Statement of Management Responsibility
Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2009 and all information contained in these statements rests with departmental management. These statements have been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.
Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgments and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the department's financial transactions. Financial information submitted to the Public Accounts of Canada and included in the department's Departmental Performance Report is consistent with these financial statements.
Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the department.
The mandate of the Audit and Evaluation Committee of Natural Resources Canada (NRCan), is to review and provide advice to the Deputy Minister on: NRCan Audit Polices; NRCan Annual Internal Audit Plans, Internal Audit and Special Review Reports, including management responses and commitments to implement remedial action; and the implementation in NRCan of the October 2005, Treasury Board Policy on Internal Audit.
The financial statements of the department have not been audited.
|
Cassie J. Doyle
Deputy Minister 2009-08-04 Date signed Ottawa, Canada |
Richard S. Tobin
Senior Financial Officer 2009-07-30 Date signed Ottawa, Canada |
Natural Resources Canada
| 2009 | 2008 | |
|---|---|---|
| Expenses (Note 4) | ||
| Economic Opportunities for natural resources | 3,593,186 | 2,741,555 |
| Clean energy | 571,512 | 348,262 |
| Ecosystem risk management | 175,857 | 153,942 |
| Natural resource and landmass knowledge and systems | 146,400 | 141,103 |
| Adapting to a changing climate and hazard risk management | 116,635 | 116,511 |
| Natural resource-based communities | 23,209 | 25,865 |
| Geomatics Canada Revolving Fund | 4,932 | 7,540 |
| Total expenses | 4,631,731 | 3,534,778 |
| Revenues (Note 5) | ||
| Economic Opportunities for natural resources | 2,689,578 | 2,203,351 |
| Clean energy | 14,166 | 17,329 |
| Ecosystem risk management | 1,474 | 1,849 |
| Natural resource and landmass knowledge for Canadians | 3,028 | 3,257 |
| Adapting to a changing climate and hazard risk management | 6,750 | 6,176 |
| Natural resource-based communities | 1,050 | 990 |
| Geomatics Canada Revolving Fund | 3,997 | 2,884 |
| Total revenues | 2,720,043 | 2,235,836 |
| Net cost of operations | 1,911,688 | 1,298,942 |
The accompanying notes form an integral part of these financial statements.
Natural Resources Canada
| 2009 | 2008 | |
|---|---|---|
| ASSETS | ||
| Financial assets | ||
| Accounts receivable and advances (Note 6) | 166,536 | 333,969 |
| Loans receivable (Note 7) | 45,327 | 90,573 |
| Investment (Note 8) | 164,159 | 164,159 |
| Total financial assets | 376,022 | 588,701 |
| Non-financial assets | ||
| Prepayments (Note 9) | 3,099 | 6,649 |
| Inventories | 6,542 | 8,621 |
| Tangible capital assets (Note 10) | 72,333 | 74,729 |
| Total non-financial assets | 81,974 | 89,999 |
| TOTAL | 457,996 | 678,700 |
| LIABILITIES | ||
| Accounts payable and accrued liabilities | 706,668 | 830,315 |
| Vacation pay and compensatory leave | 23,086 | 24,620 |
| Deferred revenue | 181 | 456 |
| Employee severance benefits (Note 11) | 80,536 | 63,991 |
| Environmental liabilities (Note 12a) | 359,416 | 336,679 |
| Other liabilities (Note 13) | 26,913 | 31,641 |
| Total liabilities | 1,196,800 | 1,287,702 |
| Equity of Canada | (738,804) | (609,002) |
| TOTAL | 457,996 | 678,700 |
Contingent Liabilities (Note 12b)
Contingent Recoveries (Note 15)
Contractual Obligations (Note 16)
The accompanying notes form an integral part of these financial statements.
Natural Resources Canada
| 2009 | 2008 | |
|---|---|---|
| Equity of Canada, beginning of year | (609,002) | (566,277) |
| Net cost of operations | (1,911,688) | (1,298,942) |
| Current year appropriations used ( Note 3) | 4,677,486 | 3,341,056 |
| Revenue not available for spending | (2,686,556) | (2,198,908) |
| Change in net position in the Consolidated Revenue Fund (Note 3) | (257,025) | 74,263 |
| Services received without charge from other government departments (Note 17) | 47,981 | 39,806 |
| Equity of Canada, end of year | (738,804) | (609,002) |
The accompanying notes form an integral part of these financial statements.
Natural Resources Canada
| 2009 | 2008 | |
|---|---|---|
| Operating activities | ||
| Net cost of operations | 1,911,688 | 1,298,942 |
| Non-cash items: | ||
| Amortization of tangible capital assets | (16,629) | (15,037) |
| Gain on disposal and write-offs of tangible capital assets | 1,289 | 121 |
| Services provided without charge | (47,981) | (39,806) |
| Variations in Statement of financial position: | ||
| (Decrease) increase in accounts receivable and advances | (167,433) | 318,984 |
| Decrease in loans receivable and investments | (45,246) | (4,982) |
| Decrease in prepayments | (3,550) | (2,022) |
| Decrease in inventory | (2,079) | (2,357) |
| Increase (decrease) in liabilities | 90,902 | (345,710) |
| Cash used by operating activities | 1,720,961 | 1,208,133 |
| Capital investment activities | ||
| Acquisitions of tangible capital assets | 13,358 | 8,751 |
| Proceeds from disposal of tangible capital assets | (414) | (473) |
| Cash used by capital investment activities | 12,944 | 8,278 |
| Financing activities | ||
| Net cash provided by Government of Canada | (1,733,905) | (1,216,411) |
The accompanying notes are an integral part of the financial statements.
Natural Resources Canada
Notes to the Financial Statements (Unaudited)
For the year ended March 31, 2009
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 mandate is to ensure the sustainable development and responsible use of Canada's natural resources. Through innovation and partnership, the department plays a pivotal role in helping shape the enormous contributions of the natural resource sectors and related industries to the high quality of life of Canadians. NRCan fulfills its mandate through seven main programs:
- 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 includes 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 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 for Canadians carries out the government’s obligation to provide a property rights infrastructure on all lands which it holds responsibility for, 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 provides 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 is targeted to increasing Canada’s knowledge of the impacts of natural resource sector evolution on communities that have a 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 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.
This mandate is delivered by the Department's 4,470 full time employees located in offices across Canada.
2. Summary of Significant Accounting Policies
The financial statements have been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.
Significant accounting policies are as follows:
- Parliamentary Appropriations – NRCan is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to NRCan do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and the statements of financial position are not necessarily the same as those provided through appropriations from Parliament. The Note 3 provides a high-level reconciliation between the bases of reporting.
- Consolidation – The accounts of the Geomatics Canada Revolving Fund have been consolidated with those of NRCan. NRCan also records an investment in Atomic Energy of Canada Limited (AECL) that is recorded at cost. The results of AECL are not consolidated in these financial statements due to the fact that NRCan is not deemed to control the Crown Corporation.
- 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 by NRCan is deposited to the CRF and all cash disbursements made by NRCan are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions with other departments of the federal Government made by NRCan during the year.
- Change in net position in the Consolidated Revenue Fund is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non respendable revenue recorded by NRCan. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.
- Revenues:
- Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
- Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
- Return on investment in Crown Corporation is recognized in the period in which the income is received.
- Revenues that have been received but not yet earned are recorded as deferred revenues.
- Expenses – Expenses are recorded on the 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 the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements;
- Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement;
- Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment; and
- Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans, workers 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 multi employer plan administered by the government of Canada. NRCan'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 to 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 amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.
- Loans with significant concessionary terms are recorded on the 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 present value of the loan outstanding. An estimated allowance for uncollectibility 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 differently.
- Unconditionally repayable contributions are contributions that must be repaid without qualification. Normally, these contributions are provided with a low or no interest clause. They are in substance loans with significant concessionary terms and accounted for as such. They are recorded on the statement of financial position as loans at their estimated present value. A portion of this unamortized discount is brought into income each year to reflect the change in the present value of the contributions outstanding. An estimated allowance for un-collectibility is also recorded 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 on the Statement of Financial Position until such time as the conditions specified in the agreement are satisfied at which time they are then recorded as a receivable and a reduction in transfer payment expenses. An estimated allowance for un-collectibility is recorded 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 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 NRCan's obligation to incur these costs is not determinable, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in the notes of the financial statements.
- Inventories – Inventories consist of parts, material and supplies held for future program delivery and not intended for re-sale. They are valued at cost. If they no longer have service potential, they are valued at the lower of cost or net realizable value.
- 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 statement of operations.
