Financial Statements (unaudited) - For the year ended March 31, 2019

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, 2019, 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 Results 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 recognizes the challenges given the fiscal profile of funding programs and is working diligently with all parties to address.

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, 2019 was completed in accordance with the Treasury Board Policy on Financial Management 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.

Kelly Gillis
Deputy Head

Nathalie Bertrand
Chief Financial Officer

Signed at Ottawa, Canada
August 27, 2019

Infrastructure Canada
Statement of Financial Position (Unaudited)
As at March 31
(in thousands of dollars)
N/A
2019
2018
Liabilities:
Construction in Progress - Samuel De Champlain Bridge Corridor Project (note 4)
$ 1,831,514
$ 1,419,127
Accounts payable and accrued liabilities (note 5)
3,452,313
580,356
Contingent liabilities (note 6)
14,700
7,000
Vacation pay and compensatory leave
3,076
2,591
Employee future benefits (note 7)
2,493
2,172
Total gross liabilities
5,304,096
2,011,246
Liabilities held on behalf of Government (note 15)
N/A
(33)
Total net liabilities
5,304,096
2,011,213
Financial assets:
Due from Consolidated Revenue Fund
1,200,183
499,538
Accounts receivable and advances (note 8)
22,488
84,390
Loan receivable (note 15)
N/A
536
Total gross assets
1,222,671
584,464
Financial assets held on behalf of Government (note 15)
(33)
(3,941)
Total financial assets
1,222,638
580,523
Departmental net debt
4,081,458
1,430,690
Non-Financial assets:
Tangible capital assets (note 9)
2,666,796
2,144,924
Total non-financial assets
2,666,796
2,144,924
Departmental net financial position
$ (1,414,662)
$ 714,234

Contractual obligations (note 10)

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

Kelly Gillis
Deputy Head

Nathalie Bertrand
Chief Financial Officer

Signed at Ottawa, Canada

Infrastructure Canada
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31
(in thousands of dollars)
N/A
2019
Planned Results
2019
2018
Expenses by Core Responsibility:
Public infrastructure
$ 6,016,486
$ 7,716,207
3,717,487
Internal Services
64,538
66,796
47,702
Total expenses
6,081,024
7,783,003
3,765,189
Revenues:
Miscellaneous Revenue (note 11)
114
395
3,522
Revenues earned on behalf of Government
(114)
(395)
(3,522)
Total revenues
Net cost of operations before government funding and transfers
6,081,024
7,783,003
3,765,189
Government funding and transfers:
Net cash provided by Government of Canada
N/A
4,944,799
3,920,431
Change in due from Consolidated Revenue Fund
N/A
700,645
404,558
Services provided without charge by other government departments (note 12)
N/A
8,658
6,796
Transfer of assets and liabilities from (to) other government departments (note 13)
N/A
N/A
(24)
Net transfer of salary overpayments from (to) other government departments
N/A
5
N/A
Net cost of operations after government funding and transfers
N/A
2,128,896
(566,572)
Departmental net financial position - Beginning of year
N/A
714,234
147,662

Departmental net financial position - End of year

N/A
$ (1,414,662)
$ 714,234

Segmented Information (note 14)

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
2019
2018
Net cost of operations after government funding and transfers
$ 2,128,896
$ (566,572)
Change due to tangible capital assets:
Acquisition of tangible capital assets (note 9)
523,914
775,290

Amortization of tangible capital assets (note 9)

(2,042)
(2,049)
Transfer of assets and liabilities from (to) other government departments (note 13)
N/A
(24)
Total change due to tangible capital assets
521,872
773,217
Net increase (decrease) in departmental net debt
2,650,768
206,645
Departmental net debt - Beginning of year
1,430,690
1,224,045
Departmental net debt - End of year
$ 4,081,458
$ 1,430,690

