Financial Statements (Unaudited) - For the year ended March 31, 2016

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, 2016, 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, 2016 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
(in thousands of dollars)
N/A 2016 2015
Liabilities:
Construction in Progress - New Bridge for the St. Lawrence Corridor Project (note 4) 574,432 N/A-
Accounts payable and accrued liabilities (note 5) 188,874 150,796
Employee future benefits (note 6) 2,273 2,260
Vacation pay and compensatory leave 1,505 1,157
Total liabilities 767,084 154,213
Financial assets:
Due from Consolidated Revenue Fund 182,133 102,903
Accounts receivable and advances (note 7) 6,747 48,380
Total financial assets 188,880 151,283
Departmental net debt 578,204 2,930
Non-Financial assets:
Tangible capital assets (note 8) 641,447 19,746
Total non-financial assets 641,447 19,746
Departmental net financial position 63,243 16,816

Contractual obligations (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

Statement of Operations and Departmental Net Financial Position (Unaudited)
For the year Ended March 31
(in thousands of dollars)
N/A 2016 Planned Results 2016 2015
Expenses by Strategic Outcome:
Public infrastructure for a More Prosperous Canada 3,583,115 3,098,743 2,994,378
Internal Services 30,340 43,023 41,306
Total expenses 3,613,455 3,141,766 3,035,684
Revenues:
Miscellaneous Revenue (note 10) 5 912 9
Revenues earned on behalf of Government (5) (912) (9)
Total revenues 0 0 0
Net cost of operations before government funding and transfers 3,613,455 3,141,766 3,035,684
Government funding and transfers:
Net cash provided by Government N/A 3,102,895 3,123,314
Change in due from Consolidated Revenue Fund N/A 79,230 (78,936)
Services provided without charge by other government departments (note 11) N/A 6,076 5,948
Transfer of the transition payments for implementing salary payments in arrears (note 11) N/A (8) (1,001)
Transfer of assets and liabilities from another government department (note 12) N/A N/A- N/A-
Net cost of operations after government funding and transfers N/A (46,427) (13,641)
Departmental net financial position - Beginning of year N/A 16,816 3,175

Departmental net financial position - End of year

N/A 63,243 16,816

Segmented Information (note 13)

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

Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31
(in thousands of dollars)
N/A 2016 2015
Net cost of operations after government funding and transfers (46,427) (13,641)
Change due to tangible capital assets:
Acquisition of tangible capital assets (note 8) 623,465 15,647
Amortization of tangible capital assets (note 8) (1,764) (1,706)
Net (Loss) or gain on disposal of tangible capital assets including adjustments (note 8) N/A- (6)
Total change due to tangible capital assets 621,701 13,936
Net increase (decrease) in departmental net debt 575,274 294
Departmental net debt - Beginning of year 2,930 2,636
Departmental net debt - End of year 578,204 2,930

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

Statement of Cash Flows (Unaudited)
For the Year Ended March 31
(in thousands of dollars)
N/A 2016 2015
Operating activities:
Net cost of operations before government funding and transfers 3,141,766 3,035,684
Non-cash items:
Construction in Progress - New Bridge for the St. Lawrence Corridor Project (note 8) 574,432 N/A-
Transition payments for implementing salary payments in arrears (note 11) 8 1,001

Gain (Loss) on disposal of tangible capital assets (note 8)

N/A- (6)
Amortization of tangible capital assets (note 8) (1,764) (1,706)
Services provided without charge by other government departments (note 11) (6,076) (5,948)
Variations in Statement of Financial Position:
Decrease (increase) in employee future benefits (note 6) (13) (832)
Decrease (increase) in vacation pay and compensatory leave (348) 59
Decrease (increase) in accounts payable and accrued liabilities (note 5) (38,078) 154,634
Increase (decrease) in accounts receivable and advances (note 7) (41,633) (75,219)
Decrease (increase) in Construction in Progress - New Bridge for the St. Lawrence Corridor Project (note 4) (574,432) N/A-
Transfer of assets and liabilities from another government department (note 12) N/A- N/A-
Cash used in operating activities 3,053,862 3,107,667
Capital investment activities:
Acquisitions of tangible capital assets (note 8) 49,033 15,647
Cash used in capital investing activities 49,033 15,647
Net cash provided by Government of Canada 3,102,895 3,123,314

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 and Communities.

