reports information on a fiscal year basis while tax information is calculated on a calendar year basis, there can be transactions related to several tax years during any given fiscal year. Taxes payable therefore include amounts assessed, estimates of assessments based upon cash received, adjustments from reassessments, and adjustments relating to previous tax years payable to provincial, territorial and Aboriginal governments.

8) Market debt ($ thousands)

The Department borrows in both domestic and international markets on behalf of the Government of Canada.

Domestic debt consists of Treasury bills, marketable bonds and retail debt.

Retail debt includes Canada Savings Bonds which are redeemable on demand by the holder, with accrued interest calculated to the end of the previous month; no interest is paid if redeemed during the first three months following the date of issue.

Foreign debt is issued by the Government of Canada under the government’s foreign currency borrowing program. It consists of marketable bonds and Canada bills. Marketable bonds include bonds assumed by Finance Canada on February 5, 2001, on the dissolution of Petro Canada Limited.

Other market debt includes matured debt, securities held for the retirement of unmatured foreign debt and cross-currency revaluation.

At March 31, market debt is estimated and planned to be composed of the following:

Market debt
($ thousands)
Market Debt Estimated Net
book value
2013
Face Value Unamortized
discounts
Planned Net
book value
2014
Domestic debt:        
  Treasury bills   180,244,570 149,000,000 (619,453) 148,380,547
  Marketable bonds  464,433,528 477,000,000 (1,597,801) 475,402,199
  Retail debt  8,000,000 7,000,000 - 7,000,000
 
Total domestic debt  652,678,098 633,000,000 (2,217,254) 630,782,746
 
Foreign debt 10,965,226 15,000,000 (36,106) 14,963,894
 
Total domestic and foreign debt 663,643,324 648,000,000 (2,253,360) 645,746,640
Other market debt (2,132,888)     (2,131,418)
 
   
Total market debt 661,510,436     643,615,222

9) Employee future benefits ($ thousands)

a) Pension benefits

The Department's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with the Canada/Quebec Pension Plans benefits and they are indexed to inflation.

Both the employees and the Department contribute to the cost of the Plan. The estimatedexpenses are $9,346 thousand in 2013 and the planned expenses are $9,635 thousands in 2014.

The Department's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

b) Severance benefits

The Department provides severance benefits to its employees based on eligibility, years of service and salary at termination of employment. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, estimated as at the date of these statements, is as follows:

As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

Severance benefits
($ thousands)
  Estimated
Results
2013
Planned
Results
2014
Accrued benefit obligation, beginning of year 12,191 4,427
Expense for the year (6,075) 1,421
Expected benefits payments during the year (1,690) (1,690)
 
Accrued benefit obligation, end of year 4,426 4,158

10. Liabilities and financial assets held on behalf of Government ($ thousands)

Notes payable to international organization are related to investments made in to international organizations. Since the Department must obtain separate authorities to make these investments these items are considered liabilities held on behalf of Government.

In addition a distinction is made between financial assets that are available to discharge the Department’s liabilities and those that are not. Financial assets that are not available to discharge the Department’s liabilities are considered to be held on behalf of the Government and are therefore presented as a reduction of the Department's gross financial assets.

Financial assets held on behalf of Government include amount related to non-respendable revenues as well as loans, advances and investments which if repaid could not be used to discharge other liabilities.

The following table presents details of liabilities and financial assets on behalf of Government:

Liabilities and financial assets held on behalf of Government
  Estimated
Results
2013
Planned
Results
2014
Liabilities held on behalf of Government:    
  Notes payable to international organizations   468,733   468,733
 
Total liabilities held on behalf of Government   468,733   468,733
Financial assets held on behalf of Government:    
  Accounts receivable (Note 11)   274,031   201,859
  Foreign exchange accounts (Note 13)  1,180,800  1,193,280
  Loans, advances and investments (Note 15)  2,769,502  1,898,915
 
Total financial assets held on behalf of Government  4,224,333  3,294,054

11) Accounts receivable ($ thousands)

The following table presents details of accounts receivable:

Accounts receivable
($ thousands)
  Estimated
Results
2013
Planned
Results
2014
Accrued investment income 272,071 199,858
Receivables ‑ other government departments and agencies 1,744 1,758
Receivables ‑ external 216 243
 
Total accounts receivable 274,031 201,859

Accrued investment income includes interest receivable related to Crown Borrowings and guarantee fees receivable.