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

Infrastructure Canada
Statement of Cash Flows (Unaudited)
For the Year Ended March 31
(in thousands of dollars)
N/A
2019
2018
Operating activities:
Net cost of operations before government funding and transfers
$ 7,783,003
$ 3,765,189
Non-cash items:
Construction in Progress - Samuel De Champlain Bridge Corridor Project (note 9)
412,387
205,546
Services provided without charge by other government departments (note 12)
(8,658)
(6,796)
Amortization of tangible capital assets (note 9)
(2,042)
(2,049)
Net transfer of salary overpayments (from) to other government departments
(5)
N/A
Variations in Statement of Financial Position:
Decrease (increase) in employee future benefits (note 7)
(322)
(480)
Decrease (increase) in vacation pay and compensatory leave
(485)
(818)
Decrease (increase) in contingent liabilities (note 6)
(7,700)
N/A
Increase (decrease) in accounts receivable and advances
(58,530)
32,026
Decrease (increase) in Construction in Progress – Samuel De Champlain Bridge Corridor (note 4)
(412,387)
(205,546)

Decrease (increase) in accounts payable and accrued liabilities (note 5)

(2,871,990)
(436,361)
Cash used in operating activities
4,833,271
3,350,711
Capital investing activities:
Acquisitions of tangible capital assets (note 9)
111,528
569,744
Transfer of asset from (to) another government department (note 13)
N/A
(24)
Cash used in capital investing activities
111,528
569,720

Net cash provided by Government of Canada

4,944,799
3,920,431

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.

Infrastructure Canada works closely with all orders of government and other partners to enable investments in social, green, public transit and other core public infrastructure, as well as trade and transportation infrastructure.

Starting in fiscal year 2018-19, INFC is reporting on its mandate under one core responsibility, as well as internal services, in support of its activities as described below.

Public Infrastructure: INFC’s key business lines and initiatives are grouped in the following Program Inventory:

  • Investing in Canada Phase 1 – Funding Allocations for Provinces and Territories;
  • Investing in Canada Phase 1 – Funding for Federation of Canadian Municipalities;
  • Investing in Canada Infrastructure Program;
  • Gas Tax Fund – Permanent Funding for Municipalities;
  • New Building Canada Fund – National Infrastructure Component;
  • New Building Canada Fund – Funding Allocations for Provinces and Territories;
  • Historical Programs;
  • Samuel De Champlain Bridge Corridor Project;
  • Gordie Howe International Bridge Project;
  • Toronto Waterfront Revitalization Initiative;
  • Smart Cities Challenge;
  • Disaster Mitigation and Adaptation Fund; and
  • Research and Knowledge Initiative.

Internal Services: Internal Services are those groups of related activities and resources that the federal government considers to be services in support of programs and/or required to meet corporate obligations of an organization. Internal Services refers to the activities and resources of the 10 distinct services that support Program delivery in the organization, regardless of the Internal Services delivery model in a department. The 10 service categories are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Management Services; Materiel Management Services; and Acquisition Management Services.

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 do 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 2018-2019 Departmental Plan. 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 2018-2019 Departmental Plan.
  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
    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. Revenues
    Other revenues are recognized in the period the event giving rise to the revenues occurred. Revenues that are non-respendable are not available to discharge INFC’s liabilities. While the Deputy Head is expected to maintain accounting control, she has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented as a reduction of the entity’s gross revenues.
  5. Expenses
    Transfer payments are recorded as an expense 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.
    Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
    Services provided without charge by other government departments for accommodation and employer contributions to the health and dental insurance plans are recorded as operating expenses at their estimated cost.
    The accrued expenses related to Construction in Progress – Samuel De Champlain Bridge Corridor Project are the estimated value of the project assets, provided by the private partner.
  6. 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.
  7. Accounts and loans receivable
    Accounts and loans receivable are initially recorded at cost and where necessary, are discounted to reflect their concessionary terms. Concessionary terms of loans include cases where loans are made on a long-term, low interest or interest-free basis. Transfer payments that are unconditionally repayable are recognized as loans receivable. When necessary, an allowance for valuation is recorded to reduce the carrying value of accounts and loans receivable to amounts that approximate their net recoverable value.
  8. Non-financial assets
    The cost of acquiring land, buildings, equipment and other capital property are capitalized as tangible capital assets and, except for land, are amortized to expense over the estimated useful lives of the assets, as described in Note 9.  All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost.  Tangible capital assets do not include immovable assets located on reserves as defined in the Indian Act, works of art, museum collection and Crown land to which no acquisition cost is attributable; and intangible assets.
  9. 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.
  10. Contingent assets
    Contingent assets are possible assets which may become actual assets when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, the contingent asset is disclosed in the notes to the financial statements.
  11. 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 and accompanying notes at March 31. 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 – Samuel De Champlain Bridge 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.
  12. Related party transactions
    Related party transactions, other than inter-entity transactions, are recorded at the exchange amount.
    Inter-entity transactions are transactions between commonly controlled entities. Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis and are measured at the carrying amount, except for the following:
    1. Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
    2. Certain services received on a without charge basis are recorded for departmental financial statement purposes at the carrying amount.