- Tangible capital assets – All tangible capital assets and leasehold improvements having an initial cost of $10,000.00 or more ($1,000.00 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 capital assets is done on a straight-line basis over the estimated useful life of the capital asset as follows:Asset Class Amortization period Buildings 15 to 40 years Machinery and equipment 5 to 15 year Vehicles 3 to 10 years
- Measurement uncertainty – The preparation of financial statements in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are contingent liabilities, environmental liabilities, the liability for employee severance benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.
3. Parliamentary Appropriations
The department receives most of its funding through annual Parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary appropriations 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 | ||
| 2009 | 2008 | |
|---|---|---|
| Net cost of operations | 1,911,688 | 1,298,942 |
| Adjustments for items affecting net cost of operations but not affecting appropriations: | ||
| Add (Less): | ||
| Revenue not available for spending | 2,686,556 | 2,198,908 |
| Adjustment for amounts to be charged later | 135,507 | (135,507) |
| Refunds of prior years expenditures | 53,904 | 14,125 |
| Services provided without charge | (47,981) | (39,806) |
| Adjustment for prepaid expenses | (34,932) | - |
| Allowance for environmental liabilities | (22,738) | 51,114 |
| Amortization of tangible capital assets | (16,629) | (15,037) |
| Employee severance benefits | (16,545) | 866 |
| Adjustments of prior year accounts payable | 11,821 | 2,684 |
| Reductions from prepaid expenses | (6,527) | (3,478) |
| Amortization of unamortized discount loans | 5,772 | 8,219 |
| Expenses related to provisions devolved to Departments | 5,000 | (5,000) |
| Adjustments of previous years inventory | (2,080) | (2,356) |
| Vacation pay and compensatory leave | 1,535 | 1,198 |
| Adjustment for expenses related to claims | - | (44,701) |
| Other adjustments | (833) | 665 |
| 2,751,830 | 2,031,894 | |
| Adjustments for items not affecting net cost of operations but affecting appropriations | ||
| Add (Less): | ||
| Receivables, Advances, and Prepayments | 610 | 1,469 |
| Acquisitions of tangible capital assets | 13,358 | 8,751 |
| 13,968 | 10,220 | |
| Current year appropriations used | 4,677,486 | 3,341,056 |
| In thousands of dollars | ||
| Appropriations Provided | ||
|---|---|---|
| 2009 | 2008 | |
| Vote 1 – Operating expenditures | 851,248 | 758,182 |
| Vote 5 – Transfer payments | 449,921 | 320,282 |
| Statutory amounts | 3,585,779 | 2,461,958 |
| Less: | ||
| Appropriations available for future years | (9,481) | (10,908) |
| Lapsed appropriations – Operating | (132,073) | (79,603) |
| Lapsed appropriations – Transfer payments | (67,908) | (108,855) |
| Current year appropriations used | 4,677,486 | 3,341,056 |
| In thousands of dollars | ||
| 2009 | 2008 | |
|---|---|---|
| Net cash provided by Government | 1,733,905 | 1,216,411 |
| Revenue not available for spending | 2,686,556 | 2,198,908 |
| Change in net position in the Consolidated Revenue Fund | ||
| Variation in accounts receivable and advances | 167,433 | (318,984) |
| Variation in accounts payable and accrued liabilities | (123,647) | 399,218 |
| Other adjustments | 213,239 | (154,497) |
| 257,025 | (74,263) | |
| Current year appropriations used | 4,677,486 | 3,341,056 |
4. Expenses
| In thousands of dollars | ||
| 2009 | 2008 | |
|---|---|---|
| Transfer payments | ||
| Other level of government | 3,368,278 | 2,549,525 |
| Industry | 180,591 | 85,407 |
| Non-profit organizations | 93,597 | 80,795 |
| Individuals | 89,495 | 14,469 |
| Other countries and international organizations | 1,179 | 2,115 |
| Total transfer payments | 3,733,140 | 2,732,311 |
| Operating expenses | ||
| Salary and employee benefits | 473,506 | 427,204 |
| Professional and special services | 234,598 | 234,172 |
| Transportation and communication | 36,875 | 37,590 |
| Rentals | 30,451 | 24,956 |
| Utilities, materials and supplies | 24,774 | 21,242 |
| Allowance for environmental liabilities | 22,738 | (51,114) |
