National Film Board
Public Accounts of Canada 2016 Volume III - Top of the page Navigation
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 the National Film Board (the "Board"). These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards. They have been approved by the Board of Trustees.
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 the Board's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Board'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 the Board 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.
The Board will be subject to periodic Core control audits performed by the Office of the Comptroller General and will use the results of such audits to adhere to the Treasury Board Policy on Internal Control.
In the interim, the Board has undertaken a risk-based assessment of the system of ICFR for the year ended March 31, 2016, in accordance with the Treasury Board Policy on Internal Control, and the results and action plan are summarized in the annex which can be found on the National Film Board website.
The Office of the Auditor General, the independent auditor for the Government of Canada, has expressed an opinion on the fair presentation of the financial statements of the Board which does not include an audit opinion on the annual assessment of the effectiveness of the Board's internal controls over financial reporting.
Approved by:
Claude Joli-Coeur
Government Film Commissioner
Luisa Frate, CPA, CA
Director General, Finance, Operations and Technology
Chief Financial Officer
July 8, 2016
Montréal, Canada
Statement of authority used (unaudited) for the year ended March 31
Table summary
The table presents on a comparative basis the statement of authority used (unaudited). It consists of five columns: item descriptions, current year with two columns—estimates and actual, and previous year with two columns—estimates and actual. Subtotals are displayed at operating use of funds and totals are displayed at authority used.
(in thousands of dollars)
2016 | 2015 | |||
---|---|---|---|---|
Estimates | Actual | Estimates | Actual | |
Cost of operation | (negative 61,797) | (negative 60,060) | (negative 63,894) | (negative 60,715) |
Items not requiring use of funds | – | 2,438 | – | 3,511 |
Operating source (use) of funds | (negative 61,797) | (negative 57,622) | (negative 63,894) | (negative 57,204) |
Items requiring use of funds | ||||
Net capital acquisitions | – | (negative 2,210) | – | (negative 3,827) |
Transition payments for implementing salary payments in arrears | – | – | – | (negative 1,108) |
Net other assets and liabilities | – | (negative 89) | – | (negative 424) |
Authority provided (used) | (negative 61,797) | (negative 59,921) | (negative 63,894) | (negative 62,563) |
Annual voted authority (used) | – | 59,832 | – | 61,032 |
Revolving fund legislative authority (used) | – | (negative 89) | – | (negative 1,531) |
Reconciliation of unused authority (unaudited) as at March 31
Table summary
The table presents on a comparative basis the reconciliation of unused authority (unaudited). It consists of three columns: item descriptions, current year and previous year. Subtotals are displayed at net authority used at the end of year and the totals are displayed at unused authority carried forward.
(in thousands of dollars)
2016 | 2015 | |
---|---|---|
Credit balance in the accumulated net charge against the Fund's authority | (negative 5,033) | (negative 3,353) |
Payables at year-end charged against the credit | (negative 6,099) | (negative 7,690) |
Net legislative revolving fund authority used, end of year | (negative 11,132) | (negative 11,043) |
Allocation from Treasury Board for the transition to salary payments in arrears | 1,108 | – |
Revolving fund legislative authority limit | 15,000 | 15,000 |
Unused legislative revolving fund authority carried forward | 4,976 | 3,957 |
Independent auditor's report
To the Minister of Canadian Heritage
Report on the financial statements
I have audited the accompanying financial statements of the National Film Board, which comprise the Statement of financial position as at 31 March 2016, and the Statement of operations and departmental net financial position, Statement of change in departmental net debt and Statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management's responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's responsibility
My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
Opinion
In my opinion, the financial statements present fairly, in all material respects, the financial position of the National Film Board as at 31 March 2016, and the results of its operations, changes in its net debt, and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.
Report on other legal and regulatory requirements
In my opinion, the transactions of the National Film Board that have come to my notice during my audit of the financial statements have, in all significant respects, been in accordance with the National Film Act and the by-laws of the National Film Board.
René Béliveau, CPA auditor, CA
Principal,
for the Auditor General of Canada
July 8, 2016
Montréal, Canada
Statements of financial position as at March 31
Table summary
The table presents on a comparative basis the statement of financial position. It consists of three columns: item descriptions, current year and previous year. Item descriptions are grouped in two: liabilities and assets, both displaying totals at total net liabilities and department net financial position. Item descriptions for assets are grouped in two: financial assets and non-financial assets, both displaying subtotals at total net financial assets and total non-financial assets.
