Future-Oriented Statement of Operations for the Canadian Food Inspection Agency (Unaudited)
Years ending March 31, 2018 and March 31, 2019
Statement of Management Responsibility (Unaudited)
Agency's management is responsible for this Future-Oriented Statement of Operations, including responsibility for the appropriateness of the assumptions on which this statement is prepared. This statement is based on the best information available and assumptions adopted as at December 31, 2017 and reflects the plans described in the Departmental Plan.
Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that transactions are in accordance with the Financial Administration Act and are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds. Management also seeks to ensure the objectivity and integrity of data in its statement of operations by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate division of responsibilities, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the Agency.
The effectiveness and adequacy of the Agency's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the Agency's operations, and by the Departmental Audit Committee, which is responsible for providing the President with independent and objective advice on the maintenance of adequate control systems and the quality of financial reporting. The Departmental Audit Committee provides this support through oversight of core areas of the Agency's controls and accountabilities.
The Future-Oriented Statement of Operations of the Agency has not been audited.
March 7, 2018
Yves Bacon, CPA, CMA
Vice-President, Corporate Management Branch and Chief Financial Officer
Future-Oriented Statement of Operations (Unaudited)
|Safe Food and Healthy Plants and Animals||$ 711,079||$ 673,763|
|Registrations, permits, certificates||8,789||8,389|
|Miscellaneous fees and services||5,164||4,930|
|Establishment license fees||2,002||1,911|
|Administrative monetary penalties||958||914|
|Revenues earned on behalf of Government||(957)||(957)|
|Net cost of operations before government funding and transfers||$ 799,062||$ 761,134|
Segmented information (Note 8)
Information for the year ended March 31, 2018 includes actual amounts from April 1, 2017 to December 31, 2017.
The accompanying notes form an integral part of this Future-Oriented Statement of Operations.
March 7, 2018
Yves Bacon, CPA, CMA
Vice-President, Corporate Management Branch and Chief Financial Officer
Notes to the Future-Oriented Statement of Operations (Unaudited)
Years ending March 31, 2018 and March 31, 2019
1. Authority and Purposes
The Canadian Food Inspection Agency (the "Agency") was established, effective April 1, 1997, under the Canadian Food Inspection Agency Act. The Act consolidates all federally mandated food and fish inspection services and federal animal and plant health activities into a single agency.
The Agency is a departmental corporation named in Schedule II to the Financial Administration Act and reports to Parliament through the Minister of Health.
The mandate of the Agency is to enhance the effectiveness and efficiency of federal inspection and related services for food, animals and plants. The objectives of the Agency are to contribute to a safe food supply and accurate product information; to contribute to the continuing health of animals and plants; and to facilitate trade in food, animals, plants, and related products.
In 2018-19 the Agency transitioned from a reporting framework comprising Strategic Outcomes and a Program Alignment Architecture to a Departmental Results Framework comprising Core Responsibilities and Departmental Results (refer to Note 9). The Agency operates under the following Core Responsibility, supported by internal services:
Safe food and Healthy Plants and Animals: Protecting Canadians by safeguarding Canada's food system and the plant and animal resources on which we depend, and supporting the Canadian economy through the trade of Canadian goods. The Agency's Core Responsibility contains the following program inventory:
- Setting Rules for Plant Health
- Plant Health Compliance Promotion
- Monitoring and Enforcement for Plant Health
- Permissions for Plant Products
- Setting Rules for Animal Health
- Animal Health Compliance Promotion
- Monitoring and Enforcement of Animal Health
- Permissions for Animal Products
- Setting Rules for Food Safety and Consumer Protection
- Food Safety and Consumer Protection Compliance Promotion
- Monitoring and Enforcement for Food Safety and Consumer Protection
- Permissions for Food Products
- International Standards Setting
- International Regulatory Cooperation and Science Collaboration
- Market Access Support
Internal Services: Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. Internal services include only those activities and resources that apply across an organization, and not those provided to a specific program. The groups of activities are Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; and Acquisition Services.
The Agency is responsible for the administering and enforcing 14 federal statutes and 34 sets of regulations, for regulating the safety and quality of food sold in Canada, and for supporting a sustainable plant and animal resource base. It shares many of its core responsibilities with other federal departments and agencies, with provincial, territorial and municipal authorities, with private industry, and with other stakeholders.
Operating and capital expenditures are funded by the Government of Canada through parliamentary authorities. Compensation payments under the Health of Animals Act and the Plant Protection Act and employee benefits are authorized by separate statutory authorities. Revenues generated by its operations are deposited to the Consolidated Revenue Fund and are available for use by the Agency.
2. Methodology and Significant Assumptions
The Future-Oriented Statement of Operations has been prepared on the basis of the government priorities and the plans of the department as described in the Departmental Plan.
The information in the forecast results for fiscal year 2017–18 is based on actual results as at December 31, 2017 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the fiscal year 2018-19.
The main assumptions underlying the forecasts are as follows:
- The Agency's activities will remain substantially the same as in the previous year except for new initiatives funded through the capital vote and the renewal of certain programs from the program inventory. (refer to Note 4(c))
- Expenses, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
- Estimated year end information for 2017-18 is used as the opening position for the 2018-19 planned results.
- The Agency's statutory authority for compensation payments (transfer payments) per Main Estimates is used to estimate the total compensation payments for the fiscal year 2019. As for fiscal year 2018, the actual compensation payments as of December 31, 2017 (mostly the Bovine Tuberculosis compensation payments) are considered in addition to the base authority from the Main Estimates.
- One of the current expired collective agreements is expected to be ratified in fiscal year 2018 and paid to the employees in fiscal year 2019. The assumptions about the collective agreements renewal do not necessarily reflect any development in the collective bargaining.
- The Agency's statutory authority per the Main Estimates for the spending of revenues pursuant to section 30 of the CFIA Act is used to estimate the total of revenues for the fiscal year 2017-18 and 2018-19. The portion of revenue available from fiscal year 2017-18 is also added to the fiscal year 2018-19 authorities to constitute the amount available for spending.
These assumptions are adopted as at December 31, 2017.
3. Variations and Changes to the Forecast Financial Information
While every attempt has been made to forecast final results for the remainder of 2017-18 and for 2018-19, actual results achieved for both years are likely to differ from the forecast information presented, and this variation could be material.
In preparing this Future-Oriented Statement of Operations, the Canadian Food Inspection Agency has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are continually evaluated.
Factors that could lead to material differences between the Future-Oriented Statement of Operations and the historical statement of operations include:
- The timing and the amount of acquisitions and disposals of property, plant and equipment, which may affect gains/losses and amortization expense. Note that the Agency has received increased funding for the Electronic Service Delivery Platform for fiscal year 2017-18 and for infrastructure upgrades (Federal Infrastructure Initiative) for both years.
- Implementation of new collective agreements.
- Economic conditions may affect the amount of revenue earned.
- Further changes to the operating budget through additional new initiatives or technical adjustments later in the year. Some funding within the Agency's program inventory are expiring and the Agency will seek renewal as required to maintain and continuously improve Canada's strong food safety system. In the event that these programs continue past fiscal year 2017-18, the expenses for fiscal year 2018-19 could be higher than planned.
- As a result of future events, the Agency's compensation payments could be higher than the amount established for this statutory item (Refer to Note 2 (d)). The variances associated with this factor are fairly common and often significant given the unforeseeable nature of events leading to compensation payments (Plant or animal diseases and outbreaks) and the importance of the amounts involved.
- The estimate for employee severance benefits allowance could lead to material differences between the Future-Oriented Statement of Operations and actual results.
- As a result of future events, the Agency's revenues could be different than the amount established for this statutory item (Refer to Note 2 (f)).
Once the Departmental Plan is tabled in Parliament, the Canadian Food Inspection Agency will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Results Report.
4. Summary of Significant Accounting Policies
The Future-Oriented Statement of Operations has been prepared using the Government of Canada's accounting policies in effect for fiscal year 2017-18, and is 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 for the Future-Oriented Statement of Operations are as follows:
The Agency is mainly financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Agency do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Note 5 provides a reconciliation between the bases of reporting.
Revenues from regulatory fees, permits and certificates are recognized in the accounts based on the services provided in the fiscal year.
Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
Revenues earned on behalf of Government of Canada are non-respendable and are not available to discharge the Agency's liabilities. Although the President is expected to maintain accounting control, he has no authority over 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 Agency's gross revenues.
The Agency records expenses on an accrual basis.
Expenses for the Agency's operations are recorded when goods are received or services are rendered, including services provided without charge for accommodation, employer contributions to health and dental insurance plans, legal services and workers' compensation, which are recorded as expenses at their estimated cost. Vacation pay and compensatory leave, as well as severance benefits, are accrued, and expenses are recorded as the benefits are earned by employees under their terms of employment.
Transfer payments are recorded as expenses when the recipients have met all the eligibility criteria and the transfers are authorized by March 31. In the case of transfers that do not form part of an existing program, the transfers are considered to be authorized 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.
The determination of the planned results expenses for the fiscal year 2018-19 is based on the obtained authorization to deliver specific programs. Expired programs are subject to government decisions to extend, reduce or enhance funding. The Agency will assess expired initiatives and seek renewal. The timing difference between the programs approval and the preparation of the Future-Oriented Statement of Operations may impact the actual program expenditures during fiscal year 2018-19.
Employee future benefits
The Agency's eligible employees participate in the Public Service Pension Plan (the "Plan"), a multi-employer plan administered by the Government of Canada. Both the employees and the Agency contribute to the cost of the Plan. The Agency's contributions are expensed during the year in which the services are rendered and represent the total pension obligation of the Agency. Under present legislation the Agency is not required to make contributions with respect to actuarial deficits of the Plan.
As part of collective agreement negotiations with the employees, and changes to conditions of employment, the accumulation of severance benefits under the employee severance pay program has ceased commencing in 2012. As of December 31st 2017, the remaining value only includes employees who chose the option not to be immediately paid the full benefit. The benefit will only be collected by these employees upon termination from the public service. The obligation relating to the benefits earned to be paid on termination is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
Other future benefit plans:
The Government of Canada sponsors a variety of other future benefit plans from which employees and former employees can benefit during or after employment or upon retirement. The Public Service Health Care Plan and the Pensioners' Dental Services Plan represent the two major future benefit plans available to the Agency's employees.
The Agency does not pay for these programs as they fall under the Government of Canada's financial responsibilities, but the Agency records its share of the annual benefits paid under these programs as a service provided without charge by other government departments. No amount is recorded in the Agency's Future-Oriented Statement of Operations with regard to either the actuarial liability of these programs at year end or the annual increase of such liabilities.
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 recorded on a straight-line basis over the estimated useful life of the asset.
The preparation of this Future-Oriented Statement of Operations requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in the Future-Oriented Statement of Operations. 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 contingent liabilities, the liability for employee severance benefits, the compensation payments, and the useful life of tangible capital assets. Actual results could significantly differ from those estimated.
5. Parliamentary Authorities
The Agency is financed by the Government of Canada through annual Parliamentary authorities. Financial reporting of authorities provided to the department differs from financial reporting according to generally accepted accounting principles because authorities are based mainly on cash flow requirements. Items recognized in the Future-Oriented Statement of Operations in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the Agency has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:
|Vote 1 - Operating expenditures||$599,100||$553,635|
|Vote 5 - Capital expenditures||48,200||33,349|
|Statutory contributions to employee benefits plans||80,400||72,032|
|Statutory compensation payments (Refer to Note 2 (d))||4,500||12,500|
|Statutory authority for spending of revenues pursuant to section 30 of the CFIA Act Table Note 1||45,500||59,661|
|Total authorities requested||$777,700||$731,177|
Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in Estimates documents and, when reasonable estimates can be made, estimates of amounts to be allocated from Treasury Board central votes.
- Table Note 1
The statutory authority for spending of revenues includes the portion available from prior years (amount of $6,500,000 for fiscal year 2019). Those amounts are in addition to the Main Estimates figure ($53,161,000) for that statutory authority.
|Net cost of operations before government funding and transfers||$799,062||$761,134|
|Adjustments for items affecting net cost of operations but not affecting authorities:
|Services provided without charge by other government departments||(85,034)||(85,321)|
|Amortization of tangible capital assets||(39,292)||(43,221)|
|Revenues pursuant to Section 30 of the CFIA act||54,736||52,201|
|Change in allowance for employee severance benefits||(1,123)||1,136|
|Change in allowance for expired collective agreements||2,165||12,510|
|Other net changes in future funding requirements||(536)||(177)|
|Post-capitalization of tangible capital assets||20||10|
|Adjustments for items not affecting net cost of operations but affecting authorities:
|Acquisition of tangible capital assets||48,200||33,349|
|Proceeds from disposal of tangible capital assets||(498)||(444)|
6. Employee Benefits
As part of collective agreement negotiations with the employees, and changes to conditions of employment, the accumulation of severance benefits under the employee severance pay program has ceased commencing in 2012. Employees 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. Information about the severance benefits, measured for March 31, is as follows:
|Accrued benefit obligation, beginning of year||$33,676||$27,914|
|Expense (recovery) for the year||(3,912)||364|
|Benefits paid during the year||(1,850)||(1,500)|
|Accrued benefit obligation, end of year||$27,914||$26,778|
7. Related Party Transactions
The Agency is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms.
Services provided without charge by other government departments:
During the year, the Agency received the employer's contribution to the health and dental insurance plans, accommodation, Shared Services Canada and legal services, without charge from other government departments. These amounts have been recognized in the Agency's Future-Oriented Statement of Operations and Agency Net Financial Position as follows:
|Employer's contribution to the health and dental insurance plans||$41,866||$42,006|
|Shared Services Canada||12,558||12,600|
8. Segmented information
Presentation by segment is based on the Agency's core responsibility structure. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in Note 4. The following table presents the expenses incurred and revenues generated for the Agency's core responsibility structure, by major object of expenses and by major type of revenues. The segmented results for the period are as follows:
|Total||Safe Food and Healthy Plants and Animals||Internal Services||Total|
|Registrations, permits, certificates||8,789||8,389||-||8,389|
|Miscellaneous fees and services||5,164||4,069||861||4,930|
|Establishment license fees||2,002||1,911||-||1,911|
|Administrative monetary penalties||958||791||123||914|
|Revenues earned on behalf of Government||(957)||-||(957)||(957)|
|Salaries and employee benefits||649,811||525,140||93,395||618,535|
|Professional and special services||62,405||30,017||24,038||54,055|
|Utilities, materials and supplies||18,155||12,980||2,746||15,726|
|Travel and relocation||15,954||11,407||2,413||13,820|
|Furniture and equipment||6,976||4,575||967||5,542|
|Total operating expenses||847,990||659,811||139,572||799,383|
|Total transfer payments||5,808||13,952||-||13,952|
|Net cost of operations||$799,062||$621,589||$139,572||$761,134|
9. Comparative information
Comparative figures have been reclassified to conform to the Agency's new core responsibility structure.
- Date modified: