Canadian Pari-Mutuel Agency Revolving Fund

Public Accounts of Canada 2020 Volume III—Top of the page Navigation

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 Policy on Special Revenue Spending 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 department's Departmental Results Report is consistent with that in these financial statements.

The Fund's Corporate 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:

Lisa Foss
Executive Director,
Canadian Pari-Mutuel Agency

Angela Murphy
Director General,
Finance and Resource Management Services
(Deputy Chief Financial Officer)

Christine Walker
Assistant Deputy Minister,
Corporate Management
(Chief Financial Officer)

June 26, 2020
Ottawa, Ontario

Statement of authority provided (used) (unaudited) for the year ended March 31

(in thousands of dollars)

  2020 2019
EstimatesLink to footnote 1 Actual EstimatesLink to footnote 1 Actual
Net results (negative 555) (negative 332) 92 662
Items not requiring use of funds 309 309 316 316
Operating source (use) of funds (negative 246) (negative 23) 408 978
Items requiring use of funds
Net tangible capital assets acquisitions (negative 784) (negative 284) (negative 923) (negative 577)
Net other assets and liabilities – 81 – (negative 84)
Authority provided (used) (negative 1,030) (negative 226) (negative 515) 317

Reconciliation of unused authority (unaudited) as at March 31

(in thousands of dollars)

  2020 2019
Debit (credit) balance in the accumulated net charge against the Fund's authority 10,399 10,540
Payables charged against the appropriation at year-end (negative 723) (negative 705)
Receivables credited to the appropriation at year-end 1 67
Net authority provided (used), end of year 9,677 9,902
Transfer from Treasury Board—Paylist requirements (Vote 30) 101 151
Authority limit 2,000 2,000
Unused authority carried forward 11,778 12,053

Independent auditor's report

To the Assistant Deputy Minister, Corporate Management (Chief Financial Officer), Agriculture and Agri-Food Canada

Our opinion

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Canadian Pari-Mutuel Agency (CPMA Revolving Fund) as at March 31, 2020 and its financial performance and its cash flows for the year then ended in accordance with Section 1 of the Receiver General for Canada Instructions for Volume III of the Public Accounts of Canada.

What we have audited

The CPMA Revolving Fund's financial statements comprise:

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements" section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the CPMA Revolving Fund in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

Emphasis of matter – basis of accounting and restriction on use

We draw attention to note 2 to the financial statements, which describes the basis of accounting. The financial statements are prepared to assist the CPMA Revolving Fund to meet the requirements of Section 1 of the Receiver General for Canada Instructions for Volume III of the Public Accounts of Canada. As a result, the financial statements may not be suitable for another purpose. Our report is intended solely for the management of the CPMA Revolving Fund and should not be used by parties other than the CPMA Revolving Fund, Agriculture and Agri-Food Canada, the Treasury Board of Canada and the Receiver General for Canada. Our opinion is not modified in respect to this matter.

Responsibilities of management and those charged with governance for the financial statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Section 1 of the Receiver General for Canada Instructions for Volume III of the Public Accounts of Canada; 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.

In preparing the financial statements, management is responsible for assessing the CPMA Revolving Fund's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the CPMA Revolving Fund or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the CPMA Revolving Fund's financial reporting process.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

PricewaterhouseCoopers LLP
Chartered Professional Accountants,
Licensed Public Accountants

June 25, 2020
Ottawa, Ontario

Statement of financial position as at March 31

(in thousands of dollars)

  2020 2019
Assets
Financial assets
Cash in transit 25 18
Accounts receivable (note 3) 220 363
Subtotal 245 381
Non-financial assets
Tangible capital assets (note 4) 2,361 2,386
Total 2,606 2,767
Liabilities
Accounts payable and accrued liabilities (note 5) 723 703
Vacation pay 199 189
Obligation for employee future benefits 53 53
Subtotal 975 945
Net assets (note 6) 1,631 1,822
Total 2,606 2,767

Approved by:

Christine Walker
Chief Financial Officer

Statement of operations and net assets for the year ended March 31

(in thousands of dollars)

  2020 2019
Revenues
Pari-mutuel levy 9,123 9,628
Other revenues 4 21
Subtotal 9,127 9,649
Operating expenses
Salaries and employee benefits 3,438 3,073
Provision for employee future benefits – (negative 6)
Professional and special services
Drug control 3,696 3,685
Drug research 229 250
Other 978 804
Utilities, materials and supplies 285 353
Amortization of tangible capital assets 253 316
Transportation and telecommunications 253 273
Rentals 174 171
Loss on retirement of tangible capital assets 56 –
Information – 8
Other expenses 97 60
Subtotal 9,459 8,987
Net results (negative 332) 662
Net assets, beginning of year 1,822 1,485
Net financial resources used (provided) and change in the accumulated net charge against the Fund's authority, during the year 141 (negative 325)
Net assets, end of year 1,631 1,822

Statement of cash flows for the year ended March 31

(in thousands of dollars)

  2020 2019
Operating activities
Net results (negative 332) 662
Items not requiring use of funds
Amortization of tangible capital assets 253 316
Loss on retirement of tangible capital assets 56 –
Subtotal (negative 23) 978
Variations in Statement of financial position
Increase in cash in transit (negative 7) (negative 4)
Decrease (increase) in accounts receivable 143 (negative 63)
Increase in accounts payable and accrued liabilities 20 41
Increase (decrease) in vacation pay 10 (negative 10)
Decrease in obligation for employee future benefits – (negative 40)
Net financial resources provided by operating activities 143 902
Capital investing activities
Acquisition of tangible capital assets (negative 284) (negative 577)
Net financial resources used by capital investing activities (negative 284) (negative 577)
Net financial resources provided (used) and change in the accumulated net charge against the Fund's authority, during the year (negative 141) 325
Accumulated net charge against the Fund's authority, beginning of year 10,540 10,215
Accumulated net charge against the Fund's authority, end of year 10,399 10,540

Notes to the financial statements for the year ended March 31, 2020

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

The 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 public sector accounting standards because:

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
Computer hardware and software 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 the 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. The 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)

  2020 2019
Government of Canada 17 43
Outside parties 203 320
Total 220 363

4. Tangible capital assets

(in thousands of dollars)

Cost Opening balance Acquisitions Writeoffs Closing balance
Furniture and equipment 1,703 – – 1,703
Computer hardware and software 3,440 274 (926) 2,788
Automotive 160 – – 160
Buildings 564 10 – 574
Land 98 – – 98
Leasehold improvements 816 – – 816
Total 6,781 284 (926) 6,139
Accumulated amortization Opening balance Amortization Writeoffs Closing balance
Furniture and equipment 1,011 106 – 1,117
Computer hardware and software 1,947 133 (870) 1,210
Automotive 100 12 – 112
Buildings 521 2 – 523
Leasehold improvements 816 – – 816
Total 4,395 253 (870) 3,778
Net book value 2020 2019
Furniture and equipment 586 692
Computer hardware and software 1,578 1,493
Automotive 48 60
Buildings 51 43
Land 98 98
Leasehold improvements – –
Total 2,361 2,386
The dash means that the amount is 0 or is rounded to 0.

5. Accounts payable and accrued liabilities

(in thousands of dollars)

  2020 2019
Government of Canada 199 75
Outside parties 524 628
Total 723 703

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)

  2020 2019
Accumulated surplus, beginning of year 12,362 11,700
Net results (negative 332) 662
Accumulated surplus, end of year 12,030 12,362
Accumulated net charge against the Fund's authority, beginning of year (negative 10,540) (negative 10,215)
Net financial resources used (provided) and change in the accumulated net charge against the Fund's authority during the year 141 (negative 325)
Accumulated net charge against the Fund's authority, end of year (negative 10,399) (negative 10,540)
Net assets, end of year 1,631 1,822

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. In addition, the CPMA has contractual obligations with respect to a supplier contract for services. Expected future payments arising from contractual obligations are as follows.

(in thousands of dollars)

2021 2,328
2022 2,183
2023 2,070
2024 –
2025 and thereafter –

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 $6,148,390 (2019—$6,347,365) or 67% (2019—66%) of CPMA's total pari-mutuel levy for the year ended March 31, 2020. As at March 31, 2020, $102,260 (2019—$118,744) or 50% (2019—37%) of CPMA's Accounts receivable—Outside parties were owed from this organization.

10. COVID-19 and subsequent events

As a result of COVID-19, the Canadian provincial governments enforced strict rules which resulted in the closure of racetracks across Canada, resulting in a significant reduction in pari-mutuel betting and revenues for the CPMA. While the closures commenced in the latter half of March 2020, there was little impact to the pari-mutuel levy revenue for the 2019-20 fiscal year as only half a month was affected. The CPMA has considered the impact of this event on the valuation of its assets and has determined that assets are appropriately valued and that no impairments are required. Additionally, there is no going concern issue as the CPMA is a federal government revolving fund.

As the racetrack closures continue in the 2020-21 fiscal year, the CPMA has experienced a significant decrease in pari-mutuel levy revenues as a result of reduced betting by the public. However, the CPMA has the ability to reduce operating costs around its professional and special services due to track closures. Additionally, the CPMA may access its accumulated surplus held with Agriculture and Agri-Food Canada if needed to support ongoing operations

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