Financial Statements (Unaudited) - For the year ended March 31, 2015

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2015, and all information contained in these statements rests with the management of Infrastructure Canada. These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.

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 fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of Infrastructure Canada’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in Infrastructure Canada’s Departmental Performance Report, is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout Infrastructure Canada and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

A risk-based assessment of the system of ICFR for the year ended March 31, 2015 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the annex.

The effectiveness and adequacy of Infrastructure Canada’s system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of Infrastructure Canada's operations, and by the Departmental Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends the financial statements to the Deputy Head of Infrastructure Canada.

The financial statements of Infrastructure Canada have not been audited.

Jean-François Tremblay
Deputy Head

Darlene Boileau
Chief Financial Officer

Signed at Ottawa, ON

Infrastructure Canada
Statement of Financial Position (Unaudited)
As at March 31

Liabilities
(in thousands of dollars)
  2015 2014
Total liabilities 154,213 308,074
Accounts payable and accrued liabilities (note 4) 150,796 305,430
Vacation pay and compensatory leave 1,157 1,216
Employee future benefits (note 5) 2,260 1,428
Infrastructure Canada
Statement of Financial Position (Unaudited)
As at March 31
Financial assets
(in thousands of dollars)
  2015 2014
Total financial assets 151,283 305,438
Due from Consolidated Revenue Fund 102,903 181,839
Accounts receivable and advances (note 6) 48,380 123,599
Infrastructure Canada
Statement of Financial Position (Unaudited)
As at March 31
Departmental net debt
(in thousands of dollars)
  2015 2014
Departmental net debt 2,930 2,636
Total liabilities 154,213 308,074
Total financial assets 151,283 305,438
Infrastructure Canada
Statement of Financial Position (Unaudited)
As at March 31
Non-Financial assets
(in thousands of dollars)
  2015 2014
Total non-financial assets 19,745 5,810
Tangible capital assets (note 7) 19,745 5,810
Infrastructure Canada
Statement of Financial Position (Unaudited)
As at March 31
(in thousands of dollars)
  2015 2014
Departmental net financial position 16,815 3,174
Departmental net debt 2,930 2,636
Total non-financial assets 19,745 5,810

Contractual obligations (note 8)

Contingent liabilities (note 9)

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

Jean-François Tremblay
Deputy Head

Darlene Boileau
Chief Financial Officer

Signed at Ottawa, ON

Infrastructure Canada
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the year Ended March 31
Expenses by Strategic Outcome
(in thousands of dollars)
  2015 Planned Results 2015 2014
Total expenses 3,324,368 3,035,684 3,516,195
Public infrastructure for a More Prosperous Canada 3,321,269 2,994,378  
Provinces, territories and municipalities have federal financial support for their infrastructure priorities     2,300,489
Funding for quality, cost-effective public infrastructure that meets the needs of Canadians in a competitive economy, a cleaner environment and liveable communities is provided     1,187,640
Internal Services 3,099 41,306 28,066
Infrastructure Canada
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the year Ended March 31
Revenues
(in thousands of dollars)
  2015 Planned Results 2015 2014
Total revenues   0  
Miscellaneous Revenue   9  
Revenues earned on behalf of Government   (9)  
Infrastructure Canada
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the year Ended March 31
Net cost of operations before government funding and transfers
(in thousands of dollars)
  2015 Planned Results 2015 2014
Net cost of operations before government funding and transfers 3,324,368 3,035,684 3,516,195
Total expenses 3,324,368 3,035,684 3,516,195
Total revenues   0  
Infrastructure Canada
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the year Ended March 31
Government funding and transfers
(in thousands of dollars)
  2015 Planned Results 2015 2014
Net cost of operations after government funding and transfers   (13,641) (366)
Net cash provided by Government   3,123,314 3,728,263
Change in due from Consolidated Revenue Fund   (78,936) (216,734)
Services provided without charge by other government departments (note 10)   5,948 5,491
Transfer of the transition payments for implementing salary payments in arrears (note 10)   (1,001)  
Transfer of liabilities from another government department (note 11)     (459)
Infrastructure Canada
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the year Ended March 31

(in thousands of dollars)
  2015 Planned Results 2015 2014
Departmental net financial position – End of year   16,815 3,174
Departmental net financial position – Beginning of year   3,174 2,808
Net cost of operations after government funding and transfers   (13,641) (366)

Segmented Information (note 12)

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

Infrastructure Canada
Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31
Change due to tangible capital assets
(in thousands of dollars)
  2015 2014
Total change due to tangible capital assets 13,936 (225)
Acquisition of tangible capital assets (note 7) 15,647 1,258
Amortization of tangible capital assets (note 7) (1,706) (1,483)
Net (Loss) gain on disposal of tangible capital assets including adjustments (note 7) (6) -
Infrastructure Canada
Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31
Net increase (decrease) in departmental net debt
(in thousands of dollars)
  2015 2014
Net increase (decrease) in departmental net debt 294 (591)
Net cost of operations after government funding and transfers (13,641) (366)
Total change due to tangible capital assets 13,936 (225)
Infrastructure Canada
Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31
(in thousands of dollars)
  2015 2014
Departmental net debt – End of year 2,930 2,636
Departmental net debt – Beginning of year 2,636 3,227
Net increase (decrease) in departmental net debt 294 (591)

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

Infrastructure Canada
Statement of Cash Flows (Unaudited)
For the Year Ended March 31
Cash used in operating activities
(in thousands of dollars)
  2015 2014
Cash used in operating activities 3,107,667 3,727,005
Operating activities:
Net cost of operations before government funding 3, 035,684 3, 516,195
Non-cash items:
Amortization of tangible capital assets (note 7) (1,706) (1,483)
(Loss) gain on disposal of tangible capital assets (note 7) (6)
Services provided without charge by other government departments (note 10) (5,948) (5,491)
Transition payments for implementing salary payments in arrears (note 10) 1,001 -
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances (note 6) (75,219) 114,286
Decrease (increase) in accounts payable and accrued liabilities (note 4) 154,634 102,415
Decrease (increase) in vacation pay and compensatory leave 59 71
Decrease (increase) in employee future benefits (note 5) (832) 553
Transfer of liabilities from another government department (note 11) - 459
Infrastructure Canada
Statement of Cash Flows (Unaudited)
For the Year Ended March 31
Capital investment activities
(in thousands of dollars)
  2015 2014
Cash used in capital investing activities 15,647 1,258
Capital investment activities:
Acquisitions of tangible capital assets (note 7) 15,647 1,258
Infrastructure Canada
Statement of Cash Flows (Unaudited)
For the Year Ended March 31
Net cash provided by Government of Canada
(in thousands of dollars)
  2015 2014
Net cash provided by Government of Canada 3,123,314 3,728,263
Cash used in operating activities 3,107,667 3,727,005
Cash used in capital investing activities 15,647 1,258

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 is funded through annual and statutory 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 Infrastructure, Communities and Intergovernmental Affairs, and Minister of the Economic Development Agency of Canada for the Regions of Quebec.

INFC was established to lead the Government of Canada’s effort to address infrastructure challenges through strategic investments in provincial, territorial and municipal assets, engagement in key partnerships, and the development and implementation of sound policies. Order in Council 2004-325 authorizes the Minister to enter into transfer payment agreements and contracts related to infrastructure initiatives in Canada.

As per Order in Council P.C. 2014-144 dated February 10, 2014, ministerial responsibility for the Federal Montreal Bridges group, which includes the New Bridge for the St. Lawrence Corridor Project and oversight of the Jacques Cartier and Champlain Bridges Incorporated (JCCBI) was transferred from the Minister of Transport to the Minister of Infrastructure, Communities and Intergovernmental Affairs and Minister of the Economic Development Agency of Canada for the Regions of Quebec, effective February 13, 2014. The enabling legislation for this project, the New Bridge for the St. Lawrence Act, was enacted on June 19, 2014.

In 2014-15 and beyond, INFC will deliver its mandate under one strategic outcome and internal services in support of its activities. This change stems from a senior management decision that INFC move towards a streamlined and more robust PAA structure that better reflects the Department’s core activity, which supports a more prosperous Canada. Furthermore, the PAA was amended to account for funding under the new Building Canada Fund, and to provide longer-term stability as changes in transfer payment programs and departmental priorities can be more easily accommodated within this new structure. The strategic outcome is described below.