| Amortization | 16,629 | 15,037 |
| Acquisitions | 16,601 | 22,712 |
| Repairs and maintenance | 10,319 | 7,074 |
| Information | 7,305 | 8,412 |
| Other | 15,795 | 55,182 |
| Total operating expenses | 898,591 | 802,467 |
| Total Expenses | 4,631,731 | 3,534,778 |
5. Revenues
| In thousands of dollars | ||
| 2009 | 2008 | |
|---|---|---|
| Sales of goods and services – external parties: | ||
| Rights and privileges | 2,609,908 | 2,055,652 |
| Services of non-regulatory nature | 19,965 | 20,931 |
| Sales of goods and information products | 3,365 | 4,074 |
| Services of regulatory nature | 1,353 | 1,295 |
| Lease and use of public property | 150 | 480 |
| Other fees and charges | 803 | 133 |
| Interest | 51,266 | 49,669 |
| Fines | 27,209 | 92,911 |
| Amortization of discount loans | 5,772 | 8,219 |
| Other | 252 | 2,472 |
| Total | 2,720,043 | 2,235,836 |
6. Accounts Receivable and Advances
| In thousands of dollars | ||
| 2009 | 2008 | |
|---|---|---|
| Receivables from external parties | 165,987 | 330,847 |
| Less: Allowance for doubtful accounts on external receivables | (2,657) | (1,253) |
| 163,330 | 329,594 | |
| Receivables from other federal government departments and agencies | 3,112 | 4,213 |
| Employee advances | 94 | 162 |
| Total | 166,536 | 333,969 |
7. Loans Receivable
| 2009 | 2008 | |
|---|---|---|
| Unconditional Repayable Contribution to Hibernia Interest Assistance | 2,660 | 39,978 |
| Unamortized discount | – | (1,623) |
| Net unconditional repayable contribution | 2,660 | 38,355 |
| Loan to Nordion International Inc. | 66,000 | 70,000 |
| Unamortized discounts | (23,333) | (26,667) |
| Loan balance – Nordion | 42,667 | 43,333 |
| Loan to Hibernia Development Project | – | 9,200 |
| Unamortized discounts | – | (815) |
| Loan balance – Hibernia | – | 8,385 |
| Loan to Atomic Energy of Canada Limited | – | 500 |
| Total | 45,327 | 90,573 |
Hibernia Interest Assistance Loan
Unconditional repayable contribution; interest free; first instalments paid on March 31, 2001. Repayment starts eight years from the first annual instalment; the first repayment date is March 1, 2009. Balance outstanding as of March 31, 2009 is $2,660,000.
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. Balance remaining as of March 31, 2009 is $66,000,000. Due to the concessionary terms of this loan, the estimated present value is $42,667,000 as at March 31, 2009.
Hibernia Development Project (loan)
Interest Free Loan Agreements; repayment in 10 consecutive equal annual instalments commencing June 30, 1999. Murphy Atlantic Offshore Oil Co. Ltd. and Mobile Canada Hibernia Co. Ltd had repaid their loans as at March 31, 2009.
Loan to Atomic Energy of Canada (AECL)
Interest bearing loan maturing September 2008. NRCan invoices AECL twice per year (May & November). As of March 31, 2009, the Heavy Water Inventory loan had been repaid.
8. Investment
Investment in Atomic Energy Canada Limited (AECL)
NRCan has purchased common shares of Atomic Energy of Canada Limited, a Crown Corporation, for a total value of $164,159,000.
9. Prepayments
| 2009 | 2008 | |
|---|---|---|
| Prepaid expenses | 2,386 | 4,594 |
| Prepaid transfer payments | 713 | 2,055 |
| Total | 3,099 | 6,649 |
10. Tangible Capital Assets
| Cost | Accumulated amortization | 2009 | 2008 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Capital asset class | Opening balance | Acquisitions | Disposals, write-offs and other | Closing balance | Opening balance | Amortization | Disposals, write-offs and other | Closing balance | Net book value | Net book value |
| Land | 7,915 | - | - | 7,915 | - | - | - | - | 7,915 | 7,915 |
| Buildings | 141,820 | 820 | 229 | 142,411 | 113,726 | 6,780 | 7 | 120,499 | 21,912 | 28,094 |
| Machinery and equipment | 224,261 | 11,382 | 2,705 | 232,938 | 190,033 | 8,830 | 4,071 | 194,792 | 38,146 | 34,228 |
| Vehicles | 12,308 | 1,156 | 1,640 | 11,824 | 7,816 | 1,019 | 1,370 | 7,465 | 4,360 | 4,492 |
| Total | 386,304 | 13,358 | 4,574 | 395,088 | 311,575 | 16,629 | 5,448 | 322,756 | 72,333 | 74,729 |
Amortization expense for the year ended March 31, 2009 is $16,629 (2008 – $15,037).
