Future-oriented Financial Statements (Unaudited)
For Fiscal Year 2011-2012 Ending March 31, 2012

Table of Contents

Statement of Management Responsibility

Departmental management is responsible for this future-oriented statement of operations, including responsibility for the appropriateness of the assumptions on which this statement is prepared. This statement is based on the best information available and the assumptions adopted as at March 31, 2011 and reflect the plans described in the Report on Plans and Priorities.

This Future-oriented Statement of Operations has not been audited.

Original signed by:

Yaprak Baltacıoğlu,
Deputy Head

Date

Su Dazé,
Chief Financial Officer

Date

Signed at Ottawa, ON
Date signed

Statement of Operations (Unaudited)
For Fiscal Year 2011-2012 Ending March 31, 2012

(in thousands of dollars)
  Estimated Results
2011		 Forecast
2012
Expenses    
Infrastructure Stimulus Fund 2,407,069 793,400
Gas Tax Fund 1,752,031 1,955,952
Provincial-Territorial Infrastructure Base Fund 437,394 629,883
Building Canada Fund - Major Infrastructure Component 405,133 1,256,873
Canada Strategic Infrastructure Fund 330,954 431,443
Building Canada Fund - Communities Component Top-Up 303,606 160,829
Building Canada Fund - Communities Component 224,251 302,703
Municipal Rural Infrastructure Fund 146,396 129,517
Border Infrastructure Fund 66,114 47,204
Internal Services 63,480 48,713
Green Infrastructure Fund 34,651 81,346
G8 4,571 0
Economic Analysis and Research 1,495 1,700
National Trails Coalition (633) 0
Total Expenses 6,176,782 5,839,563
Revenues 7 0
Net Cost of Operations 6,176,775 5,839,563

Information for the year ended March 31, 2011 includes actual amounts from April 1, 2010 to March 31, 2011.

Segmented information (Note 13. Segmented information)

The accompanying notes form an integral part of these future-oriented financial statements.

Notes to the Future-oriented Financial Statements

1. Authority and Objectives

The Office of Infrastructure of Canada (INFC) was created in 2002 as a separate organization under Schedule I.1 of the Financial Administration Act. The applied name for this organization is Infrastructure Canada.

INFC was established to lead the Government of Canada's effort to address infrastructure challenges. Order in Council 2004-325 authorizes the Minister to enter into transfer payment agreements and contracts related to infrastructure initiatives in Canada. One of the funding programs managed by the Office is the Canada Strategic Infrastructure Fund, which operates under the authority of its own act, the Canada Strategic Infrastructure Fund Act, resulting from the Budget Implementation Act, 2001.

The department is funded through annual appropriations received from the Parliament of Canada and is not taxable under the provisions of the Income Tax Act. INFC reports to the Minister of Transport, Infrastructure and Communities.

INFC is responsible for federal efforts to enhance Canada's public infrastructure through strategic investments in provincial, territorial and municipal assets, engagement in key partnerships, and the development and implementation of sound policies. It delivers its mandate under three strategic objectives and internal services as described below.

Provinces, territories and municipalities have federal financial support for their infrastructure priorities: Provides federal transfers to provincial, territorial and municipal governments for their infrastructure priorities in order to help maintain a high level of quality core public infrastructure across the country. The program activities under this strategic outcome are: Provincial-Territorial Infrastructure Base Fund and Gas Tax Fund.

Funding for quality, cost-effective public infrastructure that meets the needs of Canadians in a competitive economy, a cleaner environment and livable communities is provided: Provides targeted project-specific investments to address federal/provincial priorities in both large and small communities as well as large strategic investments of national and regional benefit. The program activities under this strategic outcome are: Building Canada Fund-Communities Component, Building Canada Fund-Major Infrastructure Component, Green Infrastructure Fund, Canada Strategic Infrastructure Fund, Municipal Rural Infrastructure Fund, Border Infrastructure Fund and Economic Analysis and Research.

Construction-ready infrastructure projects are provided with federal funding support: Provides timely, temporary and targeted funding to construction-ready projects to support short-term economic stimulus under the Economic Action Plan. The program activities under this strategic outcome are: Infrastructure Stimulus Fund, Building Canada Fund-Communities Component Top-Up, National Trails Coalition and Support for the G8 Summit 2010.

