Canadian Environmental Assessment Agency
Future-oriented Financial Statements

For the Year Ended March 31, 2011

(Unaudited)

Statement of Management Responsibility

Agency 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 assumptions adopted as at December 31, 2010 and reflect the plans described in the Report on Plans and Priorities.

The future-oriented financial statements of the Agency have not been audited.


_____Original signed by_____
Elaine Feldman
President
Ottawa, Canada


_____Original signed by_____
Richard Gagné
Chief Financial Officer
Ottawa, Canada

Future-oriented Statement of Financial Position (Unaudited)
For the Year Ending March 31, 2011
(in dollars)

 Estimated Results
2010–2011
Forecast
2011–2012
 

Assets
   Financial assets
   Accounts receivable and advances (Note 6)2,603,894831,825
 

Total financial assets2,603,894831,825
   Non-financial assets
   Tangible capital assets (Note 8)169,778134,638
 

Total non-financial assets169,778134,638
 

Total2,773,672966,463

Liabilities
   Accounts payable and accrued liabilities (Note 7)3,019,9722,994,259
   Vacation pay and compensatory leave780,000780,000
   Employee severance benefits (Note 9)3,971,1413,946,120
 

Total liabilities7,771,1137,720,379
Equity of Canada(4,997,441)(6,753,917)
 

Total2,773,672966,463

Information for the year ended March 31, 2011 includes actual amounts from April 1, 2010 to December 31, 2010.

The accompanying notes and schedules form an integral part of these future-oriented financial statements.

Future-oriented Statement of Operations (Unaudited)
For the Year Ending March 31, 2011
(in dollars)

 Estimated Results
2010–2011
Forecast
2011–2012
 

Operating Expenses
   Environmental Assessment Support Program23,750,34922,804,224
   Environmental Assesment Development Program3,919,3764,047,561
   Internal Services10,467,87610,068,768
 

Total Expenses38,137,60136,920,553

Revenues
   Environmental Assessment Support Program4,335,2863,223,525
   Environmental Assesment Development Program00
   Internal Services00
 

Total Revenues4,335,2863,223,525
 

Net Cost of Operations33,802,31533,697,028

Information for the year ended March 31, 2011 includes actual amounts from April 1, 2010 to December 31, 2010.

The accompanying notes and schedules form an integral part of these future-oriented financial statements.

Future-oriented Statement of Equity of Canada (Unaudited)
For the Year Ending March 31, 2011
(in dollars)

 Estimated Results
2010–2011
Forecast
2011–2012
 

Equity of Canada, beginning of year(4,936,232)(4,997,441)
   Net cost of operations(33,802,315)(33,697,028)
   Net cash provided by Government29,804,84327,633,054
   Services received without charge (Note 10)3,936,2634,307,498
 

Equity of Canada, end of year(4,997,441)(6,753,916)

The accompanying notes and schedules form an integral part of these statements.

Future-oriented Statement of Cash Flow (Unaudited)
For the Year Ending March 31, 2011
(in dollars)

 Estimated Results
2010–2011
Forecast
2011–2012
 

Operating Activities
   Net cost of operations33,802,31533,697,028
   Non-cash items
      Services provided without charge (Note 10)(3,936,263)(4,307,498)
      Amortization of tangible capital assets (Note 8)(35,140)(35,140)
   Variations in Statement of Financial Position
      Increase (decrease) in accounts receivable and advances (Note 6)637,263(1,772,069)
      Decrease (increase) in liabilities(663,332)50,733
 

Cash used by Operating Activities29,804,84327,633,054

Capital Investment Activities
   Acquisition of tangible capital assets00
 

Cash used by Capital Investment Activities00

Financing Activities
 

   Net cash provided by the Government of Canada29,804,84327,633,054

Information for the year ended March 31, 2011 includes actual amounts from April 1, 2010 to December 31, 2010.

The accompanying notes and schedules form an integral part of these future-oriented financial statements.

Notes to the Future-oriented Financial Statements (Unaudited)
For the Year Ending March 31, 2011

1. Authorities and Objectives

The Canadian Environmental Assessment Agency (the Agency) was established in 1995 under the Canadian Environmental Assessment Act. The Agency delivers high-quality environmental assessments (EA) and serves as the centre of expertise on EA within the federal government. To achieve this, the Agency over the planning period will focus on the following priorities:

  1. Deliver high-quality environmental assessment on major projects, with particular attention to the Agency's new role in conducting comprehensive studies;
  2. Build effective relationships with Aboriginal peoples, including consultations as an integral part of the federal environmental assessment process;
  3. Play a lead role in shaping the future of federal environmental assessment.