(in thousands of dollars)
2016 | 2015 | |
---|---|---|
Liabilities | ||
Accounts payable and accrued liabilities (Note 4) | 4,662 | 6,980 |
Accrued salaries | 1,915 | 1,859 |
Vacation pay and provision for salary revisions | 1,046 | 765 |
Deferred revenue | 445 | 232 |
Lease obligation for tangible capital assets (Note 5) | 166 | – |
Employee future benefits (Note 6) | 2,651 | 2,880 |
Total net liabilities | 10,885 | 12,716 |
Financial assets | ||
Due from Consolidated Revenue Fund | 4,463 | 5,694 |
Accounts receivable (Note 7) | 1,730 | 2,117 |
Deposits | 100 | 96 |
Total net financial assets | 6,293 | 7,907 |
Departmental net debt | 4,592 | 4,809 |
Non-financial assets | ||
Prepaid expenses | 469 | 461 |
Inventory | 131 | 72 |
Tangible capital assets (Note 8) | 7,431 | 7,939 |
Total non-financial assets | 8,031 | 8,472 |
Departmental net financial position | 3,439 | 3,663 |
Approved by Board of Trustees:
Claude Joli-Coeur
Government Film Commissioner and Chairperson
National Film Board of Canada
Louis Puddister
Member of the Board of Directors
July 8, 2016
Statement of operations and departmental net financial position for the year ended March 31
Table summary
The table presents on a comparative basis the statement of operations and departmental net financial position. It consists of four columns: item descriptions, current year planned results, current year and previous year. Item descriptions for the English programming expenses and French programming expenses are grouped separately, each displaying subtotals. Subtotals for expenses are displayed at total expenses which include the English programming expenses, French programming expenses and the other item descriptions related to expenses. Subtotals for revenues are displayed at total revenues. Subtotals for total expenses, net of total revenues are displayed at net cost operations before government funding. Subtotals for net cost operations before government funding, net of net cash provided by Government of Canada and change in due from Consolidated Revenue Fund are displayed at net cost of operations after government funding in the current year and previous year columns. Totals for net cost of operations after government funding, net of departmental net financial position beginning of year are displayed at departmental net financial position end of year in the current year and previous year columns.
(in thousands of dollars)
2016 Planned results |
2016 | 2015 | |
---|---|---|---|
Expenses (Note 11a) | |||
English programming | |||
Production of films and other forms of visual presentation | |||
Board's program | 19,459 | 20,306 | 19,924 |
Sponsored production and pre-sale | – | 22 | 15 |
Subtotal | 19,459 | 20,328 | 19,939 |
French programming | |||
Production of films and other forms of visual presentation | |||
Board's program | 14,160 | 12,749 | 12,942 |
Sponsored production and pre-sale | 178 | 327 | 326 |
Subtotal | 14,338 | 13,076 | 13,268 |
Distribution | 6,560 | 5,912 | 5,987 |
Marketing, accessibility and outreach | 12,922 | 11,128 | 13,383 |
Digital development and applications | 4,549 | 4,783 | 2,959 |
Internal services | 8,192 | 8,220 | 8,909 |
Subtotal | 32,223 | 30,043 | 31,238 |
Total expenses | 66,020 | 63,447 | 64,445 |
Revenues (Note 11b) | |||
Institutional and educational | 1,765 | 1,337 | 1,629 |
Television | 1,010 | 519 | 509 |
Stock shots | 545 | 489 | 612 |
Home video | 550 | 446 | 400 |
Sponsored production and pre-sale | 228 | 349 | 341 |
Theatrical | 50 | 45 | 59 |
Miscellaneous | 75 | 202 | 180 |
Total revenues | 4,223 | 3,387 | 3,730 |
Net cost of operations before government funding and transfers | 61,797 | 60,060 | 60,715 |
Government funding and transfers | |||
Net cash provided by Government of Canada | 60,473 | 61,067 | 60,341 |
Change in due from Consolidated Revenue Fund | – | (negative 1,231) | 1,798 |
Transfer of the transition payments for implementing salary payments in arrears (Note 13) | – | – | (negative 1,108) |
Net cost of operations after government funding and transfers | 1,324 | 224 | (negative 316) |
Departmental net financial position, beginning of year | 3,663 | 3,663 | 3,347 |
Departmental net financial position, end of year | 2,339 | 3,439 | 3,663 |
Statement of change in departmental net debt for the year ended March 31
Table summary
The table presents on a comparative basis the statement of cash flows. It consists of three columns: item descriptions, current year and previous year. Item descriptions are grouped in three: operating activities with subtotals at cash used in operating activities, capital investing activities with subtotals at cash used in capital investing activities and financial activities with subtotals at cash used in financial activities. Totals are displayed at net cash provided by Government of Canada which include the cash used in operating activities, the cash used in capital investing activities and the cash used in financial activities.