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
    (in thousands of dollars)
    N/A
    2019
    2018
    Net cost of operations before government funding and transfers
    $ 7,783,003
    $ 3,765,189
    Adjustments for items affecting net cost of operations but not affecting authorities:
    Refund of previous year's expenditures
    9,450
    1,466
    Other amounts to be charged later to authorities
    (13)
    N/A
    Decrease (increase) in employee future benefits
    (322)
    (480)
    Decrease (increase) in vacation pay and compensatory leave
    (485)
    (818)
    Amortization of tangible capital assets
    (2,042)
    (2,049)
    Decrease (increase) contingent liabilities
    (7,700)
    N/A
    Services provided without charge by other government departments
    (8,658)
    (6,796)
    Decrease (increase) in accrued liabilities related to Budget 2019
    (2,230,596)
    N/A
    Adjustment of overpayment to be recovered
    N/A
    (6)
    Bad debt expense
    N/A
    (85)

    Total items affecting net cost of operations but not affecting authorities

    (2,240,366)
    (8,768)
    Adjustments for items not affecting net cost of operations but affecting authorities:
    Acquisitions of tangible capital assets
    111,528
    569,744
    Increase (decrease) in salary overpayment and advances
    85
    132
    Total items not affecting net cost of operations but affecting authorities
    111,613
    569,876
    Current year authorities used
    $ 5,654,250
    $ 4,326,297
  2. Authorities provided and used
    (in thousands of dollars)
    N/A
    2019
    2018
    Authorities:
    Vote 1 - Operating Expenditures 135,577 217,145
    Vote 5 - Capital Expenditures 1,026,670 576,352
    Vote 10 - Contributions 3,367,804 4,282,963
    Statutory Amounts:
    Employee Benefit Plan 7,013 6,124
    Minister Office Salary and Car Allowance 86 84
    Gas Tax Fund 2,170,596 2,071,933
    Less:
    Authorities available for future years Footnote 1 (2,746,190)
    Lapsed : Operating (49,851) (76,084)
    Lapsed : Capital (915,018) (6,030)
    Lapsed : Contributions (88,627)
    Current year authorities used 5,654,250 4,326,297

4. Construction in Progress – Samuel De Champlain Bridge Corridor Project

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 objective for new bridge crossing is for it to be commissioned no later than June 2019, 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.

Please note that the Samuel De Champlain Bridge is open to traffic in both directions since July 1st 2019.

5. Accounts payable and accrued liabilities

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

Accounts payable and accrued liabilities
(in thousands of dollars)
N/A
2019
2018
Accounts Payable - Other government departments and agencies
$ 2,245
$ 2,202
Accounts Payable - External parties
1,212,756
574,530
Total accounts payable
1,215,001
576,732
Accrued Liabilities
2,237,312
3,624
Total accounts payable and accrued liabilities
$ 3,452,313
$ 580,356

The 2018-19 accrued liabilities include a one-time transfer payment expense of $2.170 million through the federal Gas Tax Fund and $60 million through the Municipal Asset Management Program as announced in Budget 2019.

6. Contingent liabilities

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

Claims have been made against INFC in the normal course of operations. While the total amount claimed in these actions is significant, their outcomes are not determinable. INFC has recorded 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 $14,700,000 at March 31, 2019.

7. 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 2018-2019 expense amounts to $4,890,780 ($4,170,328 in 2017-2018). For Group 1 members, the expense represents approximately 1.01 times (1.01 times in 2017-2018) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2017-2018) the employee contributions.

    INFC's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the Consolidated Financial Statements of the Government of Canada, as the Plan's sponsor.

