NRCan Future-Oriented Statement of Operations 2019-20

Natural Resources Canada
Consolidated Future-Oriented Statement of Operations (Unaudited)
For the Year Ending March 31

	Forecast results 2019	Planned results 2020
	(in thousands of dollars)
Expenses
Natural Resource Science and Risk Mitigation	225,658	226,800
Innovative and Sustainable Natural Resources Development	527,402	620,594
Globally Competitive Natural Resource Sectors	658,893	574,701
Internal Services	175,077	160,725
Total expenses	1,587,030	1,582,820
Revenues
Rights and privileges	332,138	276,983
Other, such as revenue pursuant to agreements	366,154	287,250
Revenue from services of a non-regulatory nature	15,729	21,879
Proceeds from sales of goods and information products	1,070	1,488
Revenue from services of a regulatory nature	6,090	6,910
Services to other government departments	135	188
Revenues earned on behalf of Government	(692,676)	(556,421)
Total net revenues	28,640	38,277
Net cost of operations before government funding and transfers	1,558,390	1,544,543

The accompanying notes form an integral part of the Consolidated Future-Oriented Statement of Operations.

Natural Resources Canada
Note to the Consolidated Future-Oriented
Statements of Operations (Unaudited)
For the Year Ending March 31

1. Methodology and significant assumptions

The Consolidated 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 2018-19 is based on actual results and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the fiscal year 2019-20.

The main assumptions underlying the forecasts are as follows:

• The department's activities are as reflected in the final 2018-19 authorities and in the 2019-20 Main Estimates; and
• Expenses and revenues, including the determination of amounts internal and external to the government, are based on past experience. The general historical pattern is expected to continue.

These assumptions are adopted as at September 30, 2018.

2. Variations and changes to the forecast financial information

Although every attempt has been made to forecast final results for the remainder of 2018-19 and for 2019-20, actual results achieved for both years are likely to differ from the forecast information presented, and this variation could be material.

In preparing this Consolidated Future-Oriented Statement of Operations, Natural Resources 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 historical 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 Consolidated Future-Oriented Statement of Operations and the historical consolidated statement of operations include the following:

• The timing and the amount of acquisitions and disposals of capital assets, such as buildings, machinery and equipment, and vehicles, which may affect gains, losses and amortization expense;
• The implementation of new collective agreements;
• Economic conditions such as fluctuations in oil and gas prices and exchange rates may affect both the amount of revenue earned and the collectability of accounts receivables;
• Interest rates and Consumer Price Index (CPI) will affect the net present value of environmental liabilities; and
• Further 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, Natural Resources 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 Consolidated Future-Oriented Statement of Operations has been prepared using the Government of Canada's accounting policies in effect for fiscal year 2018-19, 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) Consolidation

This Consolidated Future-Oriented Statement of Operations includes the accounts of the sub-entities that the Deputy Head is accountable for. The accounts of the Geomatics Canada Revolving Fund have been consolidated with those of the Department, and all inter-organizational balances and transactions have been eliminated. 

b) Expenses

Transfer payments are recorded as an expense in the year the transfer is authorized and all eligibility criteria have been met by the recipient.

Other expenses are generally recorded when goods are received or services are rendered and include expenses related to personnel, professional and special services, repair and maintenance, utilities, materials and supplies, as well as amortization of tangible capital assets. Utilization of inventories and prepaid expenses and provisions to reflect changes in the value of assets or liabilities, such as provisions for bad debts, advances, inventory obsolescence, are also included in other expenses.

c) Revenues

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

Deferred revenue consists of amounts received in advance of the delivery of goods and rendering of services that will be recognized as revenue in a subsequent fiscal year as it is earned.

Other revenues are recognized in the period the event that giving rise to the revenues occurred. Revenues that are non-respendable are not available to discharge the Department's liabilities. Although the Deputy Head is expected to maintain accounting control, she 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 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

	Forecast results 2019	Planned results 2020
	(in thousands of dollars)
Net cost of operations before government funding and transfers	1,558,390	1,544,543
Adjustment for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capitals assets	(27,090)	(28,184)
Net gain on disposal of tangible capital assets	141	262
Services provided without charge by other government departments	(48,327)	(48,914)
Increase (decrease) in prepayments	486	(85)
Increase (decrease) in inventory	32	(47)
Decrease in accrued liabilities	873	-
Increase in vacation pay and compensatory leave	(1,106)	(195)
Decrease (increase) decrease in employee future benefits	464	(147)
Decrease in allowance for environmental liabilities	40	7
Refunds of previous years' expenditures	1,216	1,159
Expenses restricted under the Environmental Studies Research Fund	(2,545)	(4,306)
Adjustments of prior year accounts payable	2,673	3,176
Total items affecting net cost of operations but not affecting authorities	(73,143)	(77,274)
Adjustment for items not affecting net cost of operations but affecting appropriations:
Acquisition of tangible capital assets	27,323	14,825
Decrease in lease obligations for tangible capital assets	3,295	3,349
Other adjustments	141	141
Total items not affecting net cost of operations but affecting authorities	30,759	18,315
Requested authorities	1,516,006	1,485,584

b) Authorities requested

	Forecast results 2019	Planned results 2020
	(in thousands of dollars)
Requested authorities:
Vote 1 – Operating expenditures	592,380	573,372
Vote 5 – Capital expenditures	32,072	14,825
Vote 10 – Grants and contributions	437,573	471,009
Statutory amounts	563,519	454,191
Less:
Authorities available for future years	7,673	7,813
Lapsed – Operating (includes frozen allotments)	4,000	5,000
Lapsed – Capital	4,749	-
Lapsed – Grants and contributions (includes frozen allotments)	93,116	15,000
Requested authorities	1,516,006	1,485,584