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

2. Significant Assumptions

The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of the department as described in the Report on Plans and Priorities.

The main assumptions are as follows:

  1. The department's activities will remain substantially the same as for the previous year but will include managing the close-out of the Economic Action Plan programs.
  2. Expenses including the determination of amounts internal and external to the government, are based on historical experience, known information, and expert opinions of people with appropriate experience in the department's activities. Where relevant, the general historical pattern is expected to continue. The Government of Canada has announced that the construction deadline for projects under the Infrastructure Stimulus Fund and the Building Canada Fund Communities Component Top-Up is being extended until October 31, 2011. Although the majority of construction is expected to be completed by the original March 31, 2011 deadline, the extension is intended to allow for completion of any remaining projects. As a result of the extension to October 31, 2011 for projects under the Economic Action Plan, funding will be transferred from 2010-11 to 2011-12. This transfer of funding will be requested through 2011-12 Supplementary Estimates.
  3. Estimated year end information for 2010-11 is used as the opening position for the 2011-12 forecasts.

These assumptions are adopted as at August 19, 2011.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for 2010-11 and for 2011-12, the actual results achieved are likely to vary from the forecast information presented; this variation could be material.

In preparing these financial statements INFC has made estimates and assumptions concerning the future. These estimates and judgments may differ from the subsequent actual results. Estimates and judgments are continually evaluated and are based on historical experience and other methodologies, including expectations of future events that are believed to be reasonable under the circumstances.

These statements are based on appropriations and supplementary estimates approved or submitted as at March 31, 2011, with the Economic Action Plan (EAP) funding amounts identified in the budget.

4. Summary of Significant Accounting Policies

The financial statements have been prepared in accordance with the Treasury Board accounting policies stated below, which are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

Significant accounting policies are as follows:

  1. Parliamentary authorities – INFC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to INFC 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 the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting.
  2. Net Cash Provided by Government – INFC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by INFC is deposited to the CRF and all cash disbursements made by INFC are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the Government.
  3. Amounts due from/to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that INFC is entitled to draw from the CRF to discharge its liabilities without further appropriations.
  4. Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.
  5. Expenses – Expenses are recorded on the accrual basis:
    • contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement, provided that the transfer is authorized and a reasonable estimate can be made;
    • vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment;
    • services provided without charge by other government departments for accommodation, and employer contributions to the health and dental insurance plans are recorded as operating expenses at their estimated cost.
  6. Employee future benefits:
    1. Pension benefits: Eligible employees participate in the Public Service Pension Plan (Public Service Superannuation Act), a multi-employer plan administered by the Government. INFC's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require INFC to make contributions for any actuarial deficiencies of the Plan.
    2. Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
  7. Accounts receivables and advances are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain.
  8. Tangible capital assets – All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. INFC does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:
    Asset class Amortization period
    Informatics Hardware 5 to 10 years
    Informatics Software – Purchased 3 years
    Informatics Software – Developed 7 years
    Leasehold improvements period of lease
  9. 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 liability for employee severance 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.

5. Parliamentary Appropriations

INFC receives its funding through expenditure authorities provided by Parliament. Items recognized in the statement of operations may be funded through Parliamentary authorities in prior, current or future years. Accordingly, INFC has different net results of operations for the year on a government funding basis (cash) than on an accrual accounting basis. The differences are reconciled in the following tables:

Authorities requested
For Fiscal Year 2011-2012 Ending March 31, 2012

(in thousands of dollars)
  Estimated Results
2011		 Forecast
2012
Authorities requested    
Vote 55 (2010/11) Vote 50 (2011/12) 64,892 61,813
Vote 60 (2010/11) Vote 55 (2011/12) 7,280,064 5,392,162
Statuary 1,878,229 385,588
Forecast authorities available 9,223,185 5,839,563

Forecast authorities requested for the year ending March 31, 2012 are the planned spending amounts presented in the 2011-12 Report on Plans and Priorities. Estimated authorities requested for the year ending March 31, 2011 include amounts presented in the 2010-11 Main Estimates and Supplementary Estimates (A), (B), and amounts allocated at year-end from Treasury Board central votes.