  2. Severance benefits:

    Severance benefits provided to INFC’s employees were previously based on an employee’s eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees.  Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. By March 31, 2019, substantially all settlements for immediate cash out were completed.  Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

    The changes in the obligations during the year were as follows:

    Severance benefits
    (in thousands of dollars)
    N/A
    2019
    2018
    Accrued benefit obligation - Beginning of year
    $ 2,171
    $ 1,691
    Expense for the year
    495
    641
    Benefits paid during year
    (173)
    (116)
    Accrued benefit obligation - End of year
    $ 2,493
    $ 2,171

8. Accounts receivable and advances

Accounts receivable and advances
(in thousands of dollars)
N/A
2019
2018
Receivables - Other government departments and agencies
$ 16,662
$ 80,789
Receivables - External parties
5,807
3,578
Advances - Employees
19
23
Total accounts receivable and advances
$ 22,488
$ 84,390

9. Tangible capital assets

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

Asset class Amorization 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 are put into service and are not amortized until they are put into service.

Cost 2019
(in thousands of dollars)
Capital asset class
Opening balance 2
Acquisitions
Adjustments3
Disposals and
write-offs
Closing balance
Land
107,626
387
-
N/A
108,013
Informatics Software - Developed and Purchased
35,133
N/A
N/A
(27,888)
7,245
Leasehold Improvements
6,058
-
31
N/A
6,089
Motor Vehicles
112
-
-
-
112

Engineering Works in Progress of Construction

58,125
17,440
95
N/A
75,660
Other Construction or Work in Progress
7,245
2,090
(219)
N/A
9,116

Work in progress for Software

869
2,235
-
-
3,104
Buildings in Progress of Construction
-
351
(31)
-
320
Subtotal
215,168
22,503
(124)
(27,888)
209,659

Cash and Non-cash items :
Construction in Progress — Samuel De Champlain Bridge Corridor Project4

1,964,997
501,536
N/A
N/A
2,466,533
Total
2,180,165
524,039
(124)
(27,888)
2,676,192

Accumulated amortization 2019
(in thousands of dollars)
Capital asset class
Opening balance
Amortization
Adjustments
Disposals and
write-offs
Closing balance
Land
N/A
N/A
N/A
N/A
N/A
Informatics Software - Developed and Purchased
32,144
1,389
N/A
(27,888)
5,645
Leasehold Improvements
3,063
631
N/A
N/A
3,694
Motor Vehicles
35
22
-
-
57

Buildings in Progress of Construction

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

Work in progress for Software

N/A
N/A
N/A
N/A
N/A
Other Construction or Work in Progress
N/A
N/A
N/A
N/A
N/A
Subtotal
35,242
2,042
-
(27,888)
9,396

Cash and Non-cash items :
Construction in Progress — Samuel De Champlain Bridge Corridor Project4

N/A
N/A
N/A
N/A
N/A
Total
35,242
2,042
-
(27,888)
9,396

Net Book ValueFootnote 2
(in thousands of dollars)
Capital asset class
2019
2018
Land
108,013
107,626
Informatics Software - Developed and Purchased
1,600
2,989
Leasehold Improvements
2,395
2,995
Motor Vehicles
55
77

Engineering Works in Progress of Construction

75,660
58,126
Other Construction or Work in Progress
9,116
7,245

Work in progress for Software

3,104
869
Buildings in Progress of Construction
320
-
Subtotal
200,263
179,927

Cash and Non-cash items :
Construction in Progress —
Samuel De Champlain Bridge Corridor Project4

2,466,533
1,964,997
Total

2,666,796

2,144,924

10. 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)
 

2020

2021

2022

2023

2024 AND
THEREAFTER

TOTAL

Transfer payments

Public infrastructure

Border Infrastructure Fund

13,124

-

-

-

-

13,124

Building Canada Fund - Communities Component

38,747

-

-

-

-

38,747

Building Canada Fund-Large Urban Centres Component

95,386

-

-

-

-

95,386

Building Canada Fund-Major Infrastructure Component

514,647

72,984

59,374

29,758

6,000

682,763

Canada Strategic Infrastructure Fund

47,728

-

-

4,200

-

51,928

Clean Water and Wastewater Fund

733,574

182,010

-

-

-

915,584

Green Infrastructure Fund

66,332

58,788

69,564

70,705

19,653

285,042

Inuvik to Tuktoyaktuk Highway Program

6,000

-

-

-

-

6,000

Investing in Canada Infrastructure Program

1,906,400

2,375,564

2,863,707

3,076,798

21,061,380

31,283,849

Municipal Asset Management Program

78,496

6,454

838

-

-

85,788

Municipalities for Climate Innovation Program

25,734

16,950

785

-

-

43,469

New Building Canada Fund-National Infrastructure Component

183,974

236,647

265,636

182,590

345,657

1,214,504

New Building Canada Fund-Provincial-Territorial Infrastructure Component-Small Communities Fund

