Condensed Financial Statements of the Government of Canada
The fundamental purpose of these condensed financial statements is to provide an overview of the financial affairs of the government and the resources for which it is responsible under authority granted by Parliament. Responsibility for the integrity and objectivity of these statements rests with the government.
These financial statements are extracted and condensed from the audited financial statements included in Section 1 of Volume I of the 1999 Public Accounts of Canada, which are expected to be tabled in Parliament later this year. As these condensed financial statements are, by their nature, summarized, they do not include all disclosure required for financial reporting by governments in Canada. Readers interested in the disclosure of more detailed data should refer to the audited financial statements in the Public Accounts.
Table 7
Government of Canada
Condensed statement of revenues, expenditures and accumulated deficit for the year ended March 31, 1999
1999
1998
(millions of dollars)
Revenues Tax revenues Income tax 102,183
101,142
Excise taxes and duties 34,249
33,752
Employment insurance premiums 19,363
18,802
155,795
153,696
Non-tax revenues 11,748
10,666
Total gross revenues 167,543
164,362
Amounts deducted to arrive at net revenues 11,872
11,200
Total net revenues 155,671
153,162
Expenditures Transfer payments Old Age Security and related payments 22,285
21,758
Other levels of government 25,523
20,504
Employment insurance benefits 11,884
11,842
Other transfer payments 27,300
28,909
86,992
83,013
Crown corporation expenditures 4,995
3,775
Other program expenditures 31,278
31,353
Total gross program expenditures 123,265
118,141
Amounts deducted to arrive at net program expenditures 11,872
11,200
Total net program expenditures 111,393
106,941
Interest on debt 41,394
40,931
Total net expenditures 152,787
147,872
Surplus for the year before change in accounting policy 2,884
5,290
Change in accounting policy (1,812)
Surplus for the year 2,884
3,478
Accumulated deficit at beginning of year 579,708
583,186
Accumulated deficit at end of year 576,824
579,708
Table 8
Government of Canada
Condensed statement of assets and liabilities
as at March 31, 1999
1999
1998
(millions of dollars)
Liabilities Payables, accruals and allowances Accounts payable and accruals 34,300
32,783
Allowances for guarantees and employee benefits 11,016
10,917
45,316
43,700
Interest-bearing debt Unmatured debt Marketable bonds 295,752
294,583
Treasury bills 96,950
112,300
Canada Savings Bonds 27,662
29,769
Bonds for Canada Pension Plan 4,063
3,456
Total payable in Canadian currency 424,427
440,108
Payable in foreign currencies 36,000
27,183
460,427
467,291
Pension and other accounts Public sector pensions 122,407
117,457
Canada Pension Plan (net of securities) 5,427
4,205
Other 6,724
5,872
134,558
127,534
Total interest-bearing debt 594,985
594,825
Total liabilities 640,301
638,525
Assets Cash and accounts receivable Cash 10,693
11,691
Accounts receivable 4,580
4,122
15,273
15,813
Foreign exchange accounts 34,668
28,968
Loans, investments and advances Enterprise Crown corporations and other government
business enterprises11,052 12,601 National governments and international organizations 7,555
6,869
Other 4,341
3,832
22,948
23,302
Less allowance for valuation 9,412
9,266
13,536
14,036
Total assets 63,477
58,817
Accumulated deficit 576,824
579,708
Table 9
Government of Canada
Condensed statement of changes in financial position
for the year ended March 31, 1999
1999
1998
(millions of dollars)
Cash provided by operating activities Surplus for the year 2,884
3,478
Add expenditures not requiring cash 11,466
13,867
14,350
17,345
Net payments from pension and other accounts (3,531)
(5,110)
Net change in receivables, payables and accruals 181
(470)
11,000
11,765
Cash provided by investing activities Net decrease in loans, investments and advances 566
1,467
Cash provided by foreign exchange activities Net increase in foreign currency borrowings 8,817
4,167
Less net increase in foreign exchange accounts 5,700
2,155
3,117
2,012
Net cash generated before financing activities 14,683
15,244
Cash used for financing activities Net decrease in Canadian currency borrowings 15,681
13,728
Net increase (decrease) in cash (998)
1,516
Cash at beginning of year 11,691
10,175
Cash at end of year 10,693
11,691
Government of Canada
Notes to the Condensed Financial Statements
Significant accounting policies
The Government of Canada reporting entity includes all departments, agencies, corporations and funds which are owned or controlled by the government and which are accountable to Parliament. The financial activities of all these entities are consolidated in these statements, except for enterprise Crown corporations and other government business enterprises, which are not dependent on the government for financing their activities. These corporations are reported as investments at their original cost adjusted by an allowance for valuation to reflect their annual profits or losses. The Canada Pension Plan is excluded from the reporting entity, as it is under the joint control of the government and participating provinces.
The government basically accounts for transactions on an accrual basis. Two notable exceptions are tax revenues and related refunds, which are generally accounted for on a cash basis; and capital assets, which are fully charged to expenditures at the time of acquisition or construction.
As a consequence, the only assets recorded on the Condensed Statement of Assets and Liabilities are financial assets, as they can provide resources to discharge liabilities or finance future operations. Assets are recorded at the lower of cost or net realizable value. Liabilities are recorded on an accrual basis with public sector pension and severance liabilities being determined on an actuarial basis. Valuation allowances are established for loan guarantees, concessionary and sovereign loans, and other obligations.
Some amounts in these statements are based on estimates and assumptions made by the government. By their nature, such estimates are subject to measurement uncertainty, although all of them are believed to be reasonable.
Comparative figures for 1998 are reclassified to conform to the current year's presentation, except for the one-time impact of the change made in 1998 of $1.8 billion in the accounting policy for assistance to international financial institutions.
Reporting of revenues and expenditures on a gross basis
Detailed amounts on the Condensed Statement of Revenues, Expenditures and Accumulated Deficit are presented on a full (gross) disclosure basis only. Gross revenues include revenues of consolidated Crown corporations, and revenues of government departments, agencies and funds which, on the net basis, are deducted from expenditures for budget and parliamentary authority purposes. Gross expenditures include expenditures determined through the tax system, such as child tax benefits and quarterly goods and services tax credits, that are deducted from revenues on the net basis.
Contractual commitments
Contractual commitments that will materially affect the level of future expenditures include transfer payment agreements, benefit plans for veterans and others, capital asset acquisitions and other purchases, operating and capital leases, and funding of international organizations. At March 31, 1999 contractual commitments amounted to approximately $30.9 billion ($29.4 billion in 1998).
Contingent liabilities
Contingent or potential liabilities that may become actual liabilities in future years include: guarantees by the government; callable share capital in international organizations; claims and pending and threatened litigation; and environmental contingencies. Contingent liabilities related to guarantees by the government and international organizations amount to $62 billion. The total amount claimed against the government for other claims and pending and threatened litigation but not assessed is not determinable. Of these other claims, over $200 billion relates to Aboriginal and comprehensive land claims. The government is confident that the ultimate settlement for these contingent liabilities will be for amounts significantly lower than those being disclosed.
Insurance in force relating to self-sustaining insurance programs operated for the government by three enterprise Crown corporations amounted to approximately $501 billion ($485 billion in 1998). The government expects that it will not incur any costs to cover the claims for these programs.
Other sources of information
The Public Accounts of Canada
The Public Accounts of Canada, as required under Section 64(1) of the Financial Administration Act, are tabled in the fall of each year by the President of the Treasury Board. This report is presented in two volumes:
- Volume I contains the government's audited financial statements and supporting schedules and information; and
- Volume II contains details of financial operations by Ministry (Part I) and additional information and analyses (Part II).
The Budget
The budget, usually introduced in February, presents the government's overall fiscal plan, incorporating revenue projections and spending plans which combine to determine the resulting budgetary balance. The budget also introduces proposals for changes in taxation.The Estimates
Each year, the government prepares Estimates in support of its request to Parliament for authority to spend public monies. This request is formalized through the tabling of appropriation bills in Parliament. The Estimates are tabled in the House of Commons by the President of the Treasury Board.The Debt Management Report
This annual document provides an overview of the federal government's borrowing operations. It outlines the key elements of current federal debt strategy and describes various strategic and operational aspects of the government's debt program and cash management activities over the past fiscal year.The Fiscal Monitor
This monthly newsletter produced by the Department of Finance highlights the financial results of the government together with the reasons underlying major variances.
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