Natural Resources Canada Consolidated Future-Oriented Statement of Operations (Unaudited) As at March 31, 2016 and 2017

Natural Resources Canada
Consolidated Future-Oriented Statement of Operations (Unaudited)
As at March 31
(In thousands of dollars)

	Forecast Results 2016	Planned Results 2017
Expenses
Statutory Programs – Atlantic Offshore	567,754	739,634
Energy-Efficient Practices and Lower-Carbon Energy Sources	207,042	178,905
Internal Services	180,264	173,562
Responsible Natural Resource Management	157,534	35,516
Technology Innovation	144,630	140,771
Innovation for New Products and Processes	89,623	100,456
Landmass Information	87,372	86,757
Protection for Canadians and Natural Resources	72,701	65,814
Investment in Natural Resource Sectors	64,628	68,874
Market Access and Diversification	54,975	47,347
Total expenses	1,626,523	1,637,636
Revenues
Rights and Privileges	451,952	638,672
Other, such as revenue pursuant to agreements	174,687	235,015
Revenue from services of a non-regulatory nature	21,269	24,113
Proceeds from sales of goods and information products	2,540	2,880
Revenue from services of a regulatory nature	3,176	5,749
Services to other government departments	100	170
Revenues earned on behalf of Government	(621,384)	(867,729)
Total net revenues	32,340	38,870
Net cost of operations before government funding and transfers	1,594,183	1,598,766

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

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 Report on Plans and Priorities.

The information in the forecast results for fiscal year 2015-16 is based on actual results as at September 30^th, 2015 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2016-17 fiscal year.

The main assumptions underlying the forecasts are as follows:

• The department’s activities are as reflected in the final 2015-16 authorities and in the 2016‑17 Main Estimates, which does not include programs that sunsetted in 2015-16 that have not been officially renewed in 2016-17.
• Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
• Allowances for uncollectibility are based on historical experience.  The general historical pattern is expected to continue.

These assumptions are adopted as at September 30, 2015.

2. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2015-16 and for 2016-17, actual results achieved for both years are likely to vary 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 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 consolidated future-oriented statement of operations and the historical consolidated statement of operations include the following:

• The timing and amount of acquisitions and disposals of capital assets (such as buildings, machinery and equipment, and vehicles) may affect gains/losses and amortization expense;
• 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 loan receivables;
• Interest rates and Consumer Price Index (CPI) will affect the net present value of environmental liabilities; and
• Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, the 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 Performance Report.

3. Summary of Significant Accounting Policies

The consolidated future-oriented statement of operations has been prepared using Government’s accounting policies that came into effect for the 2015-16 fiscal year 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:

1. Consolidation

This consolidated future-oriented statement of operations includes the accounts of the Geomatics Canada Revolving Fund that the Deputy Head is accountable for.  The accounts of this sub-entity have been consolidated with those of the Department, and all inter-organizational balances and transactions have been eliminated. 

2. 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 charges for accommodation, employee contributions to health and dental insurance plans, legal services and worker’s compensation which are recorded as expenses at their estimated cost.  Vacation pay and compensatory leave 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 advances, provision for valuation on loans, 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. 

3. Revenues

Revenues from regulatory fees are recognized in the accounts based on the services provided in the 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. 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 entity'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 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
(in thousands of dollars)

	Forecast Results		Planned Results
	2016		2017
Net cost of operations before government funding and transfers	1,594,183	1,598,766
Adjustment for items affecting net cost of operations but not affecting authorities:
Increase in allowance for environmental liabilities	(21,728)	(68)
Amortization of tangible capitals assets	(21,484)	(21,833)
Gain on disposal of tangible capital assets	436	668
Services provided without charge by other government departments	(48,491)	(46,026)
Decrease (increase)  in vacation pay and compensatory leave	(1,988)	1,893
Decrease in prepayments	(16,283)	(358)
Decrease in employee future benefits	1,060	1,986
Decrease in accrued  liabilities	34,392	1,044
Increase (decrease) in adjustments of previous year’s inventory	510	(313)
Adjustments of prior year accounts payable	6,362	5,254
Refunds of previous years' expenditures	10,149	8,382
Total items affecting net cost of operations but not affecting authorities	(57,065)	(49,371)
Adjustment for items not affecting net cost of operations but affecting appropriations:
Acquisition of tangible assets	54,739	53,685
Decrease in lease obligations for tangible capital assets	2,256	2,335
Other adjustment	96	-
Total items not affecting net cost of operations but affecting authorities	57,091	56,020
Requested authorities	1,594,209	1,605,415

b) Authorities requested
(in thousands of dollars)

	Forecast Results	Planned Results
	2016	2017
Authorities requested:
Vote 1 – Operating expenditures	945,369	462,873
Vote 5 – Capital expenditures	54,422	53,318
Vote 10 – Transfer payments	306,909	292,249
Statutory amounts	645,431	796,975
Less:
Lapsed – Operating (including frozen allotments)	309,400	-
Lapsed – Capital	-	-
Lapsed – Transfer payments (including frozen allotments)	48,522	-
Requested authorities	1,594,209	1,605,415