12. Taxes receivable under tax collection agreements

Taxes receivable refer to taxes estimated and planned to be collected or collectible by the CRA on behalf of provincial, territorial or Aboriginal governments but not yet been remitted to the Department.

The Department ultimately transfers these amounts directly to the participating provincial, territorial or Aboriginal governments in accordance with established payment schedules. Amounts payable are described in note 7.

13. Foreign exchange accounts ($ thousands)

The foreign exchange accounts represent the largest component of the official international reserves of the Government of Canada and consist of the following:

Foreign exchange accounts
($ thousands)
  Estimated
Results
2013
Planned
Results
2014
Net investments in foreign exchange accounts 58,538,773 58,551,253

Net investments in foreign exchange accounts include securities and deposits held within the Exchange Fund Account of Canada and related accrued investment income and the value of subscriptions to, and loans receivable from, the International Monetary Fund. These investments are offset by the value of notes payable to the International Monetary Fund and Special Drawing Rights allocations.

14. Crown borrowings ($ thousands)

Crown borrowings represents estimated and planned loans made to Crown corporations participating in the Crown Borrowing Program. Participating entities are the Business Development Bank of Canada, Canada Mortgage and Housing Corporation and Farm Credit Canada.

The Crown Borrowing Program provides direct lending to participating Crown corporations from the Government of Canada.

Crown borrowings
($ thousands)
  Estimated Net
book value
2013
Face
Value
Unamortized
(discounts)
premiums
Planned Net
book value
2014
Crown Borrowings   94,090,338   57,089,322 617 57,089,939

15. Loans, advances and investments ($ thousands)

i) Loans and advances

The following table presents the various components of loans and advances due to the Department.

Loans and advances
($ thousands)
  Estimated Net
book value
2013
Face
Value
Unamortized
discounts/
Valuation
allowance
Planned Net
book value
2014
Government business enterprises        
  Notes receivable from Canada Lands
   Company Ltd. (Note 15a)
59,796 71,175 8,541 62,634
  Note receivable from Parc Downsview Park Inc.
   (Note 15b)
2,368 19,000 16,483 2,517
 
Total government business enterprises 62,164 90,175 25,024 65,151
Provincial and territorial governments        
  Federal-Provincial fiscal arrangements
   (Note 15c)
1,610,810   1 230 164 46,527 1,183,637
  Recoverable from British Columbia -
   Comprehensive Integrated Tax Coordination
   Agreement (Note 15d)
937,500 639,600 10,962 628,638
  Recoverable overpayments of taxes payable
   under tax collection agreements (Note 15e)
134,552 - - -
  Loans to Municipal Development
   and Loan Board (Note 15f)
315 315 - 315
  Loans to the Winter Capital Projects Fund
   (Note 15g)
-  2,900 2,900 -
 
Total provincial and territorial governments 2,683,177   1,872,979 60,389 1,812,590
International and other organizations        
  Loans to the International
   Monetary Fund’s Poverty
   Reduction and Growth Trust (Note 15h)
86,325 86,325 - 86,325
  International Finance Corporation Global Agriculture 
   and Food Securities Program (Note 15i)
- 48,000 48,000 -
  Advances to the Global Environment
   Facility (Note 15j)
- 10,000 10,000 -
  Loan portfolio acquired from Canadian
   Commercial Bank (Note 15k)
- 42,202 42,202 -
 
Total international and other organizations 86,325 186,527 100,202 86,325
 
Total loans and advances 2,831,666   2,149,681 185,615 1,964,066

Government business enterprises

a) Canada Lands Company Ltd. (CLC)

Canada Lands Company CLC Limited (CLC) manages, redevelops and/or sells strategic Government of Canada properties across Canada that are no longer required for program purposes.