The Agency has two core program activities, Environmental Assessment Support Program and Environmental Assessment Development Program, which serve as the basis for its mission. These core program activities are supported by Internal Services, which provides modern, timely and responsive services.

In addition, the Agency has obligations under the Canada-wide Accord on Environmental Harmonization and bilateral agreements with the provincial governments, as well as international agreements covering environmental assessments.

The Agency is listed in Schedule I.1 of the Financial Administration Act and reports to Parliament through the Minister of the Environment.

2. Significant Assumptions

The future-oriented financial statements have 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:

  1. The Agency's activities have significantly changed with the introduction of the Jobs and Economic Growth Act. The Agency is now responsible for the conduct of most comprehensive studies while continuing to support review panels and manage screenings for major resource projects. However, resource requirements to carry out this new mandate will remain substantially the same as for previous years.
  2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
  3. Allowances for uncollectible amounts are based on historical experience and specific knowledge of key projects. The general historical pattern is expected to continue.
  4. Estimated year end information for 2010–2011 is used as the opening position for the 2011–2012 forecasts.

These assumptions are adopted as at December 31, 2010.

3. Variations and Changes to Forecast Financial Information

While every attempt has been made to accurately forecast final results for the remainder of 2010–2011 and for 2011–2012, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these financial statements the Canadian Environmental Assessment Agency has made estimates and assumptions concerning the future. These estimates and judgements may differ from the subsequent actual results. Estimates and judgements 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 financial statements and the historical financial statements include:

  1. the timing and unfolding of significant projects (e.g., environmental assessments) wherein the authorizations and executions are outside of the Agency's control;
  2. economic conditions may affect both the amount of revenue earned and the collectability of loan receivables; and
  3. further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, the Canadian Environmental Assessment Agency will not be updating the forecasts for any changes to appropriations or forecasting financial information made in ensuing supplementary estimates.

4. 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.

  1. Parliamentary Appropriations—The Agency is primarily financed by the Government of Canada through parliamentary appropriations. Appropriations provided to the Agency 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 statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high-level reconciliation between the bases of reporting.
  2. Net Cash Provided by Government—The Agency operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Agency is deposited to the CRF and all cash disbursements made by the Agency are paid from the CRF. The net cash provided by government is the difference between all cash receipts and all cash disbursements, including transactions between the Agency and other federal government departments.
  3. 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 the Agency. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.
  4. Revenues
    • Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
    • Revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
  5. Expenses—Expenses are recorded on an accrual basis
    • 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.
    • Services provided without charge by other government departments are recorded as operating expenses at their estimated cost.
  6. Employee Future Benefits
    1. Pension Benefits—Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government of Canada. The Agency's contributions to the Plan are charged to expenses in the year incurred and represent the total Agency obligation to the Plan. Current legislation does not require the Agency to make contributions for any actuarial deficiencies of the Plan.
    2. 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 for employee severance benefits for the government as a whole.
  7. Accounts receivables are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.
  8. 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.
  9. 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 foreign currencies are translated into Canadian dollars using the rate of exchange in effect on December 31, 2010.
  10. Tangible Capital Assets—All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the capital asset as follows:
    Asset ClassSub-asset ClassAmortization Period
    Machinery and equipmentVideoconferencing equipment10 years
    Other equipment (including furniture)Furniture and fixtures10 years
    Informatics hardwareMultifunctional3 years
    Informatics softwareServer4 years
  11. Measurement of 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 could affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these financial statements, management believes the estimates and assumptions to be reasonable. The most significant estimated items are employee severance benefits, allowances for employee vacation and compensatory 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.