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 of INFC 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 ProjectFootnote 1 and oversight of the Jacques Cartier and Champlain Bridges Incorporated (JCCBI) was transferred from the Minister of Transport to the Minister of Infrastructure and Communities (effective February 13, 2014). The enabling legislation for this project, the New Bridge for the St. Lawrence Act, was enacted on June 19, 2014.

Effective November 4, 2015, responsibility for the Windsor-Detroit Bridge Authority was transferred from the Minister of Transport to the Minister of Infrastructure and Communities. This Crown Corporation is responsible for the procurement process for the design, construction, operation and maintenance for the new publicly-owned Gordie Howe International Bridge between Windsor, Ontario and Detroit, Michigan through a public-private partnership.

Also effective on November 4, 2015, the Minister of Infrastructure and Communities was designated as the Minister responsible for federal matters relating to the Toronto Waterfront Revitalization Initiative.

Since 2014-15, INFC delivers its mandate under one strategic outcome and internal services in support of its activities as 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 to each province and territory to enhance Canada's public infrastructure system. (Provincial-Territorial Infrastructure Base Fund)
  • Permanent and Flexible Infrastructure Funding – providing predictable and flexible funding for municipalities for their infrastructure priorities (Gas Tax Fund)
  • Investments in National Infrastructure Priorities – provides funding to infrastructure projects that advance the national priorities (New Building Canada Fund-National Infrastructure Component, Green Infrastructure Fund, Border Infrastructure Fund, and Inuvik to Tuktoyaktuk Highway Fund)
  • Large-Scale Infrastructure Investments – providing funding for infrastructure projects of national, regional and/or local significance (New Building Canada Fund-Provincial Territorial Infrastructure Component – National and Regional Projects, Building Canada Fund–Major Infrastructure Component, Canada Strategic Infrastructure Fund and Gordie Howe International Bridge project)
  • Infrastructure Investments in Small Communities and Rural Areas – providing funding for infrastructure projects in small communities and rural areas (New Building Canada Fund-Provincial Territorial Infrastructure Component-Small Communities Fund and Building Canada Fund-Communities Component)
  • New Bridge for the St. Lawrence Corridor Project - In support of the Government of Canada's economic and safety priorities, this program ensures the overall delivery of the New Bridge for the St. Lawrence corridor project 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. Internal Services include only those activities and resources that apply across INFC, not those provided specifically for a program.

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 and in the Statement of 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 "Expenses" and "Revenues" sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2015-16 Report on Plans and Priorities. Planned results are not presented in the "Government funding and transfers" section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2015-16 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, employer contributions to the health and dental insurance plans and legal services are recorded as operating expenses at their estimated cost.
    4. The accrued expenses related to Construction in Progress - New Bridge for the St. Lawrence Corridor Project are the estimated value of the project assets, provided by the private partner, and validated as reasonable by a third party.
  5. Employee future benefits:
    1. Pension benefits:  Eligible employees participate in the Public Service Pension Plan (Public Service Superannuation Act), a multiemployer 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. 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.
  8. 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 Software - Purchased and Developed

    3 to 7 years
    Vehicles (non-military) 5 years
    Leasehold Improvements term 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.

