NRCan 2012-13 Future-oriented Financial Statements
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 the assumptions adopted as at January 31, 2012 and reflect the plans described in the Report on Plans and Priorities.
These Future-oriented Financial Statements have not been audited.
| Serge P. Dupont Deputy Minister April 13, 2012 |
Thérèse Roy, CA A/Chief Financial Officer |
|
|
Date signed Ottawa, Canada |
| (in thousands of dollars) | Estimated Results 2011-12 |
Planned Results 2012-13 |
|---|---|---|
| ASSETS | ||
| Financial assets | ||
| Due from Consolidated Revenue Fund | $ 882,834 | $ 844,351 |
| Accounts receivable and advances (Note 6) | 153,737 | 137,272 |
| Loan Receivable (Note 7) | 40,667 | 40,000 |
| Total financial assets | 1,077,238 | 1,021,623 |
| Non-financial assets | ||
| Prepayments (Note 8) | 7,371 | 7,500 |
| Inventory (Note 9) | 1,940 | 2,000 |
| Tangible capital assets (Note 10) | 215,241 | 200,250 |
| Total non-financial assets | 224,552 | 209,750 |
| 1,301,790 | 1,231,373 | |
| LIABILITIES AND EQUITY OF CANADA | ||
| Liabilities | ||
| Accounts payable and accrued liabilities (Note 11) | 693,520 | 694,094 |
| Vacation pay and compensatory leave | 28,494 | 27,183 |
| Lease obligation for tangible capital asset (Note 12) | 76,137 | 74,012 |
| Employee future benefits (Note 13) | 61,144 | 54,608 |
| Environment liabilities (Note 15a) | 1,062,970 | 941,937 |
| Other liabilities (Note 17) | 19,405 | 11,609 |
| 1,941,670 | 1,803,443 | |
| Equity of Canada | (639,880) | (572,070) |
| TOTAL | $ 1,301,790 | $ 1,231,373 |
Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to January 31, 2012.
Contingent liabilities (Note 15)
Contractual obligations (Note 16)
Contingent recoveries (Note 18)
The accompanying notes form an integral part of these future-oriented financial statements.
| Serge P. Dupont Deputy Minister April 13, 2012 |
Thérèse Roy, CA A/Chief Financial Officer |
|
|
Date signed Ottawa, Canada |
| (in thousands of dollars) | Estimated Results 2011-12* |
Planned Results 2012-13 |
|---|---|---|
| Expenses | ||
| Statutory Programs - Atlantic Offshore | - | 1,134,954 |
| Energy-efficient Practices and Lower-carbon Energy Source | - | 566,462 |
| Responsible Natural Resource Management | - | 233,646 |
| Technology Innovation | - | 440,568 |
| Protection for Canadians and Natural Resources | - | 65,145 |
| Innovation for New Products and Processes | - | 73,001 |
| Investment in Natural Resource Sectors | - | 75,424 |
| Landmass Information | - | 50,453 |
| Market Access and Diversification | - | 31,628 |
| Internal Services | 188,382 | 122,713 |
| Economic Opportunities for Natural Resources | 1,796,287 | - |
| Clean Energy | 1,540,940 | - |
| Ecosystem Risk Management | 223,700 | - |
| Natural Resource and Landmass Knowledge and Systems | 84,454 | |
| Adapting to a Changing Climate and Hazard risk Management | 78,098 | - |
| Geomatics Canada Revolving Fund | 1,968 | - |
| Natural Resource-based Communities | 326 | - |
| Total Expenses | 3,914,155 | 2,793,994 |
| Revenues | ||
| Statutory Programs - Atlantic Offshore | - | 1,123,748 |
| Energy-efficient Practices and Lower-carbon Energy Source | - | 450 |
| Responsible Natural Resource Management | - | 998 |
| Technology Innovation | - | 17,884 |
| Protection for Canadians and Natural Resources | - | 9,125 |
| Innovation for New Products and Processes | - | 1,710 |
| Investment in Natural Resource Sectors | - | 806 |
| Landmass Information | - | 2,536 |
| Market Access and Diversification | - | 365,786 |
| Internal Services | 3,433 | 3,433 |
| Economic Opportunities for Natural Resources | 1,666,128 | - |
| Clean Energy | 15,297 | - |
| Ecosystem Risk Management | 4,434 | - |
| Natural Resource and Landmass Knowledge and Systems | 568 | |
| Adapting to a Changing Climate and Hazard risk Management | 10,045 | - |
| Geomatics Canada Revolving Fund | 1,968 | |
| Natural Resource-based Communities | 55 | - |
| Total Revenues | 1,701,928 | 1,526,476 |
| Net Cost of Operations | 2,212,227 | 1,267,518 |
* NRCan’s Program Activity Architecture (PAA) has changed significantly from 2011-12 to 2012-13. The 2011-12 estimated results are presented using the 2011-12 PAA.
Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to January 31, 2012.
Segmented information (Note 21)
The accompanying notes form an integral part of these future-oriented financial statements.
| (in thousands of dollars) | Estimated Results 2011-12 |
Planned Results 2012-13 |
|---|---|---|
| Equity of Canada, beginning of year | (810,180) | (639,880) |
| Net cost of operations | (2,212,227) | (1,267,518) |
| Net cash provided by Government | 2,251,004 | 1,320,616 |
| Change in due from the Consolidated Revenue Fund | 78,868 | (38,483) |
| Services provided without charge by other government departments (Note 19) | 52,655 | 53,195 |
| Equity of Canada, end of year | (639,880) | (572,070) |
Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to January 31, 2012.