340,013

313,812

223,437

123,938

115,839

1,117,039

New Building Canada Fund-Provincial-Territorial Infrastructure Component-National and Regional Projects

1,194,533

849,788

600,704

191,010

323,245

3,159,280

P3 Canada Fund

346,394

294,410

-

53,300

-

694,104

Provincial-Territorial Infrastructure Base Funding

30,756

-

-

-

-

30,756

Public Transit Infrastructure Fund

1,218,800

753,811

-

-

-

1,972,611

Smart Cities Challenge

2,600

-

-

-

-

2,600

Toronto Waterfront Revitalization Initiative

48,445

44,154

50,440

81,000

101,625

325,664

Capital Assets

Samuel De Champlain Bridge Corridor Project (Construction) (note 4)

265,611

-

-

-

-

265,611

Purchases

Samuel De Champlain Bridge Corridor Project (Operations and Maintenance) (note 4)

13,693

35,397

37,025

38,096

1,295,208

1,419,419

Total transfer payments, capital assets, and purchases

7,170,987

5,240,769

4,171,510

3,851,395

23,268,607

43,703,268

11. Revenue

Revenues consist of land use rights related to the Samuel De Champlain Bridge Corridor Project as well as nominal revenue from Access to Information fees and related charges. Previous year revenues included additional miscellaneous revenues related to the dissolution of PPP Canada Inc. (see note 15).

12. 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 and 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)
     
    2019
    2018

    Employer's contribution to the health and dental insurance plans

    $ 4,229

    $ 3,639

    Accommodation

    4,429

    3,157

    Total

    $ 8,658

    $ 6,796

    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 Services and Procurement 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)
     
    2019
    2018

    Accounts receivable – Other government departments and agencies

    16,662

    80,789

    Accounts payable – Other government departments and agencies

    2,218

    2,202

    Expenses – Other government departments and agencies

    40,151

    41,974

    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, 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.

13. Transfer of assets and liabilities from another government department

In September 2017, Infrastructure Canada had a change in Deputy Heads resulting in the transfer of the former Deputy Minister’s motor vehicle to Indian Affairs and Northern Development.

14. Segmented Information

Presentation by segment is based on INFC's core responsibilities. 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)
 
Public
Infrastructure
Internal
Services
2019
2018

Transfer payments

Contributions

$ 7,671,165

$ -

$ 7,671,165

$ 3,608,413

Total transfer payments

7,671,165

-

7,671,165

3,608,413

Operating expenses

Salaries and employee benefits

22,977

38,841

61,818

53,171

Professional and special services

27,292

21,216

48,508

50,045

Rentals

2,098

3,630

5,728

5,044

Amortization

9

2,033

2,042

2,049

Repairs and maintenance

1,871

81

1,952

2,321

Transportation and communications

211

1,123

1,334

981

Acquisition of machinery and equipment

801

1,532

2,333

1,332

Information

39

481

520

384

Utilities, materials, and supplies

30

111

141

119

Other

(10,286)

(2,252)

(12,538)

41,330

Total operating expenses

45,042

66,796

111,838

156,776

Total expenses

7,716,207

66,796

7,783,003

3,765,189

Revenues

Miscellaneous revenues

395

-

395

3,522

Revenues earned on behalf of government

(395)

-

(395)

(3,522)

Total revenues

-

-

-

-

Net cost from continuing operations

$ 7,716,207

$ 66,796

$ 7,783,003

$ 3,765,189

15. Dissolution of PPP Canada Inc.

On November 1, 2017 the Governor in Council (P.C. 2017-1329), on the recommendation of the Minister of Infrastructure, Communities and Intergovernmental Affairs and pursuant to subsection 209.1(3) of the Jobs Growth and Long-term Prosperity Act, approved that the Minister procure the dissolution of PPP Canada Inc.

