Financial Statements (Unaudited)
For the Year Ended March 31, 2010

Table of Contents

Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2010 and all information contained in these statements rests with departmental management. These financial 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 judgment and gives due consideration to materiality. To fulfil 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.

Management has established an external Departmental Audit Committee (DAC) that provides leadership oversight and advice in the spirit of the Treasury Board policy on Internal Audit and Directive on Departmental Audit Committees. The committee serves both Transport Canada and the Office of Infrastructure of Canada and includes four external members, one of whom serves as Chair. The DAC is responsible for exercising active oversight of core areas of departmental control and accountability which includes reviewing the departmental financial statements and all significant accounting estimates and judgments therein. DAC has reviewed these financial statements.

The financial statements of the department have not been audited.

Original signed by:

Yaprak Baltacıoğlu,
Deputy Head

Date

David Miller,
Chief Financial Officer

Date

Statement of Operations (Unaudited)
For the Year Ended March 31, 2010
(in thousands of dollars)

Expenses 2010 2009
Transfer payments (Note 4. Transfer Payments) 4,124,684 2,239,225
Operating expenses (Note 5. Operating Expenses) 69,882 45,836
Total expenses 4,194,566 2,285,061
Revenues 8 9
Net Cost of Operations 4,194,558 2,285,052

The accompanying notes form an integral part of these financial statements.

Statement of Financial Position (Unaudited)
At March 31, 2010
(in thousands of dollars)

  2010 2009
Assets    
Financial assets
Accounts receivable and advances (Note 6. Accounts Receivable and Advances)
116,477 50,327
Non-financial assets
Tangible capital assets (Note 7. Tangible Capital Assets)
6,773 8,903
TOTAL 123,250 59,230
Liabilities    
Accounts payable and accrued liabilities (Note 8. Accounts Payable and Accrued Liabilities) 529,094 128,222
Vacation pay and compensatory leave 1,217 871
Employee severance benefits (Note 9. Employee Benefits) 4,787 3,763
Total liabilities 535,098 132,856
Equity of Canada (411,848) (73,626)
TOTAL 123,250 59,230

Contractual obligations (Note 10. Contractual Oblications)
The accompanying notes form an integral part of these financial statements.

Statement of Equity of Canada (Unaudited)
At March 31, 2010
(in thousands of dollars)

  2010 2009
Equity of Canada, beginning of year (73,626) 84,211
Net cost of operations (4,194,558) (2,285,052)
Current year appropriations used (Note 3. Parliamentary Appropriations) 4,193,517 2,279,846
Revenue not available for spending (8) (9)
Refunds of previous year's expenditures (5,005) (1,132)
Change in net position in the Consolidated Revenue Fund (Note 3c) (334,722) (153,656)
Services provided without charge (Note 11a) 2,554 2,166
Equity of Canada, end of year (411,848) (73,626)

The accompanying notes form an integral part of these financial statements.

Statement of Cash Flow (Unaudited)
At March 31, 2010
(in thousands of dollars)

  2010 2009
Operating activities    
Net cost operations 4,194,558 2,285,052
Non-cash items:    
Amortization of tangible capital assets (Note 7. Tangible Capital Assets) (4,902) (4,187)
Services provided without charge (Note 11a) (2,554) (2,166)
Variations in Statement of Financial Position:    
Decrease (increase) in liabilities (Note 8. Accounts Payable and Accrued Liabilities) (402,242) (60,158)
Increase (decrease) in receivables (Note 6. Accounts Receivable and Advances) 66,150 (94,122)
Cash used by operating activities 3,851,009 2,124,419
Capital investment activities    
Net acquisition of tangible capital assets (Note 7. Tangible Capital Assets) 2,772 630
Cash used by capital investment activities 2,772 630
Financing activities    
Net cash provided by Government of Canada 3,853,782 2,125,049

The accompanying notes form an integral part of these financial statements.

Notes to the Financial Statements (Unaudited)

1. Authority and Objectives

The Office of Infrastructure of Canada (INFC) was created in 2002 as a separate organization under Schedule I.1 of the Financial Administration Act. The applied name for this organization is Infrastructure Canada.