The accompanying notes form an integral part of these future-oriented financial statements.
| (in thousands of dollars) | Estimated Results 2011-12 |
Planned Results 2012-13 |
|---|---|---|
| Operating activities | ||
| Net cost of operations | 2,212,227 | 1,267,518 |
| Non-cash items: | ||
| Amortization of tangible capital assets | (24,915) | (25,674) |
| Gain on disposal and write-offs of tangible capital assets | 449 | (10,485) |
| Services provided without charge by other government departments (Note 19) | (52,655) | (53,195) |
| Variations in Future-oriented Statement of Financial Position: | ||
| Decrease in accounts receivable and advances | (5,861) | (16,465) |
| Decrease in loan receivable | (666) | (667) |
| Increase (Decrease) in prepayments | (106,764) | 129 |
| Increase in inventory | 26 | 60 |
| Decrease (Increase) in accounts payable and accrued liabilities | 146,312 | (574) |
| Decrease (Increase) in vacation pay and compensatory leave | (2,577) | 1,311 |
| Decrease in future employee benefits | 17,414 | 6,536 |
| Decrease in environmental liabilities | 43,391 | 121,033 |
| Decrease (Increase) in other liabilities | (3,680) | 7,796 |
| Cash used in operating activities | 2,222,701 | 1,297,323 |
| Capital investing activities | ||
| Acquisitions of tangible capital assets | 26,700 | 21,618 |
| Proceeds from disposal of tangible capital assets | (450) | (450) |
| Cash used in capital investing activities | 26,250 | 21,168 |
| Financing activities: | ||
| Lease obligation for tangible capital assets | 4,718 | 4,718 |
| Lease payments for tangible capital assets | (2,665) | (2,593) |
| 2,053 | 2,125 | |
| Net cash provided by Government of Canada | 2,251,004 | 1,320,616 |
The accompanying notes form an integral part of these future-oriented financial statements.
Natural Resources Canada
Notes to the Future-oriented Financial Statements (Unaudited)
1. Authority and Objectives
The Department of Natural Resources Canada (NRCan) was created on June 25, 1993 by the merger of the Department of Energy, Mines and Resources and the Department of Forestry. This organizational change was effected by Order in Council, pending the passage of legislation which occurred in 1994. The Department’s mandate is primarily based on the Department of Natural Resources Act, the Resources and Technical Surveys Act and the Forestry Act.
NRCan’s vision is to improve the quality of life of Canadians by creating a sustainable resource advantage. It seeks to fulfill this vision by working to: improve the competitiveness of the natural resource sectors; enable the sustainable development of Canada’s resources; and enhance the safety and security of citizens.
In 2011-12, NRCan delivered on its mandate through the following activities:
Economic Opportunities
Economic opportunities for natural resources contains programs designed to promote innovation, investment, and the enhancement of the competitiveness of Canada’s natural resources and related products to industries through the provision of know-how and tools, along with trade promotion and market acceptance, at home and abroad.
Clean Energy
Clean energy include the development and delivery of energy science and technology, policies, programs, legislation and regulations to mitigate air emissions and to reduce other environmental impacts associated with energy production and use.
Ecosystem Risk Management
Ecosystem risk management includes programs that help to understand the risks to our environment and the protection of critical resources such as groundwater.
Natural Resources and Landmass Knowledge and Systems
Natural resources and landmass knowledge and systems carries out the Minister’s obligation to provide a property rights infrastructure on all lands for which the department has this responsibility, along with the provision and access to accurate and precise geographic information on the Canadian landmass.
Adapting to a Changing Climate and Hazard Risk Management
Adapting to a changing climate and hazard risk management provide geoscience and geospatial information that contributes to the reduction of risks from natural hazards, such as earthquakes, tsunamis and floods, as well as hazards arising from human activities, and works with front-line responders to provide geographical information in the event of an emergency.
Natural Resource-Based Communities
Natural resource-based communities is targeted to increasing Canada’s knowledge of the impacts of the natural resource sector evolution on communities that have substantial reliance on resource-based industries and to improve the capacity and knowledge for increasing the number of opportunities through value-added products and services.
The Geomatics Canada Revolving Fund
The Geomatics Canada Revolving Fund allows Geomatics Canada to shift the costs from taxpayers at large to specific users who benefit directly from the goods and services provided. These goods and services include aeronautical charts and publications which contribute to the safety and security of the traveling public and Canadians.
In 2012-13, NRCan will fulfill its mandate through the following activities:
Market Access and Diversification
Canada’s natural resource sectors face two key barriers to market access and diversification: 1) trade and policy barriers and 2) lack of awareness of Canada’s natural resource products. The objectives of this program activity are to break down those barriers and support natural resource markets by making information available to Canadians, supporting negotiations to reduce trade barriers, and ensuring that regulations are up-to-date. This helps maintain natural resource sectors’ access to existing markets and increases their access to new market segments.