  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 Construction in Progress - New Bridge for the St. Lawrence Corridor Project asset and liability, the payables at year end, contingent liabilities, the liability for employee future 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 most of 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
    (in thousands of dollars)
    N/A 2016 2015
    Net cost of operations before government funding and transfers 3,141,766 3,035,684
    Adjustments for items affecting net cost of operations but not affecting authorities:
    Amortization of tangible capital assets (1,764) (1,706)
    Services provided without charge by other government departments (6,076) (5,948)
    Decrease (increase) in vacation pay and compensatory leave (348) 59
    Decrease (increase) contingent liabilities (150) N/A-
    Decrease (increase) in employee future benefits (13) (832)
    Other charges not charged to the authorities N/A- (1)
    Refund of previous year's expenditures 7,086 51,962
    Revenue not available for spending 912 9
    Total items affecting net cost of operations but not affecting authorities (353) 43,543
    Adjustments for items not affecting net cost of operations but affecting authorities:
    Acquisitions of tangible capital assets 49,033 15,647
    Proceeds from disposal of tangible capital assets N/A- (6)
    Transition payments for implementing salary payments in arrears 8 1,001
    Increase (decrease) in prepaid expenses and change in advances (13) 13
    Total items not affecting net cost of operations but affecting authorities 49,028 16,655
    Current year authorities used 3,190,441 3,095,882
  2. Authorities provided and used
    Authorities provided and used
    (in thousands of dollars)
    N/A 2016 2015
    Authorities:
    Vote 1 - Operating Expenditures 123,741 75,080
    Vote 3 - Capital Expenditures 90,179 94,037
    Vote 5 - Contributions 1,569,895 1,566,103
    Statutory Amounts:
    Employee Benefit Plan 5,186 5,046
    Minister Office Salary and Car Allowance 82 80
    Gas Tax Fund 1,973,269 1,973,269
    Less:
    Lapsed : Operating (64,973) (8,494)
    Lapsed : Capital (41,749) (78,389)
    Lapsed : Contributions (465,189) (530,850)
    Current year authorities used 3,190,441 3,095,882

4. Construction in Progress – New Bridge for the St. Lawrence Corridor Project

This relates to the Public-Private Partnership (PPP) arrangement for a new bridge crossing the St. Lawrence, as well as a new l'Île-des-Sœurs Bridge, and reconstruction and widening of the federal portion of Autoroute 15.

The Government selected a PPP procurement model following a rigorous financial and technical analysis and independent business case, which concluded that a public-private partnership would be the most cost-effective method to deliver the project within an accelerated timeline.

After a competitive process, Signature on the St. Lawrence Group was awarded the contract and is responsible for the design, construction, financing, operation, maintenance and rehabilitation of the corridor. The new bridge crossing is expected to be commissioned in December 2018, followed by the completion of the corridor in October 2019. Ownership of the bridge and related corridor remains with federal government, and the private partner will operate the corridor for 30 years following construction. During the construction period, the private partner will also operate some existing assets in the corridor.

Construction payments to the private partner are based on specific milestones being achieved subject to independent verification.

The Construction in Progress – New Bridge for the St. Lawrence Corridor Project asset represents the estimated value of the project assets, provided by the private partner, and validated as reasonable by a third party (see note 8).

A copy of the project agreement signed between the Government of Canada and Signature on the St. Lawrence Group on June 19, 2015, is available on Infrastructure Canada's website.

5. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities
Accounts Payable
(in thousands of dollars)
N/A 2016 2015
Accounts Payable - Other government departments and agencies 40,830 7,024
Accounts Payable - External parties 145,395 141,700
Total accounts payable 186,225 148,724
Accrued Liabilities 2,649 2,072
Total accounts payable and accrued liabilities 188,874 150,796

6. 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 2015-2016 expense amounts to $3,574,608 ($3,449,164 in 2014-2015).  For Group 1 members, the expense represents approximately 1.25 times (1.41 times in 2014-2015) the employee contributions and, for Group 2 members, approximately 1.24 times (1.39 times in 2014-2015) 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
N/A 2016 2015
Accrued benefit obligation - Beginning of year 2,260 1,428
Expense for the year 77 930
Benefits paid during year (64) (98)
Accrued benefit obligation - End of year 2,273 2,260