Reconciliation of net cost of operations to requested authorities
For Fiscal Year 2011-2012 Ending March 31, 2012

(in thousands of dollars)
  Estimated Results
2011		 Forecast
2012
Net cost of operations 6,176,775 5,843,446
Adjustments for items affecting net cost of operations but not affecting authorities:    
Services provided without charge (3,308) (2,862)
Amortization of tangible capital assets (7,957) (3,640)
Increase in vacation pay and comp leave (1,213) (443)
Increase in employee future benefits (1,390) (891)
Refund of previous year's expenditures 101,325 454
Bad debt expense (3) (11)
Other charges not charged to the vote 40 0
Revenue not available for spending 7 0
Total for Adjustments for items affecting net cost of operations but not affecting authorities 6,264,276 5,836,053
Adjustments for items not affecting net cost of operations but affecting authorities    
Acquisition of tangible capital assets 7,065 3,510
Decrease (increase) of advances (19,550) 0
Total for Adjustments for items not affecting net cost of operations but affecting authorities (12,485) 3,510
Anticipated current year authorities used 6,251,791 5,839,563

Appropriations provided and used
For Fiscal Year 2011-2012 Ending March 31, 2012

(in thousands of dollars)
  Estimated Results
2011		 Forecast
2012
Vote 55 (2010/11) Vote 50 (2011/2012) 64,892 61,813
Vote 60 (2010/11) Vote 55 (2011/2012) 7,280,064 5,392,162
Statutory 1,878,229 385,588
Total Sum of Vote 55 and Vote 50, Vote 60 and Vote 55, and Statutory 9,223,185 5,839,563
Less: Lapsed Appropriations    
Operations (1,457)  
Contributions (2,969,937)  
Total Sum of Vote 55 and Vote 50, Vote 60 and Vote 55, Statutory and Less Lapsed Appropriations 6,251,791 5,839,563

6. Accounts receivable and advances

(in thousands of dollars)
  Estimated Results
2011		 Forecast
2012
Receivables from Other Government Departments and Agencies 57,638 132,424
Advances to external parties 4,996 -
Employee advances 1 -
Total Sum of Receivables from Other Government Departments and Agencies, Advances to external parties and Employee advances 62,635 132,424

7. Accounts payable and accrued liabilities

(in thousands of dollars)

  Estimated Results
2011		 Forecast
2012
Accounts payable to Other Government Departments and Agencies 527 561
Accounts payable to external parties 1,773,617 196,102
Total Sum for Accounts payable to Other Government Departments and Agencies and Accounts payable to external parties 1,774,144 196,663
Accrued liabilities 105 105
Total Sum for Accounts payable to Other Government Departments and Agencies, Accounts payable to external parties and Accrued liabilities 1,774,249 196,768

8. Tangible capital assets

Click here to see the Tangible Capital Assets (in thousands of dollars)

9. Employee benefits

  1. Pension benefits:

    INFC's 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 percent 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 they are indexed to inflation.

    Both the employees and the department contribute to the cost of the Plan. The forecast expenses are $3,620 in 2011 and $3,210 in 2012.

    INFC's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses of deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

  2. Severance benefits:

    INFC provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, estimated as at the date of these statements, is as follows:

    (in thousands of dollars)
      Estimated Results
    2011    		 Forecast
    2012
    Accrued benefit obligation, beginning of year 5,629 7,019
    Expense for the year 1,530 891
    Expected benefits payments during the year (140) 0
    Accrued benefit obligation, end of year 7,019 7,910

10. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. They are grouped into two categories as follows:

(a) Contaminated Sites

No claims have been made against the department in the normal course of operations at this date.

(b) Claims and litigation

No claims have been made against the department in the normal course of operations at this date.

11. Contractual obligations

Click here to see the Contractual Obligations (in thousands of dollars)

12. Related party transactions

The department is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The department enters into transactions with these entities in the normal course of business and on normal trade terms.

Common services provided without charge by other government departments

During the year the department is forecasted to receive without charge from other departments, accommodation, legal fees, workers' compensation coverage and the employer's contribution to the health and dental insurance plans. These services without charge have been recognized in the department's future-oriented Statement of Operations as follows:

(in thousands of dollars)
  Estimated Results
2011		 Forecast
2012
Employer contribution to health and dental ins. plan 2,617 2,412
Accommodation 691 450
Total 3,308 2,862

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General, are not included as an expense in the department's Statement of Operations.

13. Segmented information

Click here to see the Segmented Information (in thousands of dollars)