Innovation for New Products and Processes
Optimizing the use of Canada's natural resources and the processes by which they are developed would improve the productivity of the natural resources sectors and reduce its dependency on the sale of traditional natural resource products. The objective of this program activity is twofold: to maximize the productivity and to decrease our dependency on the sale of traditional products by encouraging natural resources sectors to adopt new technologies and processes to develop new products. This objective is achieved by conducting science, research, development, and demonstrations on new applications, technologies, processes, and products.
Investment in Natural Resource Sectors
Investing in the development of natural resources is costly and risky due to the uncertainties related to the potential economic viability of natural resources. There are many factors to consider when deciding whether or not to develop a natural resource. In some cases, investors and/or companies lack knowledge on and, thus, are unaware of potential opportunities. The objective of this program activity is to encourage natural resource sector investment by either decreasing the risk of development or increasing knowledge on opportunities. This objective is achieved by providing funding and information on the factors that determine the potential economic viability of natural resources.
Statutory Programs – Atlantic Offshore
This program activity is about monitoring and facilitating payment disbursal agreements and transfer payments under the Atlantic Offshore Accord Acts.
Energy-Efficient Practices and Lower-carbon Energy Sources
Canada’s energy markets are defined by consumption and production decisions; however, consumers and producers do not necessarily make decisions that minimize their impact on the environment due to several barriers including: 1) a lack of awareness of available options and their benefits, 2) insufficient capacity for adoption (e.g. regulatory frameworks, codes and standards, etc.) and 3) financial risk. The objective of this program activity is to address these barriers and encourage and enable energy consumers and producers to adopt cleaner and more efficient technologies, products, services and practices, thereby transforming the market.
This objective is achieved through education and outreach activities, targeted incentives, and regulatory interventions that keep pace with technological changes.
Technology Innovation
Solutions to the environmental challenges faced by the natural resource sectors require sustained efforts in research, development and demonstration because the current level of science and technology is inadequate to address these concerns. However, the natural resource sectors neither have all the necessary knowledge nor make the necessary investments in innovation due to the potential poor return on investment. The objective of this program activity is to encourage academia, industry and the public sector to research, develop and demonstrate innovative solutions to environmental challenges encountered in the natural resource sectors. This objective is achieved through the generation and dissemination of scientific knowledge, and the development and demonstration of new technologies.
Responsible Natural Resource Management
Greater knowledge of risks and environmentally-responsible practices could help to prevent and reduce the environmental impacts of natural resource development. The objectives of the program activity are to enable government departments, regulatory bodies and industry to assess these impacts to the environment and develop, monitor and maintain resources or clean-up wastes responsibly. These objectives are achieved through the provision of assessments and knowledge rooted in sound science, and waste management efforts in collaboration with provinces, federal agencies and municipalities.
Protection for Canadians and Natural Resources
Natural resource development and military activities, and changes in the environment pose risks to human, natural resource and infrastructure health. Without the appropriate coordination for and knowledge on the management of these risks, the impacts would be severe. The objective of this program activity is to enable other government departments, communities and the private sector to manage these risks to human, natural resource and infrastructure. This objective is achieved by providing regulation and knowledge, fulfilling legislated and regulatory responsibilities, and ensuring capacity.
Landmass Information
NRCan provides clearly defined legal boundaries, a robust property system framework, authoritative geographic infrastructure and fundamental geospatial information on Canada’s landmass. Without these frameworks, negative impact will result to the Canadian economy, environment and standard of living. This program activity delivers Canada's regulatory system for Canada-Lands legal surveys, the fundamental geodetic reference system, earth observation and mapping information. Together, these support the Canadian public, other departments and levels of government, the private sector and academia to carry out a variety of decisions founded on location-based information, such as land transactions, commercial/industrial development, transportation and logistics. This fundamental information enables, effective management of Canada’s natural resources and lands including opportunities for collaboration across jurisdictions (i.e. cross-border planning, regulatory efficiency), which advances the interests of Canada’s natural resources sectors, both domestically and at the international level.
Internal Services – common activity for both 2011-12 and 2012-13
Internal services are activities supported by a group of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization.
2. Methodology and significant assumptions
The Future-oriented Financial Statements has 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 are as follows:
- Key assumptions used in 2011-2012 are also used in 2012-2013 since similar activities are undertaken in both years.
- Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience, known information, and expert opinions of people with appropriate experience in the department’s activities. Where relevant, the general historical pattern is expected to continue.
- Allowances for uncollectibility are based on historical experience. The general historical pattern is expected to continue.
- Estimated year end information for 2011-12 is used as the opening position for the 2012-13 planned results.
These assumptions are adopted as at January 31, 2012.
3. Variations and Changes to the Forecast Financial Information
While every attempt has been made to forecast final results for the remainder of 2011-12 and for 2012-13 the actual results achieved for both years are likely to vary from the forecast information presented; this variation could be material.
In preparing these future-oriented financial statements NRCan 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 and the historical financial statements include:
- The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.
- Implementation of new collective agreements.
- Economic conditions may affect both the amount of revenue earned and the collectability of the loan receivable.
- Interest rates in effect at the time of issue will affect the net present value of the liabilities.
- 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, NRCan will not be updating the forecast for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.
These Future-oriented Financial Statements are based on spending authorities granted by Parliament and are consistent with the Main Estimates, Supplementary Estimates A and B, Operating Budget Carry Forward and reimbursements from Treasury Board of eligible paylist expenditures for the 2011-12 fiscal year.