INFC was established to lead the Government of Canada's effort to address infrastructure challenges. Order in Council 2004-325 authorizes the Minister to enter into transfer payment agreements and contracts related to infrastructure initiatives in Canada. One of the funding programs managed by the Office is the Canada Strategic Infrastructure Fund, which operates under the authority of its own act, the Canada Strategic Infrastructure Fund Act, resulting from the Budget Implementation Act, 2001.

INFC is funded through annual appropriations received from the Parliament of Canada and is not taxable under the provisions of the Income Tax Act. INFC reports to the Minister of Transport, Infrastructure and Communities.

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:

  1. Parliamentary appropriations – INFC is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to INFC 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. Parliamentary Appropriations provides a high-level reconciliation between the bases of reporting.
  2. Net Cash Provided by Government – INFC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by INFC is deposited to the CRF and all cash disbursements made by INFC 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 departments of the federal government.
  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 department. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.
  4. Expenses – Expenses are recorded on the 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 for accommodation and the employer's contribution to the health and dental insurance plans are recorded as operating expenses at their estimated cost.
  5. Employee future benefits:
    1. Pension benefits: Eligible employees participate in the Public Service Pension Plan (Public Service Superannuation Act), a multi-employer plan administered by the Government of Canada. INFC'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 INFC 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.
  6. Accounts receivables and advances are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.
  7. 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. INFC 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
    Informatics Hardware 5 to 10 years
    Informatics Software - Purchased 3 years
    Informatics Software – Developed 7 years
    Leasehold improvements period of lease
  8. Measurement uncertainty - The preparation of these 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 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

INFC receives 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, INFC 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:

  1. Reconciliation of net cost of operations to current year appropriations used
    (in thousands of dollars)
      2010 2009
    Net cost of operations 4,194,558 2,285,052
    Adjustments for items affecting net cost of operations but not affecting appropriations
    Add (Less):
       
    Revenue not available for spending 8 9
    Refunds of previous year's expenditures 5,005 1,132
    Vacation pay and compensatory leave (346) 8
    Employee severance benefits (1,024) (631)
    Amortization of tangible capital assets (4,902) (4,187)
    Services provided without charge (2,554) (2,166)
    Other   (1)
    Total of adjustments for items affecting net cost of operations but not affecting appropriations 4,190,745 2,279,216
    Adjustments for items not affecting net cost of operations but affecting appropriations
    Add (Less):
       
    Acquisitions of tangible capital assets 2,772 630
    Current year appropriations used 4,193,517 2,279,846
  2. Appropriations provided and used
    (in thousands of dollars)
      2010 2009
    Vote 50 – Operating Expenditures 66,319 40,136
    Vote 55 – Contributions 4,694,565 3,307,475
    Statutory Amounts    
    EBP 4,446 2,952
    Infrastructure Stimulus Fund 466,186  
    Provincial-Territorial Infrastructure Base Funding Program Accelerated 179,383  
    Communities Component of the Building Canada Fund Top Up 30,045  
    Green Infrastructure Fund 5,160  
    Less:    
    Lapsed Appropriations:    
    Operating (6,928) (3,499)
    Contributions (1,245,659) (1,067,218)
    Current year appropriations used 4,193,517 2,279,846
  3. Reconciliation of net cash provided by Government to current year appropriations used
    (in thousands of dollars)
      2010 2009
    Net cash provided by Government 3,853,782 2,125,049
    Revenue not available for spending 8 9
    Refunds of previous year's expenditures 5,005 1,132
    Change in net position in the Consolidated Revenue Fund:    
    (Increase) decrease in accounts receivable and advances (Note 6. Accounts Receivable and Advances) (66,150) 94,122
    Increase in accounts payable and accrued liabilities 402,242 60,158
    Other adjustments (1,370) (624)
    Total Change in net position in the Consolidated Revenue Fund 334,722 153,656
    Current year appropriations used 4,193,517 2,279,846