CLC issues promissory notes, which do not bear interest and are repayable from the proceeds of the sale of the properties in respect of which they were issued.

The promissory notes are discounted using the Consolidated Revenue Fund (CRF) lending rate applicable to Crown corporations at the time of issuance and are recorded at their discounted value at March 31.

b) Parc Downsview Park Inc.

Located in Toronto, Downsview Park is a unique urban recreational green space, a safe and peaceful place developed according to the principles of environmental, economic and social sustainability, for Canadians to enjoy in all seasons.

Parc Downsview Park Inc. issued a promissory note which is non‑interest bearing and is repayable in full on July 31, 2050.

The promissory notes are discounted using the CRF lending rate applicable to Crown corporations at the time of issuance and are recorded at their discounted value at March 31.

Provincial and territorial governments

c) Federal-Provincial fiscal arrangements

These amounts represent net overpayments in respect of transfer payments to provinces under the Constitutions Acts 1867 to 1982, the Federal-Provincial Arrangements Act, and other statutory authorities. The overpayments are non-interest bearing and are paid in subsequent years.

d) Recoverable from British Columbia – Comprehensive Integrated Tax Coordination Agreement

Transitional assistance that had been paid to British Columbia as part of a Comprehensive Integrated Tax Coordination Agreement with Canada is being recovered in equal annual instalments with final payment due in March 2016. The Government has not collected interest on these amounts.

e) Recoverable overpayments of taxes payable under tax collection agreements

As part of regular operations, the Department transfers tax revenue collected on behalf of other levels of government under tax collection agreements. In certain circumstances, overpayments of taxes collected occur.

The recoverable overpayments are non-interest bearing and will take place over a 10 year period, which started in 2004–05.

f) Municipal Development and Loan Board

The Department issued various loans to municipalities in the 1960s for infrastructure development purposes.

The loans bear interest at rates from 5.25 to 5.375 per cent per annum and are repayable in annual or semi-annual instalments over 15 to 50 years.

The loans are currently due and final arrangement for the reimbursement of the remaining balance is being finalized.

g) Winter Capital Projects Fund

The loans bear interest at rates from 7.4 to 9.5 per cent per annum and are repayable either in annual instalments over 5 to 20 years, or at maturity.

The loans are fully provisioned.

International and other organizations

h) Loans to the International Monetary Fund’s Poverty Reduction and Growth Trust

This account records the loan to the International Monetary Fund's Poverty Reduction and Growth Trust (formerly the Poverty Reduction and Growth Facility) in order to provide assistance to qualifying low-income countries as authorized by the Bretton Woods and Related Agreements Act, and various appropriation acts.

i) International Finance Corporation Global Agriculture and Food Securities Program

This account records Canada's financial assistance to the IFC-FSI for participation in the G8 Food Security Initiative (FSI) as authorized by the Bretton Woods and Related Agreements Act and various appropriation acts.

Canada is estimated and planned to have advances $48 million in CAD.

j) Advances to the Global Environment Facility

This account records the funding of a facility for environmental funding in developing countries in the areas of ozone, climate change biodiversity and international waters as authorized by the Bretton Woods and Related Agreements Act, and various appropriation acts. Advances to the GEF are made in non-negotiable, non-interest bearing demand notes that are later encashed.

Advances to the GEF are estimated and planned to amount to $10 million in CAD.

k) Investment in loan portfolio acquired from Canadian Commercial Bank

Advances have been made the Canadian Commercial Bank representing the government’s participation in the support group as authorized by the Canadian Commercial Bank Financial Assistance Act. These funds represent the Government's participation in the loan portfolio that was acquired from the Bank and the purchase of outstanding debentures from existing holders.

ii) Investments and share subscriptions

The following table presents the various components of investments and share subscriptions that the Department participates in:

Investments and share subscriptions
($ thousands)
Investments and share subscriptions Estimated Net
book value
2013
Face
Value
Valuation
allowance
Planned Net
book value
2014
Subscriptions and contributions to the International Development
  Association (Note 15a)
- 10,289,338 10,289,338 -
Subscriptions to the European Bank for Reconstruction and
  Development (Note 15b)
- 215,657 215,657 -
Subscriptions to the International Bank for Reconstruction and
  Development (Note 15c)
- 433,029 433,029 -
Subscriptions to the International Finance Corporation (Note 15d) - 81,139 81,139 -
International Finance Corporation‑Financial Mechanisms for
  Climate Change Facility (Note 15e)
262,752 328,855 66,103 262,752
Subscriptions to the Multilateral Investment Guarantee Agency
  (Note 15f)
- 10,705 10,705 -
 
Total investments and share subscriptions 262,752 11,358,723 11,095,971 262,752

a) International Development Association (IDA)

This account records Canada's contributions and subscriptions to the IDA, as authorized by the Bretton Woods and Related Agreements Act, and various appropriation acts (including Finance Vote L15, Appropriation Act No. 2, 2012-2013). The contributions and subscriptions to the IDA, which is part of the World Bank Group, are used to lend funds to the poorest developing countries for development purposes, on highly favorable terms (no interest, with a 35 to 40 years maturity and 10 years of grace). Contributions and subscriptions to the IDA are made in non-negotiable, non-interest bearing demand notes that are later encashed.

During the years presented, transactions are estimated and planned to include participation through the issuance of notes payable.

As at March 31, 2013, Canada’s total participation in IDA is estimated to amount to C$9,847.7 million. At March 31, 2014 Canada’s total participation in IDA is planned to amount to C$10,289.3 million.

b) European Bank for Reconstruction and Development

This account records Canada's subscriptions to the capital of the European Bank for Reconstruction and Development (EBRD), as authorized by the European Bank for Reconstruction and Development Agreement Act, and various appropriation acts. These amounts are fully provisioned.

Canada is estimated and planned to have subscribed to 102,049 shares of the EBRD's authorized capital valued at 1,020,490,000 EUR.

Only 212,850,000 EUR or about 21% of Canada's share subscription is estimated or planned to be "paid-in". The balance would be callable meaning the institution can request the resources in the unlikely event that it requires them to meet its financial obligations to bondholders. Payments for the share subscription are authorized by the Act. Each payment to the EBRD is comprised of cash and a promissory note.

Canada's contingent liability for the callable portion of its shares is estimated and planned to be 807,640,000 EUR.

Canada's total estimated and planned cash contributions into the 'paid-in" capital of the EBRD total US$216,197,670.

c) International Bank for Reconstruction and Development (World Bank)

This account records Canada's subscriptions to the capital of the International Bank for Reconstruction and Development, as authorized by the Bretton Woods and Related Agreements Act, and various appropriation acts.

The total value of these shares is estimated and planned to be US$7,039.5 million, of which US$416.4 million plus C$16.4 million is estimated and planned to have been paid-in. The remaining portion is callable.

The callable portion is subject to call by the Bank under certain circumstances. Canada’s contingent liability for the callable portion of its shares is estimated and planned to be US$6,606.5 million.

d) International Finance Corporation

This account records Canada’s subscription to the capital of the international Finance Corporation (IFC), which is part of the World Bank Group, as authorized by the Bretton Woods and Related Agreements Act, and various appropriation acts.

Canada’s subscription is estimated and planned to amount to US$81.3 million.

e) International Finance Corporation- Financial Mechanisms for Climate Change Facility

This account records Canada's financial support of the IFC's - Financial Mechanisms for Climate Change (FMCC) facility as authorized by the Bretton Woods and related Agreements Act and various appropriation acts (including Finance Vote L12b, Appropriation Act No. 4, 2010-2011). The FMCC supports private sector engagement in climate change mitigation and adaptation activities through the provision of concessional financing arrangements.

Advances to the IFC-FMCC are estimated and planned to amount to C$328.9 million. Amounts will be recovered through the FMCC trust mechanism based on the terms and conditions of project funding which is administered by the IFC in accordance with the administration agreement signed between IFC and the Government of Canada.

f) Subscriptions to the Multilateral Investment Guarantee Agency

This account records Canada's subscriptions to the capital of the Multilateral Investment Guarantee Agency, as authorized by the Bretton Woods and Related Agreements Act, and various appropriation acts.