4. Summary of Significant Accounting Policies
The future-oriented financial statements have been prepared in accordance with the Treasury Board accounting policies in effect for the 2011-12 fiscal year. These accounting policies, stated below, are consistent with Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.
Significant accounting policies are as follows:
- 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 the Future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provide a high-level reconciliation between the bases of reporting.
- Consolidation – these future-oriented financial statements include the accounts of the Geomatics Canada Revolving Fund that is under the control of the Department. The accounts of this sub-entity have been consolidated with those of the Department and all inter-organizational balances and transactions have been eliminated.
- Net cash provided by Government – NRCan operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received is deposited to the CRF and all cash disbursements are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions made by NRCan within the federal Government.
- 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 Parliamentary expenditure authorities to discharge its liabilities.
- Revenues - are recognized on an accrual basis:
Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.
Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues. - Expenses - are recognized on an accrual basis:
Grants are recognized in the year in which the conditions for payment are met. In the case of grants which do not form part of an existing program, the expense is recognized when the Government announces a decision to make a non-recurring transfer, provided that the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the future-oriented financial statements.
Contributions are recognized in the year in which the recipient meet the eligibility criteria or fulfill the terms of a contractual transfer agreement, provided that the transfer is authorized and a reasonable estimate can be made.
Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
Services provided without charge by other government departments for accommodations, the employer’s contribution to the health and dental insurance plans, worker’s compensation and legal services, are recorded as operating expenses at their estimated cost. - Employee future benefits
- Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer 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. Current legislation does not require the department to make contributions for any actuarial deficiencies of the Plan.
- Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability employee severance benefits for the Government as a whole.
- Accounts receivables are stated at the lower of cost and net recoverable value; a valuation allowance is established for receivables where recovery is considered uncertain.
- Loans with significant concessionary terms are recorded on the Future-oriented Statement of Financial Position at their estimated net present value. A portion of this unamortized discount is brought into income each year to reflect the change in the net present value of the loan outstanding. An estimated allowance for un-collectability is recorded where appropriate. Interest revenue is recognized when earned.
- Repayable contributions are contributions where the recipient is expected to repay the amount advanced. Depending on their nature, they are classified as either unconditionally repayable or conditionally repayable and are accounted for accordingly.
- Unconditionally repayable contributions are contributions that must be repaid without qualification. Normally, these contributions are provided with a low or no interest clause. Due to their concessionary nature, they are recorded on the Future-oriented Statement of Financial Position as loans at their estimated present value. A portion of this unamortized discount is recognized as revenue each year to reflect the change in the present value of the contributions outstanding. An estimated allowance for uncollectibility is established where appropriate.
- Conditionally repayable contributions are contributions that, all or part of which, become repayable, if conditions specified in the contribution agreement come into effect. Accordingly, they are not recorded in the Future-oriented Statement of Financial Position until such time as the conditions specified in the agreement come into effect, at which time they are recorded as a receivable and a reduction in transfer payment expenses. An estimated allowance for uncollectibility is established where appropriate.
- Contingent liabilities – Contingent liabilities are potential liabilities which 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.
- Environmental liabilities – Environmental liabilities reflect the estimated costs related to the management and remediation of environmentally contaminated sites. Based on management’s best estimates, a liability is accrued and an expense recorded when the contamination occurs or when the department becomes aware of the contamination and is obligated, or likely to be obligated, to incur such costs. If the likelihood of the department’s obligation to incur these costs is not determinable, or if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the future-oriented financial statements.
- Inventory – Inventory consists of parts, material and supplies held for future program delivery and not intended for resale. Inventory is valued at cost using the average cost method. If there is no longer any service potential, inventory is stated at amounts expected to be ultimately realized.
- 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 on March 31.
Gains and losses resulting from foreign currency transactions are included in the Future-oriented Statement of Operations and in Note 21 under Operating expenses – Other. - Tangible capital assets – All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more ($1,000 or more for the Geomatics Canada Revolving Fund) 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:Asset Class Amortization period Buildings 15 to 40 years Machinery and equipment 5 to 15 years Vehicles 3 to 10 years Assets under construction Once in service, in accordance with asset class Leased tangible capital assets Over the term of the lease / useful life
Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use. - Measurement uncertainty – The preparation of these future-oriented financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the future-oriented financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Actual results could differ significantly from those estimated.
5. Parliamentary Authorities
The department receives most of its funding through expenditure authorities provided by Parliament. Items recognized in the Future-oriented Statement of Operations and 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:
| (in thousands of dollars) | Estimated Results 2011-12 |
Planned Results 2012-13 |
|---|---|---|
| Vote 1 - Operating expenditures | 849,381 | 754,477 |
| Vote 5 - Capital expenditures | 23,538 | 8,729 |
| Vote 10 - Transfer payments | 1,716,388 | 832,277 |
| Statutory Amounts | 1,672,691 | 1,254,086 |
| Forecast authorities available | 4,261,998 | 2,849,569 |
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.
