NRCan 2018-19 Consolidated Future-Oriented Statement of Operations

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

	Forecast results 2018	Planned results 2019
	(in thousands of dollars)
Expenses
Natural Resource Science and Risk Mitigation	200,687	202,955
Innovative and Sustainable Natural Resources Development	563,034	596,486
Globally Competitive Natural Resource Sectors	572,199	570,026
Internal Services	177,485	173,538
Total expenses	1,513,405	1,543,005
Revenues
Rights and privileges	382,009	402,526
Other, such as revenue pursuant to agreements	212,964	228,524
Revenue from services of a non-regulatory nature	17,540	22,275
Proceeds from sales of goods and information products	1,217	1,545
Revenue from services of a regulatory nature	5,913	5,971
Services to other government departments	135	171
Revenues earned on behalf of Government	(589,181)	(623,694)
Total net revenues	30,597	37,318
Net cost of operations before government funding and transfers	1,482,808	1,505,687

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

Natural Resources Canada
Notes 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.

In 2018-19, the Department transitioned from a reporting framework comprising Program Alignment Architecture to a Departmental Results Framework comprising Core Responsibilities. The Core Responsibilities are described in 2018-19 Departmental Plan.

The information in the forecast results for fiscal year 2017-18 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 2018-19. 

The main assumptions underlying the forecasts are as follows:

• The department’s activities are as reflected in the final 2017-18 authorities and in the 2018‑19 Main Estimates.
• 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, 2017.

2. Variations and changes to the forecast financial information

Although every attempt has been made to forecast final results for the remainder of 2017-18 and for 2018-19, 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 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, 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 2017-18, 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

The department records expenses on an accrual basis.

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. Provisions to reflect changes in the value of assets or liabilities, such as provisions for bad debts, advances and inventory obsolescence, as well as utilization of inventories and prepaid expenses, and other are also included in other expenses. 

c) Revenues

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

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, 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 2018	Planned Results 2019
	(in thousands of dollars)
Net cost of operations before government funding and transfers	1,482,808	1,505,687
Adjustment for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capitals assets	(24,879)	(27,807)
Net gain on disposal of tangible capital assets	669	994
Services provided without charge by other government departments	(52,668)	(51,659)
(Decrease) increase in prepayments	(952)	2
(Decrease) increase in inventory	(124)	1
Decrease in accrued liabilities	1,257	-
(Increase) decrease in vacation pay and compensatory leave	(3,086)	1,590
(Increase) decrease in employee future benefits	(1,359)	725
Decrease (increase) in allowance for environmental liabilities	3,301	(13)
Refunds of previous years' expenditures	4,153	4,170
Expenses restricted under the Environmental Studies Research Fund	(5,292)	(3,390)
Adjustments of prior year accounts payable	2,251	5,600
Total items affecting net cost of operations but not affecting authorities	(76,729)	(69,787)
Adjustment for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets	61,053	21,001
Decrease in lease obligations for tangible capital assets	3,241	3,295
Other adjustments	9	9
Total items not affecting net cost of operations but affecting authorities	64,303	24,305
Requested authorities	1,470,382	1,460,205

b) Authorities requested

	Forecast Results 2018	Planned Results 2019
	(in thousands of dollars)
Requested authorities
Vote 1 – Operating expenditures	568,688	547,157
Vote 5 – Capital expenditures	69,183	21,001
Vote 10 – Grants and Contributions	413,911	429,196
Statutory amounts	460,751	474,932
Less:
Authorities available for future years	7,389	7,581
Lapsed – Operating (includes frozen allotments)	6,443	4,500
Lapsed – Capital	8,129	-
Lapsed – Grants and Contributions (includes frozen allotments)	20,190	-
Requested authorities	1,470,382	1,460,205

5. Comparative Information

The 2017-18 expenses have been reclassified to compare to the 2018-19 expenses which are presented by Core Responsibilities in accordance with the new Departmental Results Framework.