Public Infrastructure for a More Prosperous Canada: INFC’s key business lines and initiatives are grouped into 6 programs which fall under this strategic outcome.

  • Funding for Provincial-Territorial Priorities – providing predictable funding for each province and territory to enhance Canada’s public infrastructure system. (Provincial - Territorial Infrastructure Base Fund).
  • Permanent and Flexible Infrastructure Funding – supporting community infrastructure for Canadians, this program provides long-term predictable and flexible funding for municipalities, supporting long-term municipal planning and asset management in order to address infrastructure priorities (Gas Tax Fund).
  • Investments in National Infrastructure Priorities – provides funding for infrastructure projects that advance national priorities (New Building Canada Fund - National Infrastructure Component, Green Infrastructure Fund, Border Infrastructure Fund, Inuvik to Tuktoyaktuk Highway Program, National Recreational Trails Program).
  • Large-Scale Infrastructure Investments – providing funding for infrastructure projects of national, regional and/or local significance (New Canada Building Fund – Provincial-Territorial Infrastructure Component - National and Regional Projects, Building Canada Fund - Major Infrastructure Component, Canada Strategic Infrastructure Fund).
  • Infrastructure Investments in Small Communities and Rural Areas — investing in infrastructure projects in small communities and rural areas in support of local and/or regional priorities and economies (New Building Canada Fund - Provincial - Territorial Infrastructure Component - Small Communities Fund, Building Canada Fund - Communities Component).
  • New Bridge for the St. Lawrence Corridor Project – supporting national, provincial and regional priorities and economies, this program provides funding for infrastructure projects for the New Bridge for the St. Lawrence corridor in Montreal, Quebec.

Internal services: Internal Services are groups of activities and resources that are administered to support the needs of programs and other corporate obligations of INFC and include those activities and resources that apply across INFC.

The New Bridge for the St. Lawrence Corridor Project was not part of Infrastructure Canada’s Program Alignment Architecture structure in 2013-2014, for reporting purposes it is being reported under the program activity of Building Canada Fund-Major Infrastructure Component (BCF-MIC). It should be noted that BCF-MIC is a contribution program, the New Bridge for the St. Lawrence Corridor Project is a major capital project, and its spending has no relation to contributions or transfer payment programs.

2. Summary of significant accounting policies

These financial statements have been prepared using the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

  1. Parliamentary authorities – INFC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to INFC does not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2014-15 Report on Plans and Priorities.
  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 Government.
  3. Amounts due from or 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 INFC is entitled to draw from the CRF without further authorities to discharge its liabilities.
  4. Expenses – Expenses are recorded on an accrual basis.
    1. Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses 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
    2. Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
    3. Services provided without charge by other government departments for accommodation, legal services and employer contributions 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. INFC’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. 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: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. 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 receivable and advances are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain and a reasonable estimate can be made of the unrecoverable amount.
  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. 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 and Developed 3 to 7 years
    Leasehold Improvements period of lease
    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.
  8. Contingent liabilities – Contingent liabilities are potential liabilities that 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. Measurement uncertainty – The preparation of these financial statements 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 payables at year end, liability for contingent liabilities, 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 authorities

INFC receives its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position in one year may be funded through parliamentary authorities 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 authorities used
    Reconciliation of net cost of operations to current year authorities used
    Adjustments for items affecting net cost of operations but not affecting authorities
    (in thousands of dollars)
      2015 2014
    Total items affecting net cost of operations but not affecting authorities 43,543 (3,628)
    Amortization of tangible capital assets (1,706) (1,483)
    Services provided without charge by other government departments (5,948) (5,491)
    Decrease in vacation pay and leave 59 71
    (Increase) in employee future benefits (832) 553
    Other charges not charged to the authorities (1) -
    Refund of previous year’s expenditures 51,962 2,722
    Revenue not available for spending 9 -
    Reconciliation of net cost of operations to current year authorities used
    Adjustments for items not affecting net cost of operations but affecting authorities
    (in thousands of dollars)
      2015 2014
    Total items affecting net cost of operations but not affecting authorities 16,655 1,258
    Acquisitions of tangible capital assets 15,647 1,258
    Proceeds from disposal of tangible capital assets (6) -
    Transition payments for implementing salary payments in arrears 1,001 -
    Change in advances 13 -
    Reconciliation of net cost of operations to current year authorities used
    Current year authorities used
    (in thousands of dollars)
      2015 2014
    Current year authorities used 3,095,882 3,513,825
    Net cost of operations before government funding and transfers 3,035,684 3,516,195
    Total items affecting net cost of operations but not affecting authorities 43,543 (3,628)
    Total items affecting net cost of operations but not affecting authorities 16,655 1,258
  2. Authorities provided and used
    Authorities provided and used

    (in thousands of dollars)
      2015 2014
    Current year authorities used 3,095,882 3,513,825
    Authorities
    Vote 1 – Operating Expenditures 75,080 55,183
    Vote 3 – Capital Expenditures 94,037  
    Vote 5 – Contributions 1,566,103 4,102,031
    Statutory Amounts
    Employee Benefit Plan 5,046 4,393
    Minister Office Salary and Car Allowance 80 -
    Gas Tax Fund 1,973,269 -
    Less:
    Lapsed : Operating (8,494) (8,974)
    Lapsed : Capital (78,389) -
    Lapsed : Contributions (530,850) (638,808)

The responsibility for the New Bridge for the St. Lawrence (NBSL) Corridor Project was transferred from the Minister of Transport to the Minister of Infrastructure, Communities and Intergovernmental Affairs on February 13, 2014.

The Total Authorities Available for Use for the Building Canada Fund-Major Infrastructure Component (BCF-MIC) in 2013-2014 was increased by $8,246,357 to include NBSL for the period of February 13, 2014 to March 31, 2014. As well, BCF-MIC Actual Spending for 2013-2014 includes the NBSL expenditures of $8,246,357 for the same period.

4. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities
Accounts Payable
(in thousands of dollars)
  2015 2014
Total accounts payable 148,724 305,082
Accounts Payable - Other government departments and agencies 7,024 234
Accounts Payable - External parties 141,700 304,848
Accounts payable and accrued liabilities
(in thousands of dollars)
  2015 2014
Total accounts payable and accrued liabilities 150,796 305,430
Total accounts payable 148,724 305,082
Accrued Liabilities Footnote 1 2,072 348

5. Employee future benefits

  1. Pension benefits:

    INFC's employees participate in the public service pension plan (the “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 Plan benefits and they are indexed to inflation.

    Both the employees and INFC contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

    The 2014-2015 expense amounts to $3,449,164 ($3,088,596 in 2013-2014). For Group 1 members, the expense represents approximately 1.41 times (1.6 times in 2013-2014) the employee contributions and, for Group 2 members, approximately 1.39 times (1.5 times in 2013-2014) the employee contributions.

    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 salary at termination of employment. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows:

    As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

Severance benefits (in thousands of dollars)
  2015 2014
Accrued benefit obligation - End of year 2,260 1,428
Accrued benefit obligation - Beginning of year 1,428 1,981
Expense for the year 930 448
Benefits paid during year (98) (1,001)

6. Accounts receivable and advances

Accounts receivable and advances (in thousands of dollars)
  2015 2014
Total accounts receivable and advances 48,380 123,599
Receivables - Other government departments and agencies 48,268 123,598
Advances to external parties 111 -
Advances - Employees 1 1