Furthermore, Section 209.1 of the Jobs Growth and Long-term Prosperity Act goes on to authorize PPP Canada, with the approval of the Governor in Council, to sell or otherwise dispose of all or substantially all of its assets. As required under the Canada Business Corporations Act (CBCA), in order to dissolve the Corporation must have distributed all of its property and discharged all of its liabilities and the shareholders must have approved the dissolution under subsection 210(3) of the CBCA. (e.g. a corporation that has been active and has dealt with its property and liabilities).

In fiscal year 2017-18 PPP Canada successfully dissolved the Corporation by the March 31, 2018 deadline. As mentioned above to accomplish dissolution, PPP Canada was required to dispose of all of its assets and discharge of all of its liabilities. As a result Infrastructure Canada acquired the following in 2017-18:

  • A dividend receivable of $3,405,250;
  • A loan receivable of $532,899;
  • An accrued interest on the loan receivable of $3,416; and
  • A liability of $33,000.

In 2018-19, the dividend was received by INFC, the loan was paid in full and the liability has been settled.

16. Subsequent events

Funding letters for the Gas Tax Fund for a total amount of $2,170,315,887 were signed and provided to recipients. These letters indicate to each recipient the amount of funds to be distributed in 2019-2020.

ANNEX to the Statement of Management Responsibility Including Internal Control over Financial Reporting for the Fiscal Year ending March 31, 2019

1.0 Introduction

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

Detailed information on Infrastructure Canada's authority, mandate, and program activities can be found in the Departmental Results Report for the 2018 to 2019 Fiscal Year and the Departmental Plan for the 2018 to 2019 Fiscal Year.

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 comprises:

  • 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 on statutory requirements, and policies and procedures for sound financial management and control; and
  • Assessment results and action plans to the Deputy Head and senior departmental management and, as applicable, the Departmental Audit Committee.

The Departmental Audit Committee provides advice to the Deputy Head on the adequacy and functioning of the department's risk management, control and governance frameworks and processes. Infrastructure Canada’s Departmental Audit Committee is composed of four 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 processing certain transactions that are recorded in its financial statements as follows:

2.2.1 Common Service Arrangements
  • Public Services and Procurement Canada, which administers the payment of salaries and the procurement of goods and services, in accordance with Infrastructure Canada’s Delegation of Financial Signing Authorities, and provides accommodation services;
  • Treasury Board Secretariat, which provides information on public service insurance and centrally administers payment of the employer’s share of contributions toward statutory employee benefit plans;
  • Department of Justice Canada, which provides legal services; and
  • Shared Services Canada, which provides information technology infrastructure services in the areas of data centre and network services. The scope and responsibilities are addressed in the interdepartmental arrangement between Shared Services Canada and Infrastructure Canada.

Readers of this annex may refer to the annexes of the above-noted organizations for a greater understanding of the systems of internal controls over financial reporting related to these specific services.
Infrastructure Canada relies on other external service providers and departments for the processing of certain transactions or information that are recorded in its financial statements, as follows:

2.2.2 Specific Arrangements
  • Public Services and Procurement Canada, which provides pay compensation services;
  • Federal delivery partner (Transport Canada), which manages certain contribution programs on behalf of Infrastructure Canada; and
  • Innovation, Science and Economic Development Canada, which hosts Infrastructure Canada's departmental financial management system, the Integrated Financial Management System (IFMS). The service arrangement also includes system support.

3. Departmental assessment results during the 2018 to 2019 fiscal year

The following table summarizes the status of the ongoing monitoring activities according to the previous fiscal year’s rotational plan.

Progress during the 2018 to 2019 fiscal year

Previous fiscal year's rotational ongoing monitoring plan for current fiscal year
Key control areas Status

Entity Level Controls

Complete. Entity level controls have been documented, reviewed by process owners, walked through and assessed for design effectiveness. Findings have been communicated to stakeholders and remedial actions are underway.

Budgeting and Forecasting

Complete. The budgeting and forecasting business process has been documented, reviewed by process owners, walked through and assessed for design effectiveness. Findings have been communicated to stakeholders and remedial actions are underway.

Capital Assets

Complete. The capital assets business process has been documented, reviewed by process owners, walked through and assessed for operating effectiveness. Findings have been communicated to stakeholders and remedial actions have been completed.

Transfer Payments

Complete. The transfer payments business processes (federal delivery partner managed and Infrastructure Canada managed) have been documented, reviewed by process owners, walked through and assessed for design effectiveness. No remedial actions required.

