Archived — 2017–18 Departmental Plan

Innovation, Science and Economic Development Canada
Consolidated Future-Oriented Statement of Operations (Unaudited)
For the Year Ended March 31
(in thousands of dollars)
2016–17
Forecast Results
2017–18
Planned Results
Expenses
The Canadian marketplace is efficient and competitive
500,658 494,260
Advancements in science and technology, knowledge and innovation strengthen the Canadian economy
1,271,559 1,616,434
Canadian businesses and communities are competitive
311,040 340,147
Internal Services
201,739 213,994
Expenses incurred on behalf of government
(2,165) (2,447)
Total expenses 2,282,831 2,662,388
Revenues
Radio spectrum licences
1,137,784 1,137,398
Sales of services
308,684 313,286
Revenue from fines
28,723 29,146
Amortization of discounts
8,536 5,077
Other revenue
840 847
Revenues earned on behalf of Government
(1,231,838) (1,228,067)
Total revenues 252,729 257,687
Net cost of operations 2,030,102 2,404,701
The accompanying notes form an integral part of these financial statements.

Notes to the Consolidated Future-Oriented Statement of Operations (Unaudited)

1. Authority and Objectives

The authorities for the programs for which Innovation, Science and Economic Development Canada (ISED) is responsible are derived from the Department of Industry Act. Many other acts are under the responsibility of the Minister of ISED, and Treasury Board also defines other specific ISED authorities.

ISED aims to help make Canadian industry more productive and competitive in the global economy, thus improving the economic and social well-being of Canadians through its three interdependent and mutually reinforcing strategic outcomes. Fostering competitiveness by developing and administering economic framework policies that: promote competition and innovation; support investment and entrepreneurial activity; and instill consumer, investor and business confidence in the marketplace. Investing in science and technology to generate knowledge and equip Canadians with the skills and training they need to compete and prosper in the global, knowledge-based economy helps ensure that discoveries and breakthroughs happen here in Canada, and that Canadians can realize the social and economic benefits. Promoting economic development in communities encourages the development of skills, ideas and opportunities across the country. Taken together, ISED's strategic outcomes support growth in employment, income, productivity and sustainable development in Canada.

Internal Services are groups of activities and resources that are administered to support the needs of programs and other corporate obligations of ISED. Internal Services include only those activities and resources that apply across ISED, not those provided specifically to a program.

ISED's activities are delivered at its headquarters in Ottawa as well as in the regions. There are five regional offices with service points located across Canada and an office for FedNor.

ISED has a number of transfer payment programs through which it provides grants and contributions to recipients in targeted groups and sectors. Each transfer payment program has specific objectives and expected results that support the achievement of ISED's strategic outcomes.

2. Methodology and Significant Assumptions

The Future-Oriented Statement of Operations has been prepared on the basis of the government priorities and the departmental plans as described in the Departmental Plan.

The information in the forecast results for fiscal year 2016–17 is based on actual results as at December 31, 2016 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2017–18 fiscal year.

The main assumptions underlying the forecasts are as follows:

These assumptions are valid as at January 16, 2017.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2016–17 and for 2017–18, 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, ISED 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 past experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and continually evaluated.

Factors that could lead to material differences between the Future-Oriented Statement of Operations and the historical statement of operations include the following:

After the Departmental Plan is tabled in Parliament, ISED will not be updating the forecasts for any changes in financial resources 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 the 2016–17 fiscal year, 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 are as follows:

  1. Parliamentary authorities

    ISED is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to ISED 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 Future-Oriented Statement of Operations are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a reconciliation between these bases of reporting.

  2. Consolidation

    The Consolidated Future-Oriented Statement of Operations includes the accounts of ISED and the Canadian Intellectual Property Office (CIPO) Revolving Fund. The accounts of this sub-entity have been consolidated with those of ISED and all inter-organizational balances and transactions have been eliminated.

  3. Revenues

    Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.

    Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.

    Funds that have been received are recorded as deferred revenue, provided that ISED has an obligation to other parties for the provision of goods, services or the use of assets in the future.

    Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

    Revenues that are non-respendable are not available to discharge ISED's liabilities. While the Deputy Head is expected to maintain accounting control, he 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 in reduction of the entity's gross revenues.

  4. Expenses

    Expenses are recorded on an accrual basis. Expenses for ISED's operations are recorded when goods are received or services are rendered including services provided without charges for accommodation, employee contributions to health and dental insurance plans, legal services and worker's 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 respective terms of employment.

    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 statement. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.

    Expenses also include provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivable, provision for valuation on loans, investments and advances, to the extent the future event is likely to occur and a reasonable estimate can be made.

    Expenses also include amortization of tangible capital assets which are capitalized at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset.

     

5. Parliamentary Authorities

ISED is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to ISED 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, ISED has different net cost of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

(a) Reconciliation of net cost of operations to current year authorities used
(in thousands of dollars)
Forecast Results
2016–17
Planned Results
2017–18
Net cost of operations 2,030,102 2,404,701
Adjustments for items affecting net cost of operations but not affecting authorities:
Repayment of conditionally repayable contributions
59,600 80,200
Services provided without charge by other government departments
(80,044) (78,942)
Bad debts/write-offs/write-down
2,165 2,447
Amortization of tangible capital assets
(16,063) (12,461)
Increase in employee future benefits
(5,739) (8,969)
Salary expense recorded at Treasury Board Secretariat
- (9,017)
Transfer payment accruals
61,900 33,100
Decrease in vacation pay and compensatory leave
69 68
Total items affecting net cost of operations but not affecting authorities
21,888 6,426
Adjustments for items not affecting net cost of operations but affecting authorities:
Increase in loans and advances
96,084 168,544
Acquisitions of tangible capital assets
20,358 11,235
Total items not affecting net cost of operations but affecting authorities
116,442 179,779
Forecast authorities available 2,168,432 2,590,906
(b) Authorities requested
(in thousands of dollars)
Forecast Results
2016–17
Planned Results
2017–18
Authorities requested: 
Vote 1 – Operating expenditures
372,008 356,423
Vote 5 – Capital expenditures
20,358 11,235
Vote 10 – Grants and contributions
1,531,342 2,038,305
Statutory amounts
244,724 184,943
Requested authorities 2,168,432 2,590,906

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.

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