Canadian Pari-Mutuel Agency Revolving Fund
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Statement of management responsibility
We have prepared the accompanying financial statements of the Canadian Pari-Mutuel Agency Revolving Fund as required by and in accordance with the Treasury Board Directive on Charging and Special Financial Authorities and the Receiver General reporting requirements. These financial statements were prepared by the management of the Fund in accordance with the significant accounting policies set out in note 2 of the financial statements, on a basis consistent with that of the preceding year.
Responsibility for the integrity and objectivity of these financial statements rests with the management of the Fund. The information included in these financial statements is based on management's best estimates and judgement with due consideration given to materiality. To fulfil its accounting and reporting responsibilities, the Fund maintains a set of accounts which provides a centralized record of the Fund's financial transactions. Financial information submitted to the Public Accounts of Canada and included in the Agriculture and Agri-Food Canada Departmental Results Report is consistent with these financial statements.
The Fund's Management Services division develops and disseminates financial management and accounting policies and issues specific directives which maintain standards of accounting and financial management. The Fund maintains systems of financial management and internal control which gives due consideration to costs, benefits and risks. They are designed to provide reasonable assurance that transactions are properly authorized by Parliament, are executed in accordance with prescribed regulations, and are properly recorded to maintain accountability of Government funds and safeguard the assets under the Fund's administration. Financial management and internal control systems are augmented by the maintenance of internal audit programs. The Fund also seeks to assure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility and by communication programs aimed at ensuring that its regulations, policies, standards and managerial authorities are understood throughout the organization.
Management has presented the financial statements to an external auditing firm, which has audited them and has provided an independent opinion that has been appended to these financial statements.
Approved by:
Steve Suttie
Executive Director,
Canadian Pari-Mutuel Agency
Angela Murphy
A/Director General,
Finance and Resource Management Services
(A/Deputy Chief Financial Officer)
Pierre Corriveau
Assistant Deputy Minister,
Corporate Management
(Chief Financial Officer)
May 28, 2018
Ottawa, Ontario
Statement of authority provided (used) (unaudited) for the year ended March 31
(in thousands of dollars)
| 2018 | 2017 | |||
|---|---|---|---|---|
| EstimatesLink to footnote 1 | Actual | EstimatesLink to footnote 1 | Actual | |
| Net results | 4 | 487 | (negative 73) | 890 |
| Items not requiring use of funds | 457 | 457 | 451 | 451 |
| Operating source (use) of funds | 461 | 944 | 378 | 1,341 |
| Items requiring use of funds | ||||
| Net tangible capital assets acquisitions | (negative 1,319) | (negative 663) | (negative 1,373) | (negative 157) |
| Net other assets and liabilities | – | (negative 9) | – | (negative 138) |
| Authority provided (used) | (negative 858) | 272 | (negative 995) | 1,046 |
Table notesThe dash means that the amount is 0 or is rounded to 0. | ||||
Reconciliation of unused authority (unaudited) as at March 31
(in thousands of dollars)
| 2018 | 2017 | |
|---|---|---|
| Debit (credit) balance in the accumulated net charge against the Fund's authority | 10,215 | 10,036 |
| Payables charged against the appropriation at year-end | (negative 702) | (negative 807) |
| Receivables credited to the appropriation at year-end | 72 | 84 |
| Net authority provided (used), end of year | 9,585 | 9,313 |
| Transfer from Treasury Board—Paylist requirements (Vote 30) | 201 | 251 |
| Authority limit | 2,000 | 2,000 |
| Unused authority carried forward | 11,786 | 11,564 |
Independent auditor's report
To the Assistant Deputy Minister, Corporate Management, Agriculture and Agri-Food Canada
We have audited the accompanying financial statements of the Canadian Pari-Mutuel Agency Revolving Fund ("the Fund"), which comprise the statement of financial position as at March 31, 2018, and the statements of operations and net assets, and cash flows for the year then ended, and the related notes, which comprise a summary of significant accounting policies and other explanatory information. These financial statements have been prepared by management of the Fund in accordance with section 8.1 of the Receiver General for Canada Public Accounts Instructions.
Management's responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with section 8.1 of the Receiver General for Canada Public Accounts Instructions, 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
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we 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 Fund'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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Canadian Pari-Mutuel Agency Revolving Fund as at March 31, 2018 and the results of its operations and its cash flows for the year then ended in accordance with section 8.1 of the Receiver General for Canada Public Accounts Instructions.
Basis of accounting and restriction on use
Without modifying our opinion, we draw attention to note 2 to the financial statements, which describes the basis of accounting. The financial statements are prepared to assist the Canadian Pari-Mutuel Agency Revolving Fund to meet the requirements of section 8.1 of the Receiver General for Canada Public Accounts Instructions. As a result, the financial statements may not be suitable for another purpose. Our report is intended solely for the management of the Canadian Pari-Mutuel Agency Revolving Fund and should not be used by parties other than the Canadian Pari-Mutuel Agency Revolving Fund or the Treasury Board of Canada.
PricewaterhouseCoopers LLP
Chartered Professional Accountants,
Licensed Public Accountants
May 28, 2018
Ottawa, Ontario
Statement of financial position as at March 31
(in thousands of dollars)
| 2018 | 2017 | |
|---|---|---|
| Assets | ||
| Financial assets | ||
| Cash in transit | 14 | 25 |
| Accounts receivable (note 3) | 300 | 243 |
| Subtotal | 314 | 268 |
| Non-financial assets | ||
| Prepaid expenses | – | 14 |
| Tangible capital assets (note 4) | 2,125 | 1,919 |
| Total | 2,439 | 2,201 |
| Liabilities | ||
| Accounts payable and accrued liabilities (note 5) | 662 | 768 |
| Vacation pay | 199 | 167 |
| Obligation for employee future benefits | 93 | 89 |
| Subtotal | 954 | 1,024 |
| Net assets (note 6) | 1,485 | 1,177 |
| Total | 2,439 | 2,201 |
|
The dash means that the amount is 0 or is rounded to 0. Contractual obligations (Note 7). Contingent Liabilities (Note 8). Economic dependence (Note 9). The accompanying notes form an integral part of these financial statements. | ||
Approved by:
Pierre Corriveau
Chief Financial Officer
Statement of operations and net assets for the year ended March 31
(in thousands of dollars)
| 2018 | 2017 | |
|---|---|---|
| Revenues | ||
| Pari-mutuel levy | 9,883 | 10,206 |
| Other revenues | 17 | 33 |
| Subtotal | 9,900 | 10,239 |
| Operating expenses | ||
| Salaries and employee benefits | 3,364 | 3,087 |
| Provision for employee future benefits | 4 | 22 |
| Professional and special services | ||
| Drug control | 3,691 | 3,557 |
| Drug research | 213 | 244 |
| Other | 943 | 1,242 |
| Amortization of tangible capital assets | 457 | 451 |
| Transportation and telecommunications | 255 | 287 |
| Utilities, materials and supplies | 175 | 114 |
| Rentals | 169 | 200 |
| Other expenses | 142 | 145 |
| Subtotal | 9,413 | 9,349 |
| Net results | 487 | 890 |
| Net assets, beginning of year | 1,177 | 1,005 |
| Net financial resources used (provided) and change in the accumulated net charge against the Fund's authority, during the year | (negative 179) | (negative 718) |
| Net assets, end of year | 1,485 | 1,177 |
| The accompanying notes are an integral part of these financial statements. | ||
Statement of cash flows for the year ended March 31
(in thousands of dollars)
| 2018 | 2017 | |
|---|---|---|
| Operating activities | ||
| Net results | 487 | 890 |
| Items not requiring use of funds | ||
| Amortization of tangible capital assets | 457 | 451 |
| Subtotal | 944 | 1,341 |
| Variations in Statement of financial position | ||
| Decrease (increase) in cash in transit | 11 | 35 |
| Decrease (increase) in accounts receivable | (negative 57) | 3 |
| Decrease (increase) in prepaid expenses | 14 | (negative 2) |
| Increase (decrease) in accounts payable and accrued liabilities | (negative 106) | (negative 460) |
| Increase (decrease) in vacation pay | 32 | (negative 48) |
| Increase (decrease) in obligation for employee future benefits | 4 | 6 |
| Net financial resources provided (used) by operating activities | 842 | 875 |
| Capital investing activities | ||
| Acquisition of tangible capital assets | (negative 663) | (negative 157) |
| Net financial resources used by capital investing activities | (negative 663) | (negative 157) |
| Net financial resources provided (used) and change in the accumulated net charge against the Fund's authority, during the year | 179 | 718 |
| Accumulated net charge against the Fund's authority, beginning of year | 10,036 | 9,318 |
| Accumulated net charge against the Fund's authority, end of year | 10,215 | 10,036 |
| The accompanying notes are an integral part of these financial statements. | ||
Notes to the financial statements for the year ended March 31, 2018
1. Authority and purpose
The Canadian Pari-Mutuel Agency Revolving Fund (CPMA or "the Fund") was established under Appropriation Act No. 1, 1970, which authorized the operation of the Fund in the current and subsequent fiscal years in accordance with terms and conditions prescribed by the Treasury Board of Canada ("Treasury Board") for the purpose of providing race track supervision in Canada. The Appropriation Act No. 1, 1970 was repealed and replaced by section 2 of the Revolving Funds Act in 1985.
CPMA has a continuing non-lapsing authority from Parliament to make payments out of the Consolidated Revenue Fund for working capital, tangible capital asset acquisitions and temporary financing of accumulated operating deficits, the total of which is not to exceed $2,000,000 at any time.
CPMA's mandate is to regulate and supervise pari-mutuel betting at racetracks across Canada, thereby ensuring that pari-mutuel betting is conducted in a way that is fair to the betting public.
CPMA is not subject to income tax under the provisions of the Income Tax Act.
On March 21, 2012, CPMA received an allotment transfer from the Treasury Board Vote 30 (Paylist Requirements) in the amount of $503,000. This increase in available authority is for the provision to eliminate the accumulation of severance for voluntary termination for CPMA employees who have opted for the immediate cash-out of accumulated severance pay. CPMA is to repay Treasury Board over 10 years, starting in the fiscal year ended March 31, 2013.
2. Significant accounting policies
These financial statements have been prepared in accordance with the reporting requirements of the Receiver General for Canada for revolving funds. The basis of accounting used in these financial statements differs from Canadian generally accepted accounting principles for the public sector because:
- the net debt indicator and the statement of change in net debt are not presented in the financial statements
- expenses are reported by type in the statement of operations and not by function or major program
- budgeted expenses are not disclosed in the statement of operations
- the services received without charge from other government departments and agencies are not reported as expenses
- no liability is recorded for sick leave
The significant accounting policies are as follows:
(a) Revenue recognition
Pari-mutuel levy revenues are generated through a levy of 0.8% applied to every dollar bet at Canadian racetracks and are recognized as bets are made. Other revenues are recognized in the period in which they are earned.
(b) Cash in transit
Cash in transit includes cash and cheques received prior to March 31, but not deposited until the subsequent year.
(c) Accounts receivable
Accounts receivable are stated at amounts expected to be ultimately realized; a provision is made for receivables when a recovery is considered uncertain.
(d) Tangible capital assets
Tangible capital assets are recorded at cost and are amortized on a straight-line basis over their estimated useful lives, as follows:
| Furniture and equipment | 10 to 15 years |
|---|---|
| Electronic data processing equipment | 3 to 5 years |
| Automotive | 8 to 10 years |
| Buildings | 20 to 25 years |
| Assets under construction | Once in service, in accordance with asset class |
| Leasehold improvements | Lesser of the remaining of the occupancy instrument or useful life of the improvement |
(e) Employee future benefits
Pension benefits
Eligible employees of CPMA participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. CPMA's contributions to the Plan are charged to expenses in the year incurred and represent CPMA's total obligation to the Plan. CPMA'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
Eligible employees of CPMA are entitled to severance benefits, calculated based on salary levels in effect at the time of termination as provided for under collective agreements and conditions of employment. The cost of these benefits is recorded in the accounts as the benefits accrue to the employees. The liability relating to the benefits earned by CPMA employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government of Canada as a whole.
(f) Vacation pay
Vacation pay is expensed as the benefits accrue to employees under their respective terms of employment.
(g) Sick leave
Employees are permitted to accumulate unused sick leave. However, such leave entitlements may only be used in the event of an illness. Unused sick leave upon employee termination is not payable to the employee. No amount has been accrued in these financial statements and payments of sick leave benefits are included in current operations as incurred.
(h) Use of estimates
The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods covered by the financial statements. The principal financial statement components, subject to measurement uncertainty, includes the obligation for employee future benefits, accrued liabilities, the allowance for doubtful accounts and the estimated useful lives of tangible capital assets. Actual results could differ from these estimates. These estimates are reviewed annually and as adjustments become necessary, they are recorded in the financial statements in the year in which they become known.
3. Accounts receivable
(in thousands of dollars)
| 2018 | 2017 | |
|---|---|---|
| Government of Canada | 54 | 58 |
| Outside parties | 246 | 185 |
| Total | 300 | 243 |
4. Tangible capital assets
(in thousands of dollars)
| Cost | Opening balance | Acquisitions | Disposals, retirements and write-offs | Closing balance |
|---|---|---|---|---|
| Furniture and equipment | 1,956 | 18 | – | 1,974 |
| Electronic data processing equipment | 2,279 | 645 | (negative 45) | 2,879 |
| Automotive | 160 | – | – | 160 |
| Buildings | 564 | – | – | 564 |
| Land | 98 | – | – | 98 |
| Leasehold improvements | 816 | – | – | 816 |
| Total | 5,873 | 663 | (negative 45) | 6,491 |
| Accumulated amortization | Opening balance | Amortization | Adjustments | Closing balance |
| Furniture and equipment | 1,007 | 146 | – | 1,153 |
| Electronic data processing equipment | 1,538 | 297 | (negative 45) | 1,790 |
| Automotive | 76 | 12 | – | 88 |
| Buildings | 517 | 2 | – | 519 |
| Leasehold improvements | 816 | – | – | 816 |
| Total | 3,954 | 457 | (negative 45) | 4,366 |
| Net book value | 2018 | 2017 | ||
| Furniture and equipment | 821 | 949 | ||
| Electronic data processing equipment | 1,089 | 741 | ||
| Automotive | 72 | 84 | ||
| Buildings | 45 | 47 | ||
| Land | 98 | 98 | ||
| Leasehold improvements | – | – | ||
| Total | 2,125 | 1,919 | ||
|
The dash means that the amount is 0 or is rounded to 0. A blank cell means there is no available data. | ||||
5. Accounts payable and accrued liabilities
(in thousands of dollars)
| 2018 | 2017 | |
|---|---|---|
| Government of Canada | – | 70 |
| Outside parties | 662 | 698 |
| Total accounts payable | 662 | 768 |
|
The dash means that the amount is 0 or is rounded to 0. | ||
6. Net assets
The accumulated surplus is an accumulation of each fiscal year's surplus net of deficits including the absorption of the opening net assets upon establishment of the Fund.
The accumulated net charge against the Fund's authority represents the cumulative receipts and disbursements over the life of the funds.
(in thousands of dollars)
| 2018 | 2017 | |
|---|---|---|
| Accumulated surplus, beginning of year | 11,213 | 10,323 |
| Net results | 487 | 890 |
| Accumulated surplus, end of year | 11,700 | 11,213 |
| Accumulated net charge against the Fund's authority, beginning of year | (negative 10,036) | (negative 9,318) |
| Net financial resources provided (used) and change in the accumulated net charge against the Fund's authority during the year | (negative 179) | (negative 718) |
| Accumulated net charge against the Fund's authority, end of year | (negative 10,215) | (negative 10,036) |
| Net assets, end of year | 1,485 | 1,177 |
7. Contractual obligations
CPMA leases its premises under occupancy instruments. An occupancy instrument is a formal agreement between CPMA and Public Services and Procurement Canada recording the terms and conditions that govern the provision and occupancy of the accommodation. Expected future payments are as follows.
(in thousands of dollars)
| 2019 | 161 |
|---|---|
| 2020 | 162 |
| 2021 | 28 |
| 2022 | 5 |
| 2023 and thereafter | – |
|
The dash means that the amount is 0 or is rounded to 0. | |
8. Contingent liabilities
In the normal course of its operations, the CPMA becomes involved in various legal actions. Some of these potential liabilities 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 is recorded in the financial statements.
9. Economic dependence
CPMA is funded solely by a federal levy on pari-mutuel betting in Canada on horse racing, a significant portion of which is generated by the largest racetrack in Canada—The Woodbine Racetrack ("Woodbine") in Toronto, Ontario.
Woodbine generated $6,513,246 (2017—$6,685,176) or 66% (2017—66%) of CPMA's total pari-mutuel levy for the year ended March 31, 2018. As at March 31, 2018, $115,176 (2017—$70,379) or 47% (2017—38%) of CPMA's Accounts receivable—Outside parties were owed from this organization.