7. Accounts receivable and advances

Accounts receivable and advances
(in thousands of dollars)
N/A 2016 2015
Receivables - Other government departments and agencies 6,645 48,268
Receivables - External parties 101 111
Advances - Employees 1 1
Total accounts receivable and advances 6,747 48,380

8. Tangible capital assets

Cost 2016
(in thousands of dollars)
Capital asset class Opening balance Acquisitions AdjustmentsFootnote 2 Disposals and
write-offs
Closing balance
Land 13,246 21,828 N/A- N/A- 35,074
Informatics Software - Developed and Purchased 30,792 N/A- 594 N/A- 31,386
Motor Vehicles N/A- 72 N/A- N/A- 72
Leasehold Improvements 4,345 N/A- N/A- N/A- 4,345

Buildings in Progress of Construction

N/A- 895 N/A- N/A- 895
Engineering Works in Progress of Construction 1,502 23,330 N/A- N/A- 24,832

Work in progress for Software

311 1,490 (594) N/A- 1,207
Other Construction or Work in Progress 137 1,418 N/A- N/A- 1,555
Subtotal 50,333 49,033 N/A- N/A- 99,366

Non-cash item:
Construction in Progress - New Bridge for the St. Lawrence Corridor ProjectFootnote 3

N/A- 574,432 N/A- N/A- 574,432
Total 50,333 623,465 N/A- N/A- 673,798

Accumulated amortization 2016
(in thousands of dollars)
Capital asset class Opening balance Amortization Disposals and
write-offs
Closing balance
Land N/A- N/A- N/A- N/A-
Informatics Software - Developed and Purchased 28,540 1,333 N/A- 29,873
Motor Vehicles N/A- 6 N/A- 6
Leasehold Improvements 2,047 425 N/A- 2,472

Buildings in Progress of Construction

N/A- N/A- N/A- N/A-
Engineering Works in Progress of Construction N/A- N/A- N/A- N/A-

Work in progress for Software

N/A- N/A- N/A- N/A-
Other Construction or Work in Progress N/A- N/A- N/A- N/A-
Subtotal 30,587 1,764 N/A- 2,478

Non-cash item:
Construction in Progress -
New Bridge for the St. Lawrence Corridor Project

N/A- N/A- N/A- N/A-
Total 30,587 1,764 N/A- 32,351

Net Book ValueFootnote 4
(in thousands of dollars)
Capital asset class 2016 2015
Land 35,074 13,246
Informatics Software - Developed and Purchased 1,513 2,252
Motor Vehicles 66 N/A-
Leasehold Improvements 1,873 2,298

Buildings in Progress of Construction

895 N/A-
Engineering Works in Progress of Construction 24,832 1,502

Work in progress for Software

1,207 311
Other Construction or Work in Progress 1,555 137
Subtotal 67,015 19,746

Non-cash item:
Construction in Progress -
New Bridge for the St. Lawrence Corridor Project

574,432 N/A-
Total 641,447 19,746

9. 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)
N/A 2017 2018 2019 2020 2021 and thereafter Total
Transfer payments:
Public infrastructure for a More Prosperous Canada
Building Canada Fund-Major Infrastructure Component 654,162 362,072 130,968 32,963 N/A- 1,180,165
New Building Canada Fund-Small Communities Fund 181,731 192,303 252,307 168,199 157,607 952,147
New Building Canada Fund-National and Regional Projects 72,351 81,442 63,150 29,186 13,033 259,162
Canada Strategic Infrastructure Fund 120,003 71,917 8,447 N/A- N/A- 200,367
Green Infrastructure Fund 24,333 46,178 33,712 32,101 36,349 172,673
Building Canada Fund-Large Urban Centres Component 29,800 29,800 29,800 61,125 N/A- 150,525
Building Canada Fund-Communities Component 67,050 13,400 13,400 43,554 N/A- 137,404
Provincial-Territorial Infrastructure Base Funding Program 102,835 N/A- N/A- N/A- N/A- 102,835
Inuvik to Tuktoyaktuk Highway Program 39,350 30,000 N/A- N/A- N/A- 69,350
New Building Canada Fund-National Infrastructure Component 13,037 5,368 7,352 2,933 11,908 40,598
Border Infrastructure Fund 1,998 6,715 N/A- 16,875 N/A- 25,588
Capital Assets:

New Bridge for the St. Lawrence Corridor Project (Construction) (note 4)

2,315  501,237 700,911 513,275 249.047 1,966,785
Purchases:

New Bridge for the St. Lawrence Corridor Project (Operations and Maintenance) (note 4)

2,117 1,931 4,283 19,914 1,405,728 1,433,973
Total transfer payments, capital assets, and purchases 1,311,082 1,342,363 1,244,330 920,125 1,624,874 6,691,572

10. Revenue

Revenues consist primarily of rental and land use rights related to the New Bridge for the St. Lawrence Corridor Project. This item also includes nominal revenue from Access to Information fees and related charges.

11. 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)
    N/A 2016 2015
    Employer's contribution to the health and dental insurance plans 2,909 2,840
    Accommodation 3,166 3,102
    Justice 1 6
    Total 6,076 5,948

    The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General are not included in 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)
    N/A 2016 2015
    Accounts receivable - Other government departments and agencies 6,645 48,368
    Accounts payable - Other government departments and agencies 40,830 7,024
    Expenses - Other government departments and agencies 16,225 32,399

    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 $7,840 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 Services and Procurement Canada, who is responsible for the administration of the Government pay system.

12. Transfer of assets and liabilities from another government department

As per Order in Council P.C. 2015-1237, the Windsor-Detroit Bridge Authority was transferred from the Minister of Transport to the Minister of Infrastructure and Communities, as of November 4, 2015. Following a Memorandum of Understanding (MOU), it was agreed that Transport Canada would continue to assume stewardship of charges including assets and liabilities and present the financial information related to the Windsor-Detroit Bridge Authority during the transition period of November 4, 2015 to March 31, 2016. According to the MOU, the land with a net book value of $67 million will be transferred through an interdepartmental transfer during the 2016-2017 fiscal year.

13. 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:

Segmented Information
(in thousands of dollars)
N/A Public Infrastructure
for a More Prosperous
Canada
Internal Services 2016 2015
Transfer payments:
Contributions 3,071,120 N/A- 3,071,120 2,956,571
Total transfer payments 3,071,120 N/A- 3,071,120 2,956,571
Operating expenses:
Salaries and employee benefits 10,021 31,323 41,344 40,654
Professional services 40,542 6,682 47,224 35,284
Amortization 6 1,758 1,764 1,707
Rentals 1,682 3,125 4,807 4,683
Temporary Help 21 155 176 379
Information 52 210 262 248
Informatics Equipment 417 910 1,327 739
Travel and Relocation 181 435 616 583
Office supplies & furnishings 26 105 131 114
Repairs 1,463 31 1,494 27
Other (25,875) (1,712) (27,587) (5,305)
Total operating expenses 28,536 43,022 71,558 79,113
Total expenses 3,099,536 43,022 3,142,678 79,113
Revenues:
Revenues earned on behalf of government (911) (1) (912) 0
Total revenues (911) (1) (912) 0
Net cost from continuing operations 3,098,745 43,021 3,141,766 3,035,684

14. Subsequent events

In the beginning of the year, the funding letters for the Gas Tax Fund for a total amount of $2,071,932,904 were signed and provided to recipients. These letters indicate to each recipient the amount of funds to be distributed in 2016-2017.