(in thousands of dollars)
2016 Planned results |
2016 | 2015 | |
---|---|---|---|
Net cost of operations after government funding and transfers | 1,324 | 224 | (negative 316) |
Change due to tangible capital assets | |||
Acquisition of tangible capital assets | 861 | 2,375 | 3,827 |
Amortization of tangible capital assets | (negative 2,185) | (negative 2,722) | (negative 2,302) |
Loss on disposal of tangible capital assets | – | (negative 161) | – |
Total change due to tangible capital assets | (negative 1,324) | (negative 508) | 1,525 |
Change due to inventories | – | 59 | (negative 27) |
Change due to prepaid expenses | – | 8 | 119 |
Net change in department net debt | – | (negative 217) | 1,301 |
Department net debt, beginning of year | 4,809 | 4,809 | 3,508 |
Department net debt, end of year | 4,809 | 4,592 | 4,809 |
Statement of cash flows for the year ended March 31
Table summary
The table presents on a comparative basis the statement of change in departmental net debt. It consists of four columns: item descriptions, current year planned results, current year and previous year. Item descriptions for change due to tangible capital assets are grouped together and are displaying subtotals at total change due to tangible capital assets. Subtotals for net cost of operations after government funding, net of total change due to tangible capital assets, change due to inventories and change due to prepaid expenses are displayed at net increase (decrease) in departmental net debt. Totals for net increase (decrease) in departmental net debt, net of departmental net debt beginning of year are displayed at departmental net debt end of year.
(in thousands of dollars)
2016 | 2015 | |
---|---|---|
Operating activities | ||
Net cost of operations before government funding and transfers | 60,060 | 60,715 |
Non-cash items | ||
Amortization of tangible capital assets | (negative 2,722) | (negative 2,302) |
Loss on disposal of tangible capital assets | (negative 161) | – |
Transition payments for implementing salary payments in arrears | – | 1,108 |
Variations in statement of financial position | ||
Variations in accrued salaries | (negative 56) | (negative 1,330) |
Change in vacation pay and provision for salary revisions | (negative 281) | (negative 414) |
Net change in employee future benefits | 229 | (negative 225) |
Change in accounts payable and accrued liabilities | 2,455 | (negative 939) |
Change in accounts receivable | (negative 387) | (negative 153) |
Change in deposits | 4 | (negative 181) |
Change in deferred revenue | (negative 213) | 143 |
Change in prepaid expenses | 8 | 119 |
Change in inventory | 59 | (negative 27) |
Cash used in operating activities | 58,995 | 56,514 |
Capital investing activities | ||
Cash used to acquire tangible capital assets | 2,034 | 3,827 |
Cash used in capital investing activities | 2,034 | 3,827 |
Financing activities | ||
Lease payments for tangible capital assets | 38 | – |
Cash used in financing activities | 38 | – |
Net cash provided by Government of Canada | 61,067 | 60,341 |
Notes to the financial statements for the year ended March 31, 2016
1. Authority and purposes
The National Film Board was established in 1939 under the National Film Act and is the agency responsible for administering the Act.
The National Film Board (the "Board") is a cultural agency named in Schedule I.1 of the Financial Administration Act reporting to the Minister of Canadian Heritage. It is administered by a Board of Trustees appointed by the Governor in Council and chaired by the Government Film Commissioner.
The Board's legislative mandate is to initiate and promote the production and distribution of films in the national interest and, in particular:
- to produce and distribute and to promote the production and distribution of films designed to interpret Canada to Canadians and to other nations;
- to represent the Government of Canada in its relations with persons engaged in commercial motion picture film activity in connection with motion picture films for the Government or any department thereof;
- to engage in research in film activity and to make available the results thereof to persons engaged in the production of films;
- to advise the Governor in Council in connection with film activities;
- to discharge such other duties relating to film activity as the Governor in Council may direct it to undertake.