4. Transfer Payments
(in thousands of dollars)

Programs 2010 2009
Gas Tax Fund 1,872,374 984,810
Provincial-Territorial Infrastructure Base Funding 492,448 390,602
Infrastructure Stimulus Fund 466,186  
Canada Strategic Infrastructure Fund 415,564 504,695
Municipal Rural Infrastructure Fund 221,014 220,106
Building Canada Fund-Major Infrastructure Component 194,776 55,425
Provincial-Territorial Infrastructure Base Funding Accelerated 179,383  
Building Canada Fund-Communities Component 99,765 808
Border Infrastructure Fund 80,763 81,111
G8 Summit 40,569  
Building Canada Fund-Communities Component Top-Up 30,045  
National Trails Coalition 25,000  
Green Infrastructure Fund 5,160  
Canadian Standards Association for the Infrastructure Solutions Project 1,344 54
Research, Knowledge & Outreach Program 293 1,614
Current year appropriations used 4,124,684 2,239,225

5. Operating Expenses
(in thousands of dollars)

  2010 2009
Salaries and employee benefits 33,911 23,789
Professional and special services 13,788 11,693
Information services 8,899 461
Amortization of tangible capital assets 4,902 4,187
Rentals 2,901 2,489
Business Services and Fees 1,889 941
Informatics Equipment 1,430 282
Travel and relocation 507 482
Equipment repair and maintenance 484 238
Accomodation 446 669
Telecommunications 391 310
Office supplies and furnishings 225 67
Other operating expenses 109 228
Total 69,882 45,836

The professional and special services expenditures includes costs for supporting the INFC informatics requirements. CGI supports the departmental Grants and Contribution system (SIMSI), Geomatics, and the platform for future SharePoint development.

6. Accounts Receivable and Advances
(in thousands of dollars)

  2010 2009
Receivables from other Federal Government departments and agencies 91,930 50,323
Advances from external parties 24,546 3
Employee advances 1 1
Total 116,477 50,327

Funds are advanced to other Federal Government departments and agencies such as Transport Canada and Industry Canada during the fiscal year for the administration of programs on behalf of INFC. An account receivable is recorded for the unused portion that will be returned to INFC after year end.

Under the Infrastructure Stimulus Fund (ISF), a portion of funds was advanced to recipients for eligible project costs. At year end, the outstanding balance for ISF advances was $24.5M.

7. Tangible Capital Assets
(in thousands of dollars)

Table of Tangible Capital Assets

8. Accounts Payable and Accrued Liabilities
(in thousands of dollars)

  2010 2009
Payables to other Federal Government departments and agencies 4,578 8,097
Payables to external parties 524,467 119,553
Accrued Liabilities 49 572
Total 529,094 128,222

9. Employee Benefits

  1. Pension benefits: INFC'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/Quebec Pension Plans benefits and they are indexed to inflation.

    Both the employees and INFC contribute to the cost of the Plan. The 2009-10 expense amounts to $3,210,356 ($2,131,030 in 2008-09), which represents approximately 1.9 times (2.0 in 2008-09) the contributions by employees.

    INFC'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: INFC 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:
    (in thousands of dollars)
      2010 2009
    Accrued benefit obligation, beginning of year 3,763 3,132
    Expense for the year 1,428 782
    Benefits paid during year (404) (151)
    Accrued benefit obligation, end of year 4,787 3,763

10. Contractual Obligations
(in thousands of dollars)

Table of Contractual Obligations

11. Related Party Transactions

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

  1. Services provided without charge

    During the year INFC received without charge from other departments, accommodation and the employer's contribution to the health and dental insurance plans. These services without charge have been recognized in the department's Statement of Operation as follows:
    (in thousands of dollars)

      2010 2009
    Employer's contribution to the health and dental insurance plan 2,108 1,497
    Accommodation 446 669
    Total 2,554 2,166

    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, are not included as an expense in the department's Statement of Operations.

  2. Payables outstanding at year-end with related parties
    (in thousands of dollars)

      2010 2009
    Accounts payable to other government departments and agencies 4,578 8,097

12. Comparative Information

Comparative figures have been reclassified to conform to the current year's presentation.

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