ANNEX to the Statement of Management Responsibility Including Internal Control over Financial Reporting for the Fiscal Year ending March 31, 2016

1. Introduction

This document provides summary information on the measures taken by Infrastructure Canada (INFC) 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 2015-16 Report on Plans and Priorities and 2015-16 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 as well as 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 Services and Procurement Canada (PSPC) centrally administers the payments of salaries and the procurement of some goods and services in accordance with INFC's Delegation Instrument, and provides accommodation services;
  • Government-wide pay and Receiver General central systems are administered by PSPC. 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
  • Innovation, Science and Economic Development Canada (ISED) 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 PSPC; and
  • 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 2015-2016

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.

Infrastructure Canada was part of the second wave to implement the new Government of Canada pay system, Phoenix, in April 2016. This new system fundamentally altered the payroll process, and will require an assessment of the new process and related controls.

Ongoing monitoring programs: As part of its rotational ongoing monitoring plan, the department completed its reassessment of transfer payment controls (managed by federal delivery partners), 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 underway.
  • Certain change requests for modifications to the financial system were found to not have been authorized in accordance with the relevant Memorandum of Understanding (MOU). These modifications primarily dealt with changes to allow for the proper coding of transactions, such as updating general ledger codes, and the ability to create commitments in future years. Recommendations were made to ensure that changes are appropriate authorized. A management action plan has been prepared and remediation is underway.
  • INFC's financial system is hosted by ISED. It was found that ISED made changes to the financial system without informing INFC, which precluded INFC from monitoring those changes, as required by the MOU. Recommendations were made to ensure that changes are communicated. A management action plan has been prepared and remediation is underway.

Based on its Multi-year Risk Based Plan, the department performed walkthroughs for business processes that were not scheduled for reassessment: Transfer payments managed by INFC and capital assets. For the most part, the key controls that were tested were designed effectively.

4. Departmental Action Plan

4.1 Progress during fiscal year 2015-16

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

Progress During Fiscal Year 2015-16
Previous year's rotational ongoing monitoring plan for current year
Key control areas Status
Entity level controls

Selected entity level controls (ELCs) were assessed during FY 2015-16, including all ELCs with findings requiring action plans in prior years. Findings have been communicated to stakeholders and remediation actions are underway.

Transfer Payments

The transfer payment process managed internally has been reviewed by process owners, documented, walked through and assessed for design effectiveness. Findings have been communicated to stakeholders and remediation actions are underway.

Transfer Payments - Federal Delivery Partners (FDP)

The transfer payment process managed by FDP has been walked through and assessed for design effectiveness; and tested for operational effectiveness. Findings have been communicated to stakeholders and remediation actions are underway.

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 underway.
Payroll

Infrastructure Canada was originally expected to move to the new payroll system in Q3 2015-16, however the move did not occur until Q1 2016-17.

The new payroll process and related controls will be assessed in 2016-17.
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 remediation actions are underway.
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 remediation actions are underway.

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.

Given the significant changes to the operating environment of Infrastructure Canada, an update to the Multi-year Risk Based Plan is planned for Q3 of 2016-17. This update will ensure the key control areas and monitoring schedule meet the needs of the department.

The status and action plan for the completion of the identified control areas for the next fiscal year (based on the existing Multi-year Risk Based Plan) are reflected in the table below:

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

* Payroll was originally planned to be assessed for operating effectiveness in 2015-16. However, the new human resource system (Phoenix) was not put in place until April 2016. In 2016-17, an assessment of the payroll process will be performed. This assessment could be limited in scope due to the inter-departmental nature of the system, as well as on-going system changes and updates.
* * 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 documented the process and performed design effectiveness testing in 2015-16. A full assessment will be performed 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.

Footnotes

Footnote 1

The project is also commonly referred to as the New Champlain Bridge Corridor Project.

Return to Footnote 1

Footnote 2

Adjustments include assets under construction of $594 that were transferred to the other categories upon completion.

Return to Footnote 2

Footnote 3

This amount includes capitalized interest costs of $17,706.  This item has been reflected as a non-cash item on the Statement of Cash Flows.

Return to Footnote 3

Footnote 4

Opening balance for 2015-16 may not balance with 2014-15 closing balance due to rounding adjustments.

Return to Footnote 4

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