The Board is not subject to income taxes.
2. 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.
Unless otherwise specified, the figures presented in the financial statements are stated in thousands of Canadian dollars.
Significant accounting policies are as follows:
a. Parliamentary authorities
Operations are funded through a permanent authority from Parliament (Revolving Fund) and Parliamentary authorities voted annually.
The Revolving Fund allows the Board to make payments out of the Consolidated Revenue Fund for working capital, interim financing of operating costs and capital assets acquisitions. This authority requires that the aggregate of admissible working capital and net book value of capital assets does not exceed $15 million.
The Board is also financed in part by the Government of Canada through Parliamentary authorities voted annually. Financial reporting of authorities provided to the Board 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 reconciliation between the two bases of reporting. The planned results amounts presented 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 2015–2016 Report on Plans and Priorities. The planned results amounts 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 were prepared for internal management purposes and have not been previously published.
Every year, the Board presents information on planned expenditures to Parliament through the tabling of Estimates publications. These estimates result in the introduction of supply bills (which once passed into legislation, become appropriation acts) in accordance with the reporting cycle for government expenditures. The Board exercises expenditure initiation processes such that unencumbered balances of budget allotments and appropriations are monitored and reported on a regular basis to help ensure sufficient authority remains for the period and appropriations are not exceeded.
Liquidity risk is the risk that the Department will encounter difficulty in meeting its obligations associated with financial liabilities. The Board's objective for managing liquidity risk is to manage operations and cash expenditures within the appropriation authorized by Parliament or allotment limits approved by the Treasury Board.
Consistent with section 32 of the Financial Administration Act, the Board's policy to manage liquidity risk is that no contract or other arrangement providing for a payment shall be entered into with respect to any program for which there is an appropriation by Parliament or an item included in estimates then before the House of Commons to which the payment will be charged, unless there is a sufficient unencumbered balance available out of the appropriation or item to discharge any debt that, under the contract or other arrangement, will be incurred during the fiscal year in which the contract or other arrangement is entered into.
The Board's risk of exposure and its objectives, policies and processes to manage and measure this risk did not change significantly from the prior year.
b. Net cash provided by Government of Canada
The Board operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Board is deposited to the CRF and all cash disbursements made by the Board are paid from the CRF. The net cash provided by the Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal Government.
c. Due from or to the Consolidated Revenue Fund
Amounts due from or to the Consolidated Revenue Fund (CRF) are the result of timing differences between when a transaction affects the Board's authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the Board is entitled to draw from the CRF without further authorities to discharge its liabilities. This amount is not considered to be a financial instrument.
d. Expense recognition
All expenses are recorded on an accrual basis.
Vacation pay is expensed, as the benefits are earned by employees under their respective terms of employment.
e. Production of films and other forms of visual presentations
All production costs are charged to operations in the year in which they are incurred and are shown in the Statement of operations and departmental net financial position as follows:
-
Board's program
All costs incurred for unsponsored productions and co-productions or other forms of visual presentation.
Sponsored production and pre-sale
Part of costs incurred for film productions and co-productions or other forms of visual presentation corresponding to sponsor's contribution. The excess of costs over the sponsor's contribution is charged to the Board's program.
f. Revenues
Revenues from the production of films and other forms of visual presentation are accounted for at an amount equal to the sponsored production and pre-sale costs during the year in which these costs are incurred. Any profit is recognized in the year the production is completed.
Royalty revenues are recognized once all of the Board's obligations have been fulfilled and its expenses have been accounted for, regardless of when the acquirer actually uses the work.
Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.
g. Accounts receivable
Accounts receivable are stated at amounts expected to be ultimately realized. A provision is recorded for external parties' accounts receivable where recovery is considered uncertain.
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Board is not exposed to significant credit risk. The Board provides services to other government departments and agencies and to external parties in the normal course of business. Accounts receivable are due on demand. The Board's maximum exposure to credit risk is equal to the carrying value of its accounts receivable.
h. Inventory
Materials and supplies are valued at cost.
Film prints and other forms of visual presentation held for sale are valued at the lower of cost or net realizable value.
i. Tangible capital assets
All tangible capital assets having an initial cost of $5,000 or more and leasehold improvements 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 assets, as follows:
Table summary
The table presents tangible capital assets and consists of 2 columns: the asset class with its respective amortization period.
Asset class | Amortization period |
---|---|
Technical equipment | from 4 to 10 years |
Software and data processing equipment | from 5 to 10 years |
Office furniture, equipment and other | from 5 to 10 years |
Leasehold improvements | terms of the leases |
Amounts related to projects in progress are transferred to the appropriate tangible capital assets category when the project is complete and amortized according to the Board's policy.
The Board has a collection of nearly twenty thousand audiovisual works produced since 1895. This inestimable collection is not intended for sale and does not have a measurable value. It has, however, been assigned a nominal value of $1 in the financial statements, appearing on the Statement of financial position and in note 8 as tangible capital assets to ensure that the reader is aware of its existence. The Board does not capitalize other intangibles that have cultural, aesthetic or historical value.
The Board enters into operating lease agreements to acquire the exclusive use of certain tangible capital assets over the term of the lease. These rental fees are charged to operations in the year to which they apply. The Board also enters into capital lease agreements by which substantially all the benefits and risks inherent to ownership of the assets are transferred to the Board. The Board then records an asset and an obligation corresponding to the present value of the minimum lease payments, excluding the portion thereof relating to executory costs. The assets recorded from a capital lease agreement are amortized on the same basis as other assets owned by the Board and the obligations are amortized over the lease term.
j. Other financial assets and financial liabilities
Financial instruments of the Board are stated at cost or amortized cost. Financial assets consist of assets that could be used to reimburse existing liabilities or finance future operations.
The Board has the following financial assets:
- Accounts receivable related to the sale of audiovisual products to external parties or other departments and agencies (net of allowances for doubtful accounts)
- Deposits related to production abroad
Financial liabilities consist of accounts payable and accrued liabilities, and accrued salaries.
k. Employee Future Benefits
Pension benefits
Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The Board's contributions to the Plan are charged to expenses in the year incurred and represent the Board's total obligation to the Plan. The Board'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.
Severance benefits
Employees are entitled to severance benefits as provided under collective agreements or conditions of employment. In 2012, the program for all employees was eliminated and, consequently, the severance benefits ceased to accumulate. The cost of severance was recorded in the periods in which the benefits were earned by employees. The obligation under severance benefits is calculated at present value using the most probable management assumptions regarding wage, the discount rate and the timing of retirement. These assumptions are reviewed annually.
Compensated absences
Employees are entitled to sick leave and worker's compensation benefits as provided in their collective agreements or conditions of employment. Sick leave days accumulate but do not vest, enabling employees to be paid during their absence due to illness in recognition of prior services rendered. As the employees render services, the value of the compensated sick leave attributed to those services is recorded as a liability and expense. The Board records the cost of worker's compensation benefits to be paid when the event giving rise to the obligation occurs. Management uses assumptions and its best estimates, such as the discount rate, age of retirement, utilization rate of days in excess of the leave granted annually, probability of departure and salary review rate to calculate the present value of the compensated absences obligation. These assumptions are reviewed annually.
l. Contingent liabilities
Contingent liabilities are potential liabilities which 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.
m. 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 allowance for doubtful accounts, contingent liabilities, the liability related to 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
The Board 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, the Board 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:
Reconciliation of net cost of operations to current year authorities used:
Table summary
The table presents on a comparative basis the parliamentary authorities, more specifically the reconciliation of net cost of operations to current year authorities used. It consists of three columns: item descriptions, current year and previous year. Item descriptions for adjustments for items affecting net cost of operations but not affecting authorities are grouped together, displaying subtotals. Item descriptions for adjustments for items not affecting net cost of operations but affecting authorities are grouped together, displaying subtotals. Totals are displayed at current year authorities used.
(in thousands of dollars)
2016 2015 Net cost of operations before government funding and transfers 60,060 60,715 Adjustments for items affecting net cost of operations but not affecting authorities Add (less) Loss on disposal of tangible capital assets (negative 161) – Change in vacation pay and provision for salary revisions (negative 281) (negative 414) Change in accrued liabilities not charged to authorities 498 (negative 570) Net change in employee future benefits 229 (negative 225) Amortization of tangible capital assets (negative 2,722) (negative 2,302) Subtotal (negative 2,437) (negative 3,511) Adjustments for items not affecting net cost of operations but affecting authorities Add (less) Acquisition of tangible capital assets 2,171 3,827 Lease payments for tangible capital assets 38 – Transition payments for implementing salary payments in arrears (Note 13) – 1,108 Subtotal 2,209 4,935 Current year authorities used 59,832 62,139 Authorities provided and used
Table summary
The table presents on a comparative basis the parliamentary authorities more specifically the authorities provided and used. It consists of three columns: item descriptions, current year and previous year. Totals are displayed on the last row.
(in thousands of dollars)
2016 2015 Authorities provided Main Estimates 59,652 59,912 Supplementary Estimates authorities 2,964 4,506 Less: Authorities available for future years (negative 2,733) (negative 2,246) Frozen allotment (negative 51) (negative 33) Current year authorities used 59,832 62,139
4. Accounts payable and accrued liabilities
Accounts payable and accrued liabilities are measured at cost and are due, mainly, within six months following the closing date.
The following table presents details of the Board's accounts payable and accrued liabilities:
Table summary
The table presents on a comparative basis accounts payable and accrued liabilities. It consists of three columns: item descriptions, current year and previous year. Totals are displayed on the last row.
(in thousands of dollars)
2016 | 2015 | |
---|---|---|
Accounts payable—Other government departments and agencies | 1,210 | 1,132 |
Accounts payable—External parties | 3,324 | 4,848 |
Total accounts payable | 4,534 | 5,980 |
Accrued liabilities | 128 | 1,000 |
Total accounts payable and accrued liabilities | 4,662 | 6,980 |
As at March 31, 2016, the accrued liability corresponds to the balance of the obligation for severance benefits in the amount of $1,000, linked to the Board's reorganization of its operations announced in 2015.
5. Lease obligation for tangible capital assets
The Board has entered into an agreement to rent technical equipment under a capital lease. The asset has been capitalized using an imputed interest rate of 3.85 per cent. The related obligation will be paid over a 3-year lease term. Payments totalled $41 for the year ended March 31, 2016 (2015—NIL). Interest of $3 (2015—NIL) was charged to operations.
Table summary
The table presents an agreement to rent technical equipment under a capital lease. It consists of three columns: item descriptions, current year and previous year. Totals are displayed on the last row.
(in thousands of dollars)
2016 | 2015 | |
---|---|---|
2017 | 71 | – |
2018 | 71 | – |
2019 | 29 | – |
Total future minimum lease payments | 171 | – |
Less: imputed interest | (negative 5) | – |
Balance of lease obligation for tangible capital assets | 166 | – |
6. Employee future benefits
Pension benefits
The Board's eligible employees participate in the Public Service Pension 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 per cent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plans benefits and are indexed to inflation.
Both the employees and the Board 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.
In 2016, the expense amount for Group 1 and Group 2 members of $3,220 (2015—$3,377) represents approximately 1.3 times (2015—1.5 times) the employee contributions.
The Board'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.
Severance benefits and compensated absences
Severance benefits
The Board 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.
As part of collective agreement negotiations and conditions of employment, the accumulation of severance benefits under the employees' severance pay program ceased commencing in 2012. Employees subject to these changes had, until December 31, 2013, 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. As at March 31, 2016, to calculate the obligation of the remaining portion, the Board uses a rate of compensation increase of 0.96 per cent (2015—0.96 per cent), an estimated discount rate of 1.61 per cent (2015—1.65 per cent) and a horizon of retirement estimated at 60 years old.
Compensated absences
The Board provides its employees with sick leave benefits based on their salary and the entitlements accumulated over their years of service. These entitlements are accumulated but do not vest. The Board has also recognized a worker's compensation obligation.
To calculate the obligation for sick leaves, the Board uses an average daily wage of $289 (2015—$287), a rate of salary increase of 0.96 per cent (2015—0.96 per cent), an average annual utilization rate of 2.6 per cent (2015—2.8 per cent), a discount rate of 1.61 per cent (2015—1.65 per cent), a 5.16 per cent (2015—5.00 per cent) probability of employee departure and a retirement age assumption of 60 or 65 years old, depending on the beginning of employment.
To calculate the workers' compensation obligation, the Board uses the provisions of the applicable workers' compensation plan and a discount rate of 1.61 per cent.
Information about the severance and compensated absence benefits, measured as at March 31, 2016, is as follows:
Table summary
The table presents employee future benefits related to severance and sick leave benefits. It consists of four columns: item descriptions, severance benefits, compensated absences and total. Subtotals are displayed at balance as at March 31 of the previous year. Totals are displayed at balance as at March 31 of the current year.
(in thousands of dollars)
Severance benefits | Compensated Absences | Total | |
---|---|---|---|
Balance as at March 31, 2014 | 1,217 | 1,438 | 2,655 |
Expenses for the year | 22 | 525 | 547 |
Benefits paid during the year | (negative 295) | (negative 27) | (negative 322) |
Balance as at March 31, 2015 | 944 | 1,936 | 2,880 |
Expenses for the year | 84 | (negative 111) | (negative 27) |
Benefits paid during the year | (negative 175) | (negative 27) | (negative 202) |
Balance as at March 31, 2016 | 853 | 1,798 | 2,651 |
7. Accounts receivable
The following table presents details of the Board's accounts receivable:
Table summary
The table presents on a comparative basis the accounts receivable. It consists of three columns: item descriptions, current year and previous year. Totals are displayed at total accounts receivable.
(in thousands of dollars)
2016 | 2015 | |
---|---|---|
Receivables—Other government departments and agencies | 363 | 494 |
Receivables—External parties | 1,698 | 1,971 |
Subtotal | 2,061 | 2,465 |
Allowance for doubtful accounts on receivables from external parties | (negative 331) | (negative 348) |
Total accounts receivable | 1,730 | 2,117 |
8. Tangible capital assets
Table summary
The table presents the tangible capital assets, with six columns. The first column lists the item descriptions and the next five columns are grouped in two: cost (opening balance, additions, disposals & write-offs, transfers and closing balance) and accumulated amortization (opening balance, amortization, disposals & write-offs, Transfers and closing balance). The last row provides the net book value for the current year and for previous year.
(in thousands of dollars)
March 31, 2015 | Additions | Disposals and write-offs | Transfers | March 31, 2016 | |
---|---|---|---|---|---|
Technical equipment | |||||
Cost | 19,673 | 614 | (negative 1,654) | – | 18,633 |
Accumulated amortization | (negative 18,221) | (negative 697) | 1,726 | – | (negative 17,192) |
Subtotal | 1,452 | (negative 83) | 72 | – | 1,441 |
Software and data processing equipment | |||||
Cost | 14,525 | 297 | (negative 2,326) | 1,457 | 13,953 |
Accumulated amortization | (negative 10,831) | (negative 1,533) | 2,093 | – | (negative 10,271) |
Subtotal | 3,694 | (negative 1,236) | (negative 233) | 1,457 | 3,682 |
Office furniture, equipment and other | |||||
Cost | 589 | – | (negative 52) | – | 537 |
Accumulated amortization | (negative 576) | (negative 5) | 52 | – | (negative 529) |
Subtotal | 13 | (negative 5) | – | – | 8 |
Leasehold improvements | |||||
Cost | 6,932 | 222 | (negative 2,593) | 70 | 4,631 |
Accumulated amortization | (negative 5,679) | (negative 487) | 2,593 | – | (negative 3,573) |
Subtotal | 1,253 | (negative 265) | – | 70 | 1,058 |
CollectionLink to footnote 1 | 0 | – | – | – | 0 |
Work in progress | 1,527 | 1,242 | – | (negative 1,527) | 1,242 |
Total | |||||
Cost | 43,246 | 2,375 | (negative 6,625) | – | 38,996 |
Accumulated amortization | (negative 35,307) | (negative 2,722) | 6,464 | – | (negative 31,565) |
Net book value | 7,939 | (negative 347) | (negative 161) | – | 7,431 |
The above assets include equipment under capital leases for a total cost of $204 (2015—NIL) less accumulated amortization of $29 (2015—NIL). Current year amortization expense relating to property under capital leases amounts to $29 (2015—NIL).
Disposals and write-offs of $6,625 (2015—$8,268) for the year are related to the abandonment of obsolete material.
9. Contractual obligations
The nature of the Board's activities can result in multi-year contracts and obligations whereby the Board will be obligated to make future payments for the acquisition of goods or services. Significant contractual obligations that can be reasonably estimated are summarized as follows:
Table summary
The table presents the contractual obligations for the next five years and thereafter. It consists of seven columns: the first column presents the item descriptions, the following five columns presents future years and the last column presents the total of the five previous columns. The totals for each columns are displayed on the last row.
(in thousands of dollars)
2017 | 2018 | 2019 | 2020 | 2021–2031 | Total | |
---|---|---|---|---|---|---|
Premises | 4,533 | 3,902 | 529 | 476 | 1,743 | 11,183 |
Other goods and services | 893 | 130 | 35 | 18 | 6 | 1,082 |
Total | 5,426 | 4,032 | 564 | 494 | 1,749 | 12,265 |
The agreements for leased premises in the amount of $11,183 were signed with Public Services and Procurement Canada (PSPC).
10. Contingent liabilities
The Board is subject to various legal claims arising in the normal course of its operations. In management's view, the ultimate disposition of these claims is not expected to have a material impact on the financial statements.
11. Expenses by major object and types of revenues
a. Expenses
Table summary
The table presents on a comparative basis expenses by major object. It consists of three columns: item descriptions, current year and previous year. Totals are displayed on the last row.
(in thousands of dollars)
2016 | 2015 | |
---|---|---|
Salaries and benefits | 35,653 | 37,027 |
Professional and special services | 10,122 | 9,897 |
Rentals | 6,265 | 6,719 |
Transportation and communication | 3,120 | 2,765 |
Amortization of tangible capital assets | 2,722 | 2,302 |
Materials and supplies | 1,724 | 1,588 |
Repairs and upkeep | 1,081 | 933 |
Cash financing in co-productions | 1,020 | 1,225 |
Royalties | 675 | 796 |
Information | 491 | 436 |
Contracted film production and laboratory processing | 389 | 517 |
Gain on disposal of tangible capital assets | 161 | – |
Miscellaneous | 24 | 240 |
Total | 63,447 | 64,445 |
b. Revenues
Table summary
The table presents on a comparative basis revenues by types. It consists of three columns: item descriptions, current year and previous year. Totals are displayed on the last row.
(in thousands of dollars)
2016 | 2015 | |
---|---|---|
Royalties | 1,874 | 1,984 |
Stock shots | 489 | 612 |
Film prints | 473 | 613 |
Sponsored production and pre-sale | 349 | 341 |
Miscellaneous | 202 | 180 |
Total | 3,387 | 3,730 |
12. Related party transactions
The Board is related, as a result of common ownership, to all government departments, agencies and Crown corporations. The Board enters into transactions with these entities in the normal course of business and on normal trade terms. During the year ending March 31, 2016, the Board leased premises from Public Services and Procurement Canada (PSPC) for the amount of $5,006 (2015—$5,639).
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 PSPC and audit services provided by the Office of the Auditor General, are not included in the Board's Statement of Operations and Departmental Net Financial Position.
Table summary
The table presents on a comparative basis related party transactions involving services provided by other government departments. It consists of three columns: item descriptions, current year and previous year. The last row presents the totals.
(in thousands of dollars)
2016 | 2015 | |
---|---|---|
Accounts receivable—Other government departments and agencies | 363 | 494 |
Accounts payable—Other government departments and agencies | 1,210 | 1,132 |
Expenses—Other government departments and agencies | 13,509 | 14,148 |
Revenues—Other government departments and agencies | 377 | 487 |
13. Transfer of the transition payments for implementing salary payments in arrears
The Government of Canada implemented salary payments in arrears in 2014–2015. As a result, a one-time payment 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 (PSPC), who is responsible for the administration of the Government pay system. The impact in 2015–2016 is not significant.
14. The Documentary Channel
Since 2002, the NFB owns a permanent share of 14 per cent (14 x $1 units) of the specialized television channel The Documentary Channel. Pursuant to the investment agreement, the NFB's obligations with respect to debts, liabilities, and other obligations are limited to the capital invested.
Revenues from portfolio investments are recognized only to the extent that they are received or eligible and they are presented under miscellaneous revenues in the income statement in the amount of $113 ($137 in 2015).
15. Comparative figures
Comparative figures have been reclassified to conform to the current year's presentation.
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