| (in thousands of dollars) | Estimated Results 2011-12 |
Planned Results 2012-13 |
|---|---|---|
| Net Cost of Operations | 2,212,227 | 1,267,518 |
| Adjustments for items affecting net cost of operations but not affecting authorities: | ||
| Revenue not available for spending | 1,664,683 | 1,490,010 |
| Refunds of prior years’ expenditures | 15,900 | 15,900 |
| Services provided without charge by other government departments | (52,655) | (53,195) |
| Adjustment for prepayments | 11,000 | 1,000 |
| Allowance for environmental liabilities | 43,391 | 121,033 |
| Amortization of tangible capital assets | (24,915) | (25,674) |
| Employee severance benefits | 17,414 | 6,536 |
| Adjustments of prior year accounts payable | 8,800 | 8,800 |
| Reduction from prepayments | (106,764) | 129 |
| Amortization of unamortized discount loan | 3,333 | 3,333 |
| Adjustment for previous year's inventory | 26 | 60 |
| Vacation pay and compensatory leave | (2,577) | 1,311 |
| Adjustment to work in progress | 22,323 | (10,935) |
| 1,599,959 | 1,558,308 | |
| Adjustments for items not affecting net cost of operations but affecting authorities: | ||
| Acquisitions of tangible capital assets | 26,700 | 21,618 |
| Decrease in lease obligations for tangible capital assets | 2,053 | 2,125 |
| 28,753 | 23,743 | |
| Forecast current year lapse including frozen allotments (Operating and Capital) | 37,712 | - |
| Forecast current year lapse including frozen allotments (Transfer payments) | 238,975 | - |
| Forecast current year lapse (Statutory Amounts) | 144,372 | - |
| 421,059 | - | |
| Forecast authorities available | 4,261,998 | 2,849,569 |
6. Accounts Receivable and Advances
The following table presents details of the Department’s accounts receivable and advances balances.
| Estimated Results 2011-12 |
Planned Results 2012-13 |
|
|---|---|---|
| (in thousands of dollars) | ||
| Receivables from external parties | 148,244 | 132,000 |
| Receivables from other federal government departments and agencies | 6,715 | 6,500 |
| Employee advances | 91 | 90 |
| 155,050 | 138,590 | |
| Less: Allowance for doubtful accounts on external receivables | (1,313) | (1,318) |
| Total | 153,737 | 137,272 |
7. Loan Receivable
The following table presents details of the Department's loan receivable balance.
| Estimated Results 2011-12 |
Planned Results 2012-13 |
|
|---|---|---|
| (in thousands of dollars) | ||
| Loan to Nordion International Inc. | 54,000 | 50,000 |
| Unamortized discounts | (13,333) | (10,000) |
| Loan balance - Nordion | 40,667 | 40,000 |
Nordion International Inc. (loan)
Interest free loan agreement: to be repaid over 30 semi-annual payments commencing October 1, 2000; fully secured by a financial instrument in Canada’s name which guarantees that the loan will be repaid. The balance remaining as of March 31, 2012 is estimated at $54,000,000. Due to the concessionary terms of this loan, the estimated present value was $40,667,000 as at March 31, 2012.
8. Prepayments
The following table presents details of the Department’s prepayments.
| Estimated Results 2011-12 |
Planned Results 2012-13 |
|
|---|---|---|
| (in thousands of dollars ) | ||
| Prepayments | 7,371 | 7,500 |
9. Inventory
The following table presents details of the inventory, measured at cost using the average cost method.
| Estimated Results 2011-12 |
Planned Results 2012-13 |
|
|---|---|---|
| (in thousands of dollars ) | ||
| Inventory held for consumption | 1,900 | 1,950 |
| Inventory held for resale | 40 | 50 |
| Total | 1,940 | 2,000 |
10. Tangible Capital Assets
| (in thousands of dollars) | Cost (Planned 2012-13) | Accumulated Amortization (Planned 2012-13) | Net Book Value | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Asset Class | Opening Balance | Acquisition | Disposals/ Write-off | Closing Balance | Opening Balance | Amortization | Disposals/ Write-off | Closing Balance | Estimated Results 2011-12 |
Planned Results 2012-13 |
| Land | 8,008 | - | - | 8,008 | - | - | - | - | 8,008 | 8,008 |
| Buildings | 194,066 | 200 | 100 | 194,166 | 140,971 | 8,075 | 100 | 148,946 | 53,095 | 45,220 |
| Machinery & Equipment | 262,674 | 21,418 | 1,200 | 282,892 | 220,680 | 12,938 | 1,200 | 232,418 | 41,994 | 50,474 |
| Vehicles | 10,556 | - | 1,500 | 9,056 | 6,650 | 1,023 | 1,500 | 6,173 | 3,906 | 2,883 |
| Leased Tangible Capital Assets | 90,953 | - | - | 90,953 | 5,038 | 3,638 | - | 8,676 | 85,915 | 82,277 |
| Assets under Construction | 22,323 | 10,935 | 11,388 | - | - | - | - | 22,323 | 11,388 | |
| Total | 588,580 | 21,618 | 13,735 | 596,463 | 373,339 | 25,674 | 2,800 | 396,213 | 215,241 | 200,250 |
Disposals of assets under construction represent assets that are put into use and transferred to other capital asset classes in the year as applicable.