7. Tangible capital assets

Tangible capital assets Cost 2015
(in thousands of dollars)
Capital asset class Opening balance Acquisitions Adjustments Footnote 2 Disposals and write-offs Closing balance
Total 35,679 15,647 - (994) 50,332
Land - 13,246 - - 13,246
Informatics Hardware 994 - - (994) Footnote 3 -
Informatics Software – Developed and Purchased 29,286 732 772 - 30,790
Leasehold Improvements 4,316 30 - - 4,346
Engineering Works in Progress of Construction - 1,502 - 1,502
Assets under construction 1,083 - (772) - 311
Other Construction or Work in Progress - 137 - - 137
Tangible capital assets Accumulated amortization 2015
(in thousands of dollars)
Capital asset class Opening balance Amortization Disposal and write-offs Closing balance
Total 29,869 1,706 (988) 30,587
Land - - - -
Informatics Hardware 981 7 (988) -
Informatics Software – Developed and Purchased 27,262 1,278 - 28,540
Leasehold Improvements 1,626 421 - 2,047
Engineering Works in Progress of Construction - - - -
Assets under construction - - - -
Other Construction or Work in Progress - - - -
Tangible capital assets Net Book Value
(in thousands of dollars)
Capital asset class Cost 2015
Closing balance
Accumulated amortization 2015
Closing balance
Net Book Value
2015
Net Book Value
2014
Total 50,332 30,587 19,745 5,810
Land 13,246 - 13,246 -
Informatics Hardware - - - 13
Informatics Software – Developed and Purchased 30,790 28,540 2,250 2,024
Leasehold Improvements 4,346 2,047 2,299 2,690
Engineering Works in Progress of Construction 1,502 - 1,502 -
Assets under construction 311 - 311 1,083
Other Construction or Work in Progress 137 - 137 -

8. Contractual obligations

The nature of INFC's activities can result in some large multi-year contracts and obligations whereby INFC will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

Contractual obligations
(in thousands of dollars)
  2016 2017 2018 2019 2020 and thereafter Total
Total transfer payments and operating expenses 1,467,479 1,247,163 330,720 324,166 253,789 3,623,316
Transfer payments
Public infrastructure for a More Prosperous Canada
Building Canada Fund-Major Infrastructure Component 857,306 731,744 50,621 88,187 - 1,727,858
Building Canada Fund-Communities Component 146,734 219,022 - - - 365,756
Canada Strategic Infrastructure Fund 166,620 110,046 56,174 64,898 - 397,738
Provincial/Territorial Infrastructure Base Fund 125,135 27,700 - - - 152,835
Provincial-Territorial Infrastructure Component National and Regional Projects 9,474 5,983 1,794 1,160 - 18,411
Provincial-Territorial Infrastructure Component Small Communities Fund 55,257 117,231 149,759 135,985 250,493 708,725
Green Infrastructure Fund 25,444 13,071 25,122 15,912 - 79,549
Border Infrastructure Fund 11,834 8,516 - 14,224 - 34,574
Inuvik to Tuktoyaktuk Highway Program 65,625 10,850 44,250 - - 120,725
National Recreational Trails 5,000 - - - - 5,000
Operating
Operating contracts and other expenditures 4,050 3,000 3,000 3,800 3,296 17,146

9. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown.

  1. Claims and litigation

    Claims have been made against Infrastructure Canada in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. Infrastructure Canada will record an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $390,000 ($390,000 in 2013-14) at March 31, 2015.

10. Related party transactions

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

  1. Common services provided without charge by other government departments

    During the year, INFC received services without charge from certain common service organizations, related to accommodation, legal services, the employer’s contribution to the health and dental insurance plans. These services provided without charge have been recorded in INFC’s Statement of Operations and Departmental Net Financial Position as follows:

    Common services provided without charge by other government departments
    (in thousands of dollars)
      2015 2014
    Total 5,948 5,491
    Employer’s contribution to the health and dental insurance plans 2,840 2,447
    Accommodation 3,102 3,044
    Justice 6 -

    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, are not included as an expense in INFC's Statement of Operations and Departmental Net Financial Position.

  2. Other transactions with related parties
    Other transactions with related parties
    (in thousands of dollars)
      2015 2014
    Accounts receivable – Other government departments and agencies 48,368 123,598
    Accounts payable – Other government departments and agencies 7,024 234
    Expenses – Other government departments and agencies 32,399 6,436

    Expenses disclosed in (b) exclude common services provided without charges, which are already disclosed in (a). Common services include other support services from other government departments, such as providing financial and human resources systems, as well as salary recoveries between departments.