Payroll

Complete. The payroll business process has been documented, reviewed by process owners, walked through, and assessed for design and operating effectiveness. Findings have been communicated to stakeholders and remedial actions are underway.

Procure to Payment

Complete. The procure to payment business process has been documented, reviewed by process owners, walked through and assessed for design effectiveness. Findings have been communicated to stakeholders and remedial actions are underway.

Travel

Complete. The travel business process has been documented, reviewed by process owners, walked through and assessed for design effectiveness. Findings have been communicated to stakeholders and remedial actions are underway.

Financial Reporting and Financial Close

Complete. The financial reporting and financial close business process has been documented, reviewed by process owners, walked through, and assessed for operating effectiveness. Findings have been communicated to stakeholders and remedial actions are underway.

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

3.1 New or significantly amended key controls

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. The payroll process has been documented and an assessment of design and operating effectiveness has been conducted.

3.2 Ongoing monitoring program

As part of its rotational ongoing monitoring plan, Infrastructure Canada completed its reassessment of the financial controls within the business processes of capital assets, transfer payments, payroll, procure to payment, financial reporting and financial close as well as entity level controls. For the most part, the key controls that were tested performed as intended, with remediation required in the following areas.

  • Payroll
    • A post payment verification process should be implemented as per the Treasury Board Guideline on Financial Administration of Pay Administration. A management action plan has been prepared.
    • Quality assurance should be performed and recorded for auditable evidence on staffing actions. A management action plan has been prepared.
    • A review of section 34 approvers in Phoenix should be conducted to ensure appropriate delegation of authority in Phoenix. A management action plan has been prepared.
  • Procure to Payment
    • Processes for quality assurance should be reviewed and documented to ensure accuracy and completeness in the procurement process. A management action plan has been prepared.

4. Departmental action plan for the next fiscal year and subsequent years

Infrastructure Canada’s rotational ongoing monitoring plan over the next five fiscal years, based on an annual validation of the high-risk processes and controls and related adjustments to the ongoing monitoring plan as required, is shown in the following table.

Rotational Ongoing Risk-Based Monitoring Plan
Key control areas

2019-2020

2020-2021

2021-2022

2022-23

2023-24

DE

OE

DE

OE

DE

OE

DE

OE

DE

OE

Entity-Level Controls

Yes

 

 

Yes

   

Yes

   

IT General Controls

Yes

 

 

Yes

 

 

Yes

   

Yes

Capital Assets

 

 

Yes

   

Yes

Yes

   

Yes

Transfer Payments

Yes

 

Yes

Yes

   

Yes

Yes

 

Payroll

 

 

Yes

 

 

Yes

   

Yes

 

Procure to Payment

 

Yes

 

 

Yes

 

 

Yes

   

Travel

 

Yes

   

Yes

   

Yes

   

Financial Reporting and Financial Close

 

 

Yes

   

Yes

       

In addition to the ongoing monitoring rotational plan, Infrastructure Canada plans to conduct the following assessment work in the fiscal years indicated.

New Processes to be added based on the yearly risk assessment
Key control areas

2019-20

2020-21

2021-22

2022-23

2023-24

DE

OE

DE

OE

DE

OE

DE

OE

DE

OE

Budgeting and Forecasting

   

Yes

   

Yes

Yes

   

Yes

Cabinet Submission

Yes

 

 

Yes

 

 

Yes

   

Yes

Hospitality

Yes

   

Yes

   

Yes

 

 

Yes

Acquisition Cards

   

Yes

    Yes

 

     

Footnotes

Footnote 1

The funding profiles for a number of federal infrastructure programs have been updated for Budget 2018 to reflect when the Government expects to receive claims from recipients. A frozen allotment of $2.7 billion was established for 2017-2018.

Return to Footnote 1

Footnote 2

Opening balance for 2018-19 may not balance with 2017-18 closing balance due to rounding adjustments.

Return to Footnote 2

Footnote 3

Adjustments include assets under construction that were transferred to the other categories upon completion, as well as adjustments to values of work-in-progress assets related to the Samuel De Champlain Bridge Corridor.

Return to Footnote 3

Footnote 4

This acquisition includes acceleration cash payments of $89.1M as well as $412.4M of non-cash items reflected in the Statement of Cash Flows. The non-cash items includes $79.3M in capitalized interest costs.

Return to Footnote 4

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