Canada is estimated and planned to have subscribed to 5,225 shares. The total value of these shares is estimated and planned to be US$56.5 million, of which US$10.7 million is estimated and planned to be paid-in with the remaining portion being callable.

The callable portion is subject to call by the Agency under certain circumstances. Canada’s contingent liability for the callable portion of its shares is estimated and planned to be US$45.7 million.

16. Tangible capital assets ($ thousands)

Tangible capital assets
($ thousands)
Tangible Capital Assets Net Book Value Costs Accumulated Amortization Net Book Value





Capital asset class Esti-
mated
Results
2013
Opening
balance
Acqui-
sitions
Disposal and write-
offs
Closing
balance
Opening
balance
Amorti-
zation
Dis-
posal
and
write
offs
Closing
balance
Planned
Results
2014
Machinery and equipment 204   550 - - 550 346 83  - 429 121
Motor vehicles 54 80 - - 80 26 16  - 41 38





Total capital assets 258   630 - - 630 372 99  - 471 159

17. Contractual obligations ($ thousands)

The nature of the Department’s activities can result in some large multi-year contracts and obligations whereby the Department will be obligated to make future payments in order to carry out its transfer payments programs or when the services/goods are received.

Significant contractual obligations that can be reasonably estimated and planned for are summarized as follows:

Contractual obligations
($ thousands)
  2014 2015 2016 2017 2018 and
 thereafter
Total
Transfer payments            
  International Development
   Association
 492 810 51,200 51,200 51,200 879,300 1,525,710
  African Development Fund  -  -  - - 415,750 415,750
  Harbourfront Centre
   Funding Program
5,000 5,000 3,000 -  -   13,000
  Research and Policy
   Initiatives Assistance 
35 35 35 -  - 105
 
Total contractual obligations 497,845 56,235 54,235 51,200 1,295,050 1,954,565

18. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. They are grouped into two categories as follows:

a) Callable share capital

The Department has callable share capital in certain international organizations that could require payments to those organizations. Information related to these amounts is provided in note 15.

b) Loan guarantees

Mortgage Insurance

The Department guarantees loans insured by the Genworth Financial Mortgage Insurance Company Canada and Canada Guarantee Mortgage Insurance Company.

Losses on loan guarantees are recorded in the accounts when it is likely that a payment will be made to honour a guarantee and where the amount of the anticipated loss can be reasonably estimated. The amount of the allowance for losses is determined by taking into consideration historical loss experience and current economic conditions.

No amounts related to contingent liabilities have been forecasted in the future-oriented financial statements.

19. Related party transactions ($ thousands)

The Department is related as a result of common ownership to all government departments, agencies, and Crown corporations. The Department enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Department has an agreement with Treasury Board of Canada Secretariat related to the provision of accounting services. During the year, the Department received common services which were obtained without charge from other government departments as disclosed below.

a) Common services received without charge from other government departments

The Department is estimated and planned to receive without charge from certain common service organizations, related to accommodation, legal services, and the employer’s contribution to the health and dental insurance plans. These services received without charge have been recognized in the Department’s future-oriented Statement of Operations and Departmental Net Financial Position as follows:

Services received without charge 
($ thousands)
  Estimated
Results
2013
Planned
Results
2014
Accommodation 9,513 9,642
Employer’s contributions to the health and dental insurance plans 6,786 6,786
Legal services 3,703 3,655
 
Total services received without charge 20,002 20,083

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common services organizations so that one department performs services for all other departments and agencies without charge. The cost of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General, are not included as an estimated or planned expense in the future-oriented Statement of Operations and Departmental Net Financial Position.

b) Other transactions with related parties

Other transactions with related parties
($ thousands)
  Estimated
Results
2013
Planned
Results
2014
Expenses - Other Government departments and agencies 9,185,996 8,786,543
Revenues - Other Government departments and agencies 20,067 19,939

20. Segmented Information ($ thousands)

Presentation by segment is based on the Department's program activity architecture. The presentation by segment is based on the same accounting policies asdescribed in the summary of significant accounting policies in note 4. The following table presents the forecasted expenses incurred and forecasted revenues generated for the main program activities, by major object of expenses and by major type of revenues. The segmented results for the period are as follows:

Segmented Information
($ thousands)
  2013 2014
 

  Total  Economic and Fiscal Policy Framework   Transfer and Taxation Payment Programs  Treasury and Financial Affairs Internal Services Total
Expenses            
Transfer payments            
  Provinces and territories
   (Note 20a)
56,438,806 -   58,239,043 - - 58,239,043
  International organizations 914,593 - 502,810 - - 502,810
  Non-Profit institutions
   and organizations
14,987 -   5,035 - - 5,035
 

Total transfer payments 57,368,386 -   58,746,888 - - 58,746,888
Interest and other
 costs (Note 20b)
           
  Interest on market debt 17,775,000 - - 18,401,000 - 18,401,000
  Other interest costs 9,131,000 - - 8,733,000 - 8,733,000
Operating expenses 148,233 74,613 - - 71,026 145,639
Cost of domestic
 coinage sold
120,000 - - 126,500 - 126,500
 

Total expenses 84,542,619 74,613   58,746,888 27,260,500 71,026 86,153,027


Revenues            
Investment income            
  Crown borrowings -
   interest (Note 20c)
2,246,063 - - 1,711,458 - 1,711,458
  Exchange Fund Account
   (Note 20d)
1,180,800 - - 1,193,280 - 1,193,280
  Other interest 101,373 59 69,405 4,091 - 73,555
 

Total investment
 income
3,528,236 59 69,405 2,908,829 - 2,978,293
Sale of domestic coinage 121,758 - - 130,758 - 130,758
Interest on bank deposits 205,416 - - 296,496 - 296,496
Other income 59,105 - 19,283   39,583 111 58,977
Revenues earned on
 behalf of Government
 (Note 21)
(3,914,347) (59) (88,688) (3,375,666) (71) (3,464,484)
 

Total revenues 168 - - - 40 40
 

Net cost of operations 84,542,451 74,613   58,746,888 27,260,500 70,986 86,152,987

a) Provinces and territories

Transfer payments to provinces and territories are paid pursuant to the Federal-Provincial Fiscal Relations Act, Budget Implementation Acts, and other statutory authorities and are consistent with those described in the Department’s Report on Plans and Priorities.

b) Interest and other costs

Interest and other costs include the interest on market debt and on various superannuation accounts as prescribed by legislation. Also included are the amortization of premiums and discounts on unmatured debt, and the servicing costs and the costs of issuing new borrowings.

c) Crown borrowing interest

Estimated and planned Crown borrowing interest is comprised of interest revenue earned on direct lending to Crown corporations participating in the Crown Borrowing Program.

d) Exchange fund account

Estimated and planned revenues from investments includes interest earned, amortization of premiums and discounts using the straight line method, gains or losses on sales of securities, and revenues from securities lending activities. Interest is accrued on short-term deposits, deposits held under repurchase agreements, marketable securities, and Special Drawing Rights.

21. Revenues earned on behalf of Government ($ thousands)

The following table presents details of the revenues earned on behalf of Government:

Revenues earned on behalf of Government
($ thousands)
  Estimated
Results
2013
Planned
Results
2014
  Crown borrowing - interest 2,246,063 1,711,458
  Exchange Fund Account - net revenues 1,180,800 1,193,280
  Other interest 101,373 73,555
  Sale of domestic coinage 121,758 130,758
  Interest on bank deposits 205,416 296,496
  Other income 58,937 58,937
 
Total revenues earned on behalf of Government 3,914,347 3,464,484

22. Accounting changes

On April 1, 2012, the Government of Canada adopted Public Sector Accounting Standard 3410, Government Transfers. The Department has implemented this standard on a prospective basis.

As a result of this change in accounting policy, the Department has recognized an immediate transfer payment expense of $161 million on April 1, 2012 in relation to amounts which had been previously disbursed but, given the timing of certain events, were presented as Prepaid Expenses in 2012.

The estimated expense is presented as a transfer payment expense to international organizations (Note 20).