5. Parliamentary Appropriations

The Agency 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 Agency 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:

a) Authorities Requested
 Estimated
2010–2011
Forecast
2011–2012
 

 (in dollars)
Authorities requested
   Vote 1529,458,74027,134,473
   Statutory Amounts2,654,6342,872,435
 

Forecast authorities available32,113,37430,006,908

Forecast authorities requested for the year ending March 31, 2012 are the planned spending amounts presented in the 2011–2012 Report on Plans and Priorities. Estimated authorities requested for the year ending March 31, 2011 include amounts presented in the 2010–2011 Main Estimates and Supplementary Estimates (A) and (B), planned for presentation in Supplementary Estimates (C) and estimates of amounts to be allocated at year-end from Treasury Board central votes.

b) Reconciliation of Net Cost of Operations to Requested Authorities
 Estimated
2010–2011
Forecast
2011–2012
 

 (in dollars)
Net Cost of Operations33,802,31533,697,028
Adjustments for items affecting net cost of operations, but not affecting appropriations
Add (Less):
   Services provided without charge (note 10)(3,936,263)(4,307,498)
   Amortization of tangible capital assets (note 8)(35,140)(35,140)
   Revenue not available for spending1,139,817766,938
   Vacation pay and compensatory leave7,9230
   Severance pay(663,563)25,020
Increase in accrued liabilities not charged to authorities(51,715)(139,440)
 (3,538,941)(3,690,120)
Forecasted current year lapse (e.g. Frozen allotments)1,850,000 
 

Forecasted authorities available32,113,37430,006,908

6. Accounts Receivable and Advances

The following table presents details of accounts receivable and advances:

 Estimated Results
2010–2011
Forecast
2011–2012
 

 (in dollars)
Receivables from other federal government departments and agencies83,00083,000
Receivables from external parties2,810,0871,038,018
Employee advances2,8002,800
 

 2,895,8871,123,818
Less: Allowance for doubtful accounts(291,993)(291,993)
 

Total2,603,894831,825

7. Accounts Payable and Accrued Liabilities

The following table presents details of accounts payable and accrued liabilities:

 Estimated Results
2010–2011
Forecast
2011–2012
 

 (in dollars)
Payables to other federal government departments and agencies785,119785,100
Payables to external parties1,865,1331,700,000
 

 2,650,2522,485,100
Accrued Salaries369,720509,159
 

Accrued Liabilities3,019,9722,994,259

8. Tangible Capital Assets

Tangible Capital Assets
Cost (in dollars)
Capital Asset ClassOpening BalanceAcquisitionsTransferDisposals and Write-offsClosing Balance
Machinery and equipment206,8450 0206,845
Other equipment (including furniture)14,0590 014,059
Informatics hardware 0 00
Informatics software52,2000 052,200
Total273,104000273,104
Tangible Capital Assets (continued)
Accumulated Amortization (in dollars)
Capital Asset ClassOpening BalanceAcquisitionsAmortizationDisposals and Write-offsClosing Balance
Machinery and equipment47,431020,684068,115
Other equipment (including furniture)7,03001,40608,436
Informatics hardware 0 00
Informatics software13,725013,050026,775
Total68,186035,1400103,326
Tangible Capital Assets (continued)
Net Book Value (in dollars)
Capital Asset Class20112012
Machinery and equipment138,730118,046
Other equipment (including furniture)5,6234,217
Informatics hardware00
Informatics software25,42512,375
 00
Total169,778134,638

9. Employee Benefits

  1. Pension Benefits—The Agency'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 Agency contribute to the cost of the Plan.

    The Agency'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.
  2. Severance Benefits—The Agency 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:
     Estimated Results
    2010–2011
    Forecast
    2011–2012
     

     (in dollars)
    Accrued benefit obligation, beginning of year3,307,5783,971,141
    Expense for the year763,56374,979
    Benefits paid during the year (severance pay)(100,000)(100,000)
     

    Accrued Benefit Obligation, end of year3,971,1413,946,120

10. Related Party Transactions

The Agency is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year, the Agency received services, which were obtained without charge from other government departments as presented below.

During the year, the Agency received without charge from other departments, accommodation, legal fees and employer’s contribution to the health and dental insurance plans. These services without charge have been recognized in the Agency’s Statement of Operations as follows:

 Estimated Results
2010–2011
Forecast
2011–2012
 

 (in dollars)
Accommodations1,936,6712,078,170
Employer's contribution to the health and dental insurance plan1,364,3071,339,428
Legal services provided by the Department of Justice635,285889,900
 

Total3,936,2634,307,498

The Agency also obtains selected financial services, material management, informatics, and compensation and benefits services under a shared services agreement with Environment Canada.

In addition, 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 Comptroller General and the Office of the Auditor General, are not included as an expense in the Agency's Statement of Operations.