11. Employee Benefits
(a) Pension benefits: NRCan 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 2008-09 expense amounts to $58,466,000 ($58,300,000 in 2007-08), which represents approximately 2.0 times (2.1 in 2007-08) the contributions by 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 appropriations. Information about the severance benefits, measured as at March 31, is as follows:
| 2009 | 2008 | |
|---|---|---|
| Accrued benefit obligation, beginning of year | 63,991 | 64,858 |
| Expense for the year | 16,182 | (1,001) |
| Benefits paid during the year | 363 | 134 |
| Accrued benefit obligation, end of year | 80,536 | 63,991 |
12. Contingent liabilities
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. The department has identified approximately 11 sites (9 sites in 2008) where such action is possible and for which a liability of $359,416,000 ($336,679,000 in 2008) has been recorded. NRCan'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 known.
Claims have been made against the department in the normal course of operations. Legal proceedings for claims totaling approximately $90,394,000 ($685,700,000 in 2008) were still pending at March 31, 2009. Some of these potential liabilities 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 in the financial statements.
13. Other Liabilities
| April 1, 2008 | Receipts and other credits | Payments and other charges | March 31, 2009 | |
|---|---|---|---|---|
| Guarantee deposits – Oil and gas | 13,546 | 687,240 | (690,998) | 9,788 |
| Shared costs projects | 12,061 | 16,219 | (16,613) | 11,667 |
| Market development and incentive payments – Alberta | 4,691 | 4,664 | (4,691) | 4,664 |
| Shared costs agreements – Research | 1,343 | 7,643 | (8,192) | 794 |
| Total | 31,641 | 715,766 | (720,494) | 26,913 |
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 and 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.
14. Equity of Canada
NRCan includes in its revenues and expenses the transactions of certain consolidated accounts established for specified purposes. Legislation required that the revenues of these specified purpose 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 specified purposes. NRCan has one such account entitled Environmental Research Fund. This 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.
| 2009 | 2008 | |
|---|---|---|
| Opening balance | 2,185 | 2,482 |
| Revenues | 2,722 | 2,168 |
| Expenses | (2,168) | (2,465) |
| Closing balance | 2,739 | 2,185 |
| Unrestricted equity | (741,543) | (611,187) |
| Total equity of Canada | (738,804) | (609,002) |
15. 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 Oil in 1995. The terms of sale included an upside interest provision whereby 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.
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 $37,200,000 ($130,700,000 in 2008). Contingent recoveries are not recorded in the financial statements.
16. Contractual Obligations
The nature of the department's activities can result in some large mutli-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:
| 2010 | 2011 | 2012 | 2013 | 2014 and thereafter | TOTAL | |
|---|---|---|---|---|---|---|
| Transfer Payments | 275,562 | 339,924 | 297,714 | 277,789 | 815,054 | 2,006,043 |
17. 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. Also, during the year, the department received services which were obtained without charge from other Government departments as presented in part (a).
(a) Services provided without charge:
| Services provided without charge | Amount (in thousands of dollars) |
|
|---|---|---|
| 2009 | 2008 | |
| Accommodation provided by Public Works and Government Services Canada | 15,671 | 14,215 |
| Contributions covering employer's share of employees' insurance premiums and costs paid by Treasury Board Secretariat | 31,186 | 24,112 |
| Worker's compensation cost provided by Human Resources Canada | 299 | 248 |
| Legal services provided by Department of Justice | 825 | 1,231 |
| Total | 47,981 | 39,806 |
The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include 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 as an expense in the department's Statement of Operations.
| Payables outstanding at year-end with related parties: | Amount (in thousands of dollars) |
|
|---|---|---|
| 2009 | 2008 | |
| Accounts payable to other government departments and agencies | 12,830 | 8,885 |
18. Comparative information
Comparative figures have been reclassified to conform to the current year's presentation.
Page details
- Date modified: