Natural Resources Canada Consolidated Future-Oriented Statement of Operations 2017-18

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

	Forecast results 2017	Planned results 2018
	(in thousands of dollars)
Expenses
Statutory Programs - Atlantic Offshore	393,535	406,532
Energy-efficient Practices and Lower-carbon Energy Sources	190,614	182,890
Technology Innovation	164,859	245,464
Innovation for New Products and Processes	89,489	111,339
Landmass Information	77,124	61,775
Protection for Canadians and Natural Resources	75,300	73,333
Investment in Natural Resource Sectors	74,836	77,794
Market Access and Diversification	55,527	60,484
Responsible Natural Resource Management	32,059	31,599
Internal Services	163,039	159,101
Total expenses	1,316,382	1,410,311
Revenues
Rights and privileges	293,058	291,448
Other, such as revenue pursuant to agreements	151,300	226,345
Revenue from services of a non-regulatory nature	19,946	24,157
Proceeds from sales of goods and information products	1,326	1,606
Revenue from services of a regulatory nature	5,749	5,344
Services to other government departments	132	160
Revenues earned on behalf of Government	(438,414)	(510,595)
Total net revenues	33,097	38,465
Net cost of operations before government funding and transfers	1,283,285	1,371,846

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)

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 2016-17 is based on actual results as at November 30, 2016 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the fiscal year 2017-18.

The main assumptions underlying the forecasts are as follows:

• The department’s activities are as reflected in the final 2016-17 authorities and in the 2017‑18 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 November 30, 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 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 loan receivables;
• Interest rates and Consumer Price Index (CPI) will affect the net present value of environmental liabilities; and
• 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, 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 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) 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.

Expenses for the Department’s operations are recorded when goods are received or services are rendered, including services provided without charges for accommodation, employer 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 recipients have met all the eligibility criteria or the entitlement established for the transfer payment program and authorization for the payment exists by March 31. In the case of transfer payments that do not form part of an existing program, the transfer payments 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 consolidated financial statements.

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. 

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, 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 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 2017	Planned Results 2018
	(in thousands of dollars)
Net cost of operations before government funding and transfers	1,283,285	1,371,846
Adjustment for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments	(51,732)	(51,347)
Amortization of tangible capitals assets	(21,639)	(22,699)
Expenses restricted under the Environmental Studies Research Fund	(5,271)	(5,188)
Decrease (increase) in vacation pay and compensatory leave	(1,501)	285
(Increase) decrease in allowance for environmental liabilities	(451)	3,251
Decrease in prepayments	(390)	(12)
Decrease (increase) in accrued liabilities	17,577	3,145
Refunds of previous years' expenditures	6,513	6,150
Decrease in employee future benefits	464	288
Gain on disposal of tangible capital assets	217	144
Increase (decrease) in inventory	31	(10)
Total items affecting net cost of operations but not affecting authorities	(56,182)	(65,993)
Adjustment for items not affecting net cost of operations but affecting appropriations:
Acquisition of tangible capital assets	82,738	60,781
Decrease in lease obligations for tangible capital assets	2,256	2,417
Other adjustments	7	-
Total items not affecting net cost of operations but affecting authorities	85,001	63,198
Requested authorities	1,312,104	1,369,051

b) Authorities requested

	Forecast Results 2017	Planned Results 2018
	(in thousands of dollars)
Requested authorities
Vote 1 – Operating expenditures	564,745	520,865
Vote 5 – Capital expenditures	87,738	60,781
Vote 10 – Grants and Contributions	287,578	324,921
Statutory amounts	466,318	469,322
Less:
Authorities available for future years – Geomatics Canada Revolving Fund	6,838	6,838
Lapsed – Operating (includes frozen allotments)	32,688	-
Lapsed – Capital	5,000	-
Lapsed – Grants and Contributions (includes frozen allotments)	49,749	-
Requested authorities	1,312,104	1,369,051