    Other Government Departments (OGDs) and agencies administer certain programs on behalf of INFC. Funds are advanced to these OGDs and agencies, namely Transport Canada and the Regional Development Agencies, during the fiscal year. An accounts receivable is recorded for the unused portion that will be returned to INFC after year end while an accounts payable is recorded when INFC must provide additional funds to these OGDs and agencies.

  3. Transfer of the transition payments for implementing salary payments in arrears

    The Government of Canada implemented salary payments in arrears in 2014-15. As a result, a one-time payment of $1,000,930 was issued to employees and will be recovered from them in the future. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the Department. However, it did result in the use of additional spending authorities by the Department. Prior to year end, the transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Works and Government Services Canada, who is responsible for the administration of the Government pay system.

11. Transfer of liabilities from another government department

Effective February 13, 2014, Infrastructure Canada was transferred the responsibility for the New Bridge for the St. Lawrence Corridor Project and oversight of Jacques Cartier Champlain Bridge Incorporated in accordance with Order-in-Council 2014-0144, including the stewardship responsibility for the assets and liabilities related to the program. Accordingly, Infrastructure Canada received the following liabilities related to the New Bridge for the St. Lawrence Corridor Project and oversight of Jacques Cartier Champlain Bridge Incorporated from Transport Canada on February 13, 2014:

Transfer of liabilities from another government department
(in thousands of dollars)
Liabilities 2014
Adjustment to the department net financial position 459
Accounts Payable – Other government departments and agencies 100
Accounts Payable - External parties 285
Accrued Liabilities 74

12. Segmented Information

Presentation by segment is based on INFC's program alignment architecture. The presentation by segment is based on the same accounting policies as described in the Summary of Significant Accounting Policies in note 2. The following table presents the expenses incurred or the main programs, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

Transfer payments
(in thousands of dollars)
  Public Infrastructure for a More Prosperous Canada Internal Services 2015 2014
Total transfer payments 2,956,571 - 2,956,571 3,460,567
Contributions 2,956,571 - 2,956,571 3,460,567
Operating expenses
(in thousands of dollars)
  Public Infrastructure for a More Prosperous Canada Internal Services 2015 2014
Total operating expenses 37,807 41,306 79,113 55,628
Salaries and employee benefits 9,913 30,741 40,654 34,086
Professional services 30,694 4,590 35,284 14,159
Amortization 0 1,707 1,707 1,483
Rentals 1,281 3,402 4,683 4,798
Temporary Help 71 308 379 311
Information 52 196 248 206
Informatics Equipment 256 483 739 311
Travel and Relocation 192 391 583 169
Telecommunications - - - -
Office supplies & furnishings 25 89 114 65
Repairs 1 26 27 13
Other (4,678) (627) (5,305) 27
Transfer payments
(in thousands of dollars)
  Public Infrastructure for a More Prosperous Canada Internal Services 2015 2014
Net cost from continuing operations 2,994,378 41,306 3,035,684 3,516,195
Total transfer payments 2,956,571 - 2,956,571 3,460,567
Total operating expenses 37,807 41,306 79,113 55,628

13. Subsequent events

On June 19, 2015, the Government of Canada announced that the project agreement was signed with Signature on the Saint-Lawrence Group for the New Bridge for the St. Lawrence Corridor project. The project agreement is valued at $3.977 billion and covers the construction period, to begin in June 2015 and end in the fall of 2019, as well as a subsequent 30-year operating period. The impact of this agreement will be reflected in the 2015-16 financial statements.

Additionally, in early April, the funding letters for the Gas Tax Fund for a total amount of $1,958,269,432, were signed and provided to recipients. These letters indicate to each recipient the amount of funds to be distributed in 2015-2016.

ANNEX to the Statement of Management Responsibility Including Internal Control over Financial Reporting for the Fiscal Year ending March 31, 2015

1. Introduction

This document provides summary information on the measures taken by Infrastructure Canada to design, assess and maintain an effective system of internal control over financial reporting (ICFR) including information on internal control management and assessment results and related action plans.

Detailed information on Infrastructure Canada's authority, mandate, and program activities can be found in its 2014-15 Report on Plans and Priorities and 2014-15 Departmental Performance Report.

2.0 Departmental system of internal control over financial reporting

2.1 Internal control management

Infrastructure Canada has a well-established governance and accountability structure to support departmental assessment efforts and oversight of its system of internal control. A departmental internal control management framework, approved by the Deputy Head, is in place and includes:

  • Organizational accountability structures as they relate to internal control management to support sound financial management, including roles and responsibilities of senior managers in their areas of responsibility for control management;
  • Values and ethics;
  • Ongoing communication and training on statutory requirements, and policies and procedures for sound financial management and control; and
  • At least semi-annual monitoring of and regular updates on internal control management, as well as the provision of related assessment results and action plans to the Deputy Head and departmental senior management and the Departmental Audit Committee (DAC).

DAC provides advice to the Deputy Head on the adequacy and functioning of the department's risk management, control and governance frameworks and processes. DAC is composed of three external members and meets up to four times per year (and more frequently as required).

2.2 Service arrangements relevant to financial statements

Infrastructure Canada relies on other organizations for the processing of certain transactions that are recorded in its financial statements:

Common Arrangements
  • Public Works and Government Services Canada (PWGSC) centrally administers the payments of salaries and the procurement of some goods and services in accordance with the Infrastructure Canada Delegation Instrument, and provides accommodation services;
  • Government-wide pay and Receiver General central systems are administered by PWGSC. The central systems consist of six individual systems: Standard Payment System (SPS), Government Banking System (GBS), Regional Pay System (RPS), Payroll System-General Ledger (PS-GL), Receiver General-General Ledger (RG-GL), and the Central Financial Management Reporting System (CFMRS);
  • The Treasury Board Secretariat provides Infrastructure Canada with information used to calculate various accruals and allowances, such as the accrued severance liability and employee benefit plan, and pays the employer's contribution to the health and dental insurance plans;
  • The Department of Justice provides legal services to Infrastructure Canada; and
  • Shared Services Canada (SSC) provides information technology (IT) infrastructure services to Infrastructure Canada in the areas of data centre and network services. The scope and responsibilities are addressed in the interdepartmental arrangement between SSC and Infrastructure Canada.
Specific Arrangements
  • Industry Canada is the host of Infrastructure Canada's departmental financial management system, the Integrated Financial Management System (IFMS). The service arrangement also includes system support.
  • Infrastructure Canada acquires pay compensation services from PWGSC.
  • Federal delivery partners (Transport Canada, Atlantic Canada Opportunities Agency, Western Economic Diversification Canada, Federal Economic Development Agency for Southern Ontario, and the Economic Development Agency of Canada for the Regions of Quebec) manage certain contribution programs on behalf of Infrastructure Canada.

3. Departmental assessment results during fiscal year 2014-2015

The key findings and significant adjustments required from the current year’s assessment activities are summarized below.

New or significantly amended key controls: The department inherited responsibility for the construction of the New Bridge for the St. Lawrence Corridor (NBSLC) Project in 2013-14, which will result in significant balances in the coming years for accounts like Assets under Construction, Tangible Capital Assets, Accumulated Amortization, and Amortization of Tangible Capital Assets.

Ongoing monitoring programs: As part of its rotational ongoing monitoring plan, the department completed its reassessment of transfer payment controls (managed internally), procure-to-payment controls, financial statement preparation controls, entity-level controls and IT general controls. For the most part, the key controls that were tested performed as intended, with remediation required as follows:

  • There was inconsistency in or non-existence of evidence of control operation in the procure-to-payment process. Recommendations were made to ensure that evidence is available to demonstrate consistent control operation. A management action plan has been prepared by control owners and remediation is targeted for completion in September 2015.
  • There were deficiencies found in the Program Information Management System reporting functionality. Recommendations were made to improve the reliability of user access reports. A management action plan is due to be completed in September 2015.