11. Accounts Payable and Accrued Liabilities
The following table presents details of the Department’s accounts payable and accrued liabilities.
| Estimated Results 2011-12 |
Planned Results 2012-13 |
|
|---|---|---|
| (in thousands of dollars) | ||
| Accounts payable to other government departments and agencies | 21,639 | 22,000 |
| Accounts payable to external parties | 669,512 | 669,726 |
| 691,151 | 691,726 | |
| Accrued liabilities | 2,369 | 2,368 |
| Total | 693,520 | 694,094 |
12. Lease Obligation for Tangible Capital Assets
The department has entered into an agreement to lease a building under capital lease with a cost of $90,953,000 and accumulated amortization of $5,038,000 as at March 31, 2012. The obligations for the upcoming years include the following:
| Estimated Results 2011-12 |
Planned Results 2012-13 |
|
|---|---|---|
| (in thousands of dollars ) | ||
| 2013 | 4,718 | |
| 2014 | 4,718 | 4,718 |
| 2015 | 4,718 | 4,718 |
| 2016 | 4,718 | 4,718 |
| 2017 and thereafter | 92,548 | 92,548 |
| Total future minimum lease payments | 111,420 | 106,702 |
| Less: imputed interest (3.45%) | 35,283 | 32,690 |
| Balance of obligation | 76,137 | 74,012 |
13. Employee Future Benefits
(a) Pension benefits:
The department ' s employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. 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 Canada/Québec Pension Plans benefits and they are indexed to inflation.
Both the employees and the department contribute to the cost of the Plan. The forecast expenses are estimated at $58,743,068 in 2011-12 and planned at $59,716,340 in 2012-13, representing approximately 1.9 times the contributions of employees.
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 final salary. 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:
| Estimated Results 2011-12 |
Planned Results 2012-13 |
|
|---|---|---|
| (in thousands of dollars) | ||
| Accrued benefit obligation, beginning of year | 78,558 | 61,144 |
| Expense for the year | 2,224 | 808 |
| Benefits paid during the year | (19,638) | (7,344) |
| Accrued benefit obligation, end of year | 61,144 | 54,608 |
14. Restricted Equity of Canada
A portion of the Department’s equity is restricted to be used for a specific purpose. Related revenues and expenses are included in the Future-oriented Statement of Operations.
The Environmental Studies Research Fund account was established pursuant to subsection 76(1) of the Canada Petroleum Resources Act. The purpose of the fund is to finance environmental and social studies pertaining to the manner in which, and the terms and conditions under which, exploration development and production activities on frontier land, authorized under this Act or any other Act of Parliament, should be conducted. Legislation required that the revenues of these accounts to be earmarked and that related payments and expenses be charged against such revenues. The transactions do not represent liabilities to third parties but are internally restricted for specific purposes.
| Estimated Results 2011-12 |
Planned Results 2012-13 |
|
|---|---|---|
| (in thousands of dollars) | ||
| Balance, beginning of year - Restricted | 3,381 | 5,581 |
| Revenues | 3,500 | 1,968 |
| Expenses | (1,300) | (1,350) |
| Balance, end of year - Restricted | 5,581 | 6,199 |
| Unrestricted Equity of Canada, end of year | (645,461) | (578,269) |
| Total Equity of Canada, end of year | (639,880) | (572,070) |
15. 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) Contaminated sites
Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where the department is obligated or likely to be obligated to incur such costs. As at the date of the preparation of these future-oriented financial statements, the department had identified approximately 7 sites where such action is possible and for which a liability of $1,062,970 in 2011-12 has been recorded. Additional new sites, changes in the remediation approach or material changes in amounts accrued or not accrued are not forecasted for the future years presented in these statements. However, the department’s ongoing efforts to assess contaminated sites may result in additional environmental liabilities related to newly identified sites, or changes in the assessments or intended use of existing sites; these liabilities will be accrued by the department in the year in which they become likely and can be reasonably estimated.
(b) Claims and litigation
Claims have been made against the department in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. Based on the Department’s assessment, legal proceedings for claims estimated at $17,350,000 were pending at March 31, 2011. Some of these potential liabilities may become actual liabilities when one or more future events occur or fail to occur. To the extent that future events 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 in the financial statements.
16. Contractual Obligations
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 when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:
| (in thousands of dollars) | 2012 | 2013 | 2014 | 2015 | 2016 and thereafter | TOTAL |
|---|---|---|---|---|---|---|
| Transfer payments | 720,432 | 291,834 | 257,979 | 234,009 | 626,109 | 2,130,363 |
17. Other Liabilities
| (in thousands of dollars) | Estimated Results for FY 2011-12 | |||
|---|---|---|---|---|
| April 1, 2011 | Receipts and other credits | Payments and other charges | Estimated Results 2011-12 | |
| Guarantee deposits - Oil and gas | 4,429 | 9,145 | (4,550) | 9,024 |
| Shared-costs projects | 2,246 | 12,872 | (9,191) | 5,927 |
| Market development incentive payments – Alberta | 4,651 | - | (4,596) | 55 |
| Shared-costs agreements - Research | 4,399 | - | - | 4,399 |
| Total | 15,725 | 22,017 | (18,337) | 19,405 |
| Planned Results for FY 2012-13 | ||||
|---|---|---|---|---|
| April 1, 2012 | Receipts and other credits | Payments and other charges | Planned Results 2012-13 | |
| Guarantee deposits - Oil and gas | 9,024 | 4,000 | (9,000) | 4,024 |
| Shared-costs projects | 5,927 | 6,000 | (9,200) | 2,727 |
| Market development incentive payments - Alberta | 55 | 5,000 | (4,596) | 459 |
| Shared-costs agreements - Research | 4,399 | - | - | 4,399 |
| Total | 19,405 | 15,000 | (22,796) | 11,609 |
Guarantee deposits – Oil and gas: This account was established to record securities in the form of cash, promissory notes, and bonds which are required to be issued to, and held by the Government of Canada pursuant to an Exploration License in accordance with section 24 of the Canada Petroleum Resources Act. These securities are a performance guarantee that the agreed exploration will be performed in the manner and time frame specified. Interest is not paid on these deposits.
Shared-cost projects - This account was established to facilitate the retention and disbursement of moneys received from private organizations and other governments for cost-sharing scientific projects.
Market development incentive payments – Alberta : This account records money received from the Government of Alberta, to encourage the expansion of natural gas market in Alberta and provinces to the East, in accordance with an agreement between the Government of Canada and the Government of Alberta dated September 1, 1981 and pursuant to section 39 of the Energy Administration Act. The original term of the agreement was from November 1, 1981 to January 31, 1987. As a result of the Western Accord of March 25, 1985, payments from the Government of Alberta terminated as at April 30, 1986, however, payments are being made from the account for selected programs which encourage the use of natural gas for vehicles.
Shared-cost agreements – Research: This account was established to facilitate the retention and disbursement of moneys received from private industries and other governments for joint projects or shared-cost research agreements.
18. Contingent Recoveries
NRCan issues conditionally repayable contributions that become repayable if conditions specified in the contribution agreement come into effect.
Lloydminster Bi-Provincial Upgrader -Canada sold its interests in the Lloydminster Bi-Provincial Upgrader to Husky Oilin 1995. The terms of sale included an upside interest provision where by Canada would be eligible to receive additional payments for a period of up to 20 years if the differential between light and heavy crude oil reached a certain threshold. As a result of the increase in oil prices since the date of sale, the upside interest provision was triggered and eligible payments to Canada have increased.Canada's eligibility for upside interest payments ends in 2015.
Vancouver Island Pipeline Contribution -Canada provided $50 million in support of the construction of Vancouver Island Pipeline in the early 1990's. This support was provided in the form of a repayable contribution. Repayment was contingent upon the proponent meeting certain financial conditions. Full repayment is expected to be received by 2014.
The Ethanol Expansion Program (EBP) was launched in August 2003 with a budget of $100 million, as part of the budget 2003 Climate Change measures. The purpose of the EBP was to contribute to the expansion of ethanol production and use in Canada and the reduction of transportation greenhouse gas emissions. Incentives were provided to enable the construction of new ethanol facilities or the expansion of existing ones. The support was provided in the form of repayable contributions. Repayments are to be made over a seven year period or until Canada has received repayments totaling an amount equal to the contribution, whichever comes first. Repayment is contingent upon the proponents meeting certain financial conditions. The final repayment reports will be received in 2017.
Other contingent recoveries relate to agreements entered into with proponents for early stage research and development (R&D) activities. Recoveries are contingent upon the successful commercialization of products generated by the R&D activities.
The department has estimated the contingent recoverable amounts as $91 million. Contingent recoveries are not recorded in the financial statements.
19. Related Party Transactions
The department is related, as a result of common ownership, to all Government of Canada departments, agencies, and Crown corporations. The department enters into transactions with these entities in the normal course of business and on normal trade terms.
Common services provided without charge by other government departments
During the year the Department receives services without charge from certain common service organizations, related to accommodation, legal services, the employer's contribution to the health and dental insurance plans and workers' compensation coverage. These services provided without charge have been recorded in the department's Future-oriented Statement of Operations as follows:
| Estimated Results 2011-12 |
Planned Results 2012-13 |
|
|---|---|---|
| (in thousands of dollars ) | ||
| Accommodations provided by Public Works and Government Services Canada | 17,485 | 17,344 |
| Contributions covering employer’s share of employees' insurance premiums and costs paid by Treasury Board Secretariat | 33,622 | 34,289 |
| Workers’ compensation cost provided by Human Resources Canada | 237 | 232 |
| Legal services provided by Department of Justice | 1,311 | 1,330 |
| Total | 52,655 | 53,195 |
The Government has centralized some of its administrative activities for efficiency and cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the 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 in the Department's Future-oriented Statement of Operations.
20. Transfers from/ to other government departments
On August 4, 2011, pursuant to section 31.1 of the Financial Administration Act and toan Order-in-Council (OIC) (P.C. 2011-0877), Shared Services Canada (SSC) was established. The mandate of the new organization is to standardize and consolidate information technology services in the federal government in order to reduce costs, improve services, and leverage capacity in the public and private sectors through pooled resources and greater buying power.
On November 15, 2011, a subsequent OIC (P.C. 2011-1297) was signed to transfer to SSC the responsibility for providing email, data centre and network services from a number of organizations across the Government of Canada, including NRCan. This resulted in NRCan transferring 70 funded positions to SSC.
NRCan’s estimated results for 2011-12 continue to reflect financial information related to the transferred services. NRCan’s planned results for 2012-13 reflect NRCan’s permanent transfer of authorities of $31,456,004 ($30,433,175 in Vote 1 - Operating expenditures and $1,022,829 in Statutory Amounts).
21. Segmented Information
| (in thousands of dollars) | Estimated Results 2011-12 | Planned Results 2012-13 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Statutory Programs- Atlantic Offshore | Energy-efficient Practices and Lower-carbon Energy Source | Responsible Natural Resource Management | Technology Innovation | Internal Services | Protection for Canadians and Natural Resources | Innovation for New Products and Processes | Investment in Natural Resource Sectors | Landmass Information | Market Access and Diversification | Total | ||
| Transfer Payments | ||||||||||||
| Industry | 1,440,349 | - | 459,466 | 3,393 | 150,000 | 648 | 2,800 | - | 5,000 | 407 | 461 | 622,175 |
| International | 2,500 | 1,000 | - | 398 | - | - | 1,397 | - | - | 2,795 | ||
| Non-profit organization | 175,000 | 8,000 | - | 100,000 | - | - | 33,945 | - | - | - | 141,945 | |
| Other levels of government | 1,325,126 | 1,134,954 | - | - | - | - | - | - | - | - | - | 1,134,954 |
| Individuals | 75,000 | 50,000 | - | 50,000 | - | - | - | - | - | - | 100,000 | |
| Total Transfer Payments | 3,017,975 | 1,134,954 | 518,466 | 3,393 | 300,398 | 648 | 2,800 | 33,945 | 6,397 | 407 | 461 | 2,001,869 |
| Operating Expenses | ||||||||||||
| Salaries and employee benefits | 450,039 | - | 25,765 | 115,000 | 60,000 | 100,516 | 29,320 | 19,019 | 35,000 | 24,910 | 17,137 | 426,667 |
| Transportation | 38,302 | - | 5,450 | 9,491 | 544 | 10,331 | 2,000 | 3,155 | 3,000 | 2,000 | 1,000 | 36,971 |
| Information | 9,358 | - | 821 | 2,000 | 590 | 1,357 | 500 | 329 | 1,506 | 1,000 | 300 | 8,403 |
| Professional and Special Services | 346,472 | - | 9,950 | 80,762 | 66,257 | 52,212 | 24,025 | 11,748 | 21,922 | 16,836 | 9 800 | 293,512 |
| Rentals | 28,846 | - | 2,446 | 3,000 | 855 | 22,569 | 2,000 | 670 | 1,400 | 900 | 600 | 34,440 |
| Purchased repairs and upkeep | 5,512 | - | 623 | 2,000 | 761 | 1,663 | 400 | 273 | 600 | 500 | 250 | 7,070 |
| Utilities, materials and supplies | 21,208 | - | 1,421 | 6,000 | 3,392 | 7,177 | 1,000 | 933 | 2,000 | 1,200 | 800 | 23,923 |
| Acquisitions | 8,737 | - | 423 | 10,000 | 6,983 | 19,536 | 2,600 | 2,611 | 2,999 | 2,200 | 1,000 | 48,352 |
| Other | 6,182 | - | 1,097 | 2,000 | 788 | 2,063 | 500 | 318 | 600 | 500 | 280 | 8,146 |
| Amortization | 24,915 | - | - | - | - | 25,674 | - | - | - | - | - | 25,674 |
| Environmental expenses | (43,391) | - | - | - | - | (121,033) | - | - | - | - | - | (121,033) |
| Total Operating Expenses | 896,180 | - | 47,996 | 230,253 | 140,170 | 122,065 | 62,345 | 39,056 | 69,027 | 50,046 | 31,167 | 792,125 |
| Total Expenses | 3,914,155 | 1,134,954 | 566,462 | 233,646 | 440,568 | 122,713 | 65,145 | 73,001 | 75,424 | 50,453 | 31,628 | 2,793,994 |
| Revenues | ||||||||||||
| Rights and privileges | 1,201,923 | 1,123,748 | - | - | 277 | - | - | 1,325 | - | 200 | 75 | 1,125,625 |
| Interest | 466,829 | - | 450 | - | (1) | - | 1,816 | 385 | - | - | 365,711 | 368,361 |
| Services of a non-regulatory nature | 16,617 | - | - | - | 15,429 | - | - | - | 806 | - | - | 16,235 |
| Other | 12,998 | - | - | - | - | 3,433 | 7,007 | - | - | 2,336 | - | 12,776 |
| Proceeds from sales | 2,374 | - | - | 140 | 2,179 | - | - | - | - | - | - | 2,319 |
| Services of a regulatory nature | 1,017 | - | - | 858 | - | - | 136 | - | - | - | - | 994 |
| Lease and Use of Public Property | 170 | - | - | - | - | - | 166 | - | - | - | - | 166 |
| Total Revenues | 1,701,928 | 1,123,748 | 450 | 998 | 17,884 | 3,433 | 9,125 | 1,710 | 806 | 2,536 | 365,786 | 1,526,476 |
| Net Cost of Operations | 2,212,227 | 11,206 | 566,012 | 232,648 | 422,684 | 119,280 | 56,020 | 71,291 | 74,618 | 47,917 | (334,158) | 1,267,518 |
22. Adoption of new accounting policy
The Department adopted the revised Treasury Board accounting policy, TBAS 3.2 – Transfer Payments, which will become effective for the Department for the 2012-13 fiscal year. The major change in the accounting policies of the Department required by the adoption of the new TBAS 3.2 is given the non-exchange nature of government transfer payments, the Department is either not acquiring an asset or have a liability extinguished by providing a transfer payment and therefore not recognizing a prepayment in its 2012-13 Future-oriented Statement of Financial Position. The adoption of the revised TBAS 3.2 has to be applied prospectively.
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