Based on its Multi-year Risk Based Plan, the department did not perform Operating Effectiveness Testing for Transfer Payments managed by Federal Delivery Partners (FDPs) or for payroll during this fiscal year. Design Effectiveness Testing was performed and for the most part, the key controls that were tested were designed effectively, with remediation required as follows:

  • Only the current year of multi-year transfer payment agreements is committed in the departmental financial management system. It was recommended to commit the entirety of multi-year agreements. A management action plan has been prepared by control owners and remediation is targeted for completion in August 2015.

4. Departmental Action Plan

4.1 Progress during fiscal year 2014-15

Infrastructure Canada conducted ongoing monitoring according to the previous fiscal year’s rotational plan as shown in the following table.

Progress During Fiscal Year 2014-15
Previous year’s rotational ongoing monitoring plan for current year
Key control areas
Status
Entity level controls

Entity level controls (ELCs) were assessed during FY 2013-14 and all deficiencies identified were remediated and re-tested for FY 2014-15.

A full assessment is planned to take place in Q2 of FY 2015-16.

Transfer Payments

The transfer payment process managed internally has been reviewed by process owners, documented, walked through and assessed for design effectiveness; and tested for operational effectiveness. Findings have been communicated to stakeholders and remediation actions are targeted for completion in August 2015.

Transfer Payments – Federal Delivery Partners (FDP)

The transfer payment process managed by FDP has been walked through and assessed for design effectiveness. Findings have been communicated to stakeholders and remediation actions are targeted for completion in October 2015.

Procure-to-Payment

The procure-to-payment process has been reviewed by process owners, documented, walked through and assessed for design effectiveness; and tested for operational effectiveness. Findings have been communicated to stakeholders and remediation actions are targeted for completion in September 2015.

Payroll

The payroll process has been walked through and assessed for design effectiveness. Findings have been communicated to stakeholders and remediation actions were completed in February 2015.

Financial Statement Preparation

The financial statement preparation process has been reviewed by process owners, documented, walked through and assessed for design effectiveness; and tested for operational effectiveness. Findings have been communicated to stakeholders and a management action plan is due to be completed in September 2015.

IT General Controls

The IT general controls (logical access and change management) have been reviewed by process owners, documented, walked through and assessed for design effectiveness; and tested for operational effectiveness. Findings have been communicated to stakeholders and a management action plan is due to be completed in September 2015.

4.2 Action plan for the next fiscal year and subsequent years

Infrastructure Canada will be applying its rotational on-going monitoring plan to reassess control performance on a risk basis across all control areas. The status and action plan for the completion of the identified control areas for the next fiscal year are reflected in the table below:

Action plan for the next fiscal year and subsequent years
Key control areas Fiscal year 2015-16 Fiscal year 2016-17 Fiscal year 2017-18
Entity level controls Yes Yes Yes
Transfer payments No Yes No
Transfer payments - FDP Yes No Yes
Procure-to-payment No Yes No
Payroll Footnote 4 No Yes No
Financial Statement Preparation Yes Yes Yes
Tangible Capital Assets Footnote 5 No Yes Yes
IT General Controls Yes Yes Yes

Footnotes

Footnote 1

This amount includes performance pay, pay in arrears (10 days) in addition to 3 days of salary accruals (compared to 2 days in the previous year without pay in arrears or performance pay).

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Footnote 2

Adjustments include assets under construction of $772 that were transferred to the other categories upon completion of the assets.

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Footnote 3

INFC no longer has informatics hardware since the transfer of IT services to Shared Services Canada. The hardware was disposed of through the Computer for Schools Program.

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Footnote 4

Payroll was originally planned to be assessed for operating effectiveness in 2015-16. However, a new human resource system is being implemented, which will change the current payroll process in the department. The new system is expected to be in place by the end of Q3. In 2015-16, the department plans to update the documentation according to the new process and its controls. In 2016-17, a full assessment will be performed.

Return to footnote 4 referrer

Footnote 5

Tangible capital asset accounts have been identified as significant, due to changes in the department’s business described earlier. Therefore, the controls in the tangible capital asset process will have to be assessed. The department expects to document the process and perform design effectiveness testing in 2015-16 and to do a full assessment in 2016-17, based on the transactions that have occurred up to that point. This will mainly include the Assets under Construction account, until the NBSLC project is completed.

Return to footnote 5 referrer

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