Future-oriented Financial Statements (Unaudited) for fiscal year 2013-2014 ending March 31, 2014

Table of Contents

• Statement of Management Responsibility Including Internal Control Over Financial Reporting
• Future-oriented Statement of Financial Position (Unaudited)
• Future-oriented Statement of Operations and Departmental Net Financial Position (Unaudited)
• Future-oriented Statement of Change in Departmental Net Debt (Unaudited)
• Future-oriented Statement of Change in Cash Flows (Unaudited)
• Notes to the Future-oriented Financial Statements (Unaudited)
  • Note 1. Authority and Objectives
  • Note 2. Significant Assumptions
  • Note 3. Variations and Changes to the Forecast Financial Information
  • Note 4. Summary of Significant Accounting Policies
  • Note 5. Parliamentary Appropriations
  • Note 6. Accounts payable and accrued liabilities
  • Note 7. Employee future benefits
  • Note 8. Accounts receivable and advances
  • Note 9. Tangible Capital Assets
  • Note 10. Contractual obligations
  • Note 11. Related party transactions
  • Note 12. Segmented information
  • Note 13. Comparative information

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Departmental management is responsible for these future-oriented statements, including responsibility for the appropriateness of the assumptions on which these statements were prepared. These statements are based on the best information available and the assumptions adopted as at December 17, 2012 and reflect the plans described in the Report on Plans and Priorities.

These future-oriented statements have not been audited.

Signed at Ottawa, ON
March 18, 2013

Future-oriented Statement of Financial Position (Unaudited)
For fiscal year 2013-2014 ending March 31, 2014

(in thousands of dollars)

	2013 Estimated Results	2014 Planned Results
Liabilities
Accounts payable and accrued liabilities (Note 6. Accounts payable and accrued liabilities)	281,063	281,182
Vacation pay and compensatory leave	892	892
Employee future benefits (Note 7. Employee future benefits)	1,751	1,270
Total liabilities	283,706	283,344
Financial assets
Due from Consolidated Revenue Fund	219,062	238,181
Accounts receivable and advances (Note 8. Accounts receivable and advances)	62,001	43,001
Total financial assets	281,063	281,182
Departmental net debt/financial asset	2,643	2,162
Non-Financial assets
Tangible capital assets (Note 9. Tangible capital assets)	6,581	5,649
Total non-financial assets	6,581	5,649
Departmental net financial position	3,938	3,487

Contractual obligations (Note 10. Contractual obligations)

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

Signed at Ottawa, ON
March 18, 2013

Future-oriented Statement of Operations and Departmental Net Financial Position (Unaudited)
For fiscal year 2013-2014 ending March 31, 2014
(in thousands of dollars)

	2013 Estimated Results	2014 Planned Results
Expenses
Provinces, territories and municipalities have federal financial support for their infrastructure priorities	2,416,284	2,239,637
Funding for quality, cost-effective public infrastructure that meets the needs of Canadians in a competitive economy, a cleaner environment and liveable communities is provided	1,945,966	1,649,072
Internal Services	32,509	37,492
Total expenses	4,394,759	3,926,201
Net cost of operations before government funding and transfers	4,394,759	3,926,201
Government funding and transfers
Net cash provided by Government	4,689,565	3,900,586
Change in due from Consolidated Revenue Fund	(325,800)	19,119
Services provided without charge by other government departments (Note 11. Related party transactions)	2,742	6,045
Net cost of operations after government funding and transfers	28,252	451
Departmental net financial position – Beginning of year	32,190	3,938
Departmental net financial position – End of year	3,938	3,487

Segmented Information (Note 12. Segmented information)

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

Future-oriented Statement of Change in Departmental Net Debt (Unaudited)
For fiscal year 2013-2014 ending March 31, 2014
(in thousands of dollars)

	2013 Estimated Results	2014 Planned Results
Net cost of operations after government funding transfers	28,252	451
Change due to tangible capital assets
Acquisition of tangible capital assets	2,200	400
Amortization of tangible capital assets	(787)	(1,332)
Total change due to tangible capital assets	1,413	(932)
Net increase (decrease) in departmental net debt	29,665	(481)
Departmental net debt/financial asset – Beginning of year	(27,022)	2,643
Departmental net/debt financial asset – End of year	2,643	2,162

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

Future-oriented Statement of Cash Flows (Unaudited)
For fiscal year 2013-2014 ending March 31, 2014

(in thousands of dollars)

	2013 Estimated Results	2014 Planned Results
Operating activities:
Net cost of operations before government funding and transfers	4,394,759	3,926,201
Non-cash items:
Amortization of tangible capital assets	(787)	(1,332)
Services provided without charge by other government departments (Note 11. Related party transactions)	(2,742)	(6,045)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances	(116,955)	(19,000)
Increase (decrease) in accounts payable and accrued liabilities	410,186	(119)
Increase (decrease) in vacation pay and compensatory leave	411	0
Increase (decrease) in employee future benefits	2,493	481
Cash used in operating activities	4,687,365	3,900,186
Capital investment activities:
Acquisitions of tangible capital assets (Note 9. Tangible capital assets)	2,200	400
Cash used in capital investing activities	2,200	400
Net cash provided by Government of Canada	4,689,565	3,900,586

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

Notes to the Future-oriented Financial Statements (Unaudited)

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.

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 was established to lead the Government of Canada's effort to address infrastructure challenges through strategic investments in provincial, territorial and municipal assets, engagement in key partnerships, and the development and implementation of sound policies. Order in Council 2004-325 authorizes the Minister to enter into transfer payment agreements and contracts related to infrastructure initiatives in Canada.

INFC delivers its mandate under two strategic outcomes and internal services. INFC outcomes are 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 liveable 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.

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 INFC, not those provided specifically to a program.

2. Significant Assumptions

The future-oriented financial statements have been prepared on the basis of the Government's priorities and the plans of the department as described in the Report on Plans and Priorities. The future oriented financial statements use the accrual basis of accounting whereas the Report on Plans and Priorities uses the cash basis of accounting. The different accounting methods used to compile the financial figures explain why there are variances in dollar amounts for each program.

The future-oriented financial statements have been prepared using the following assumptions:

1. On the basis of government policies, government priorities, and external environment at the time the future-oriented financial information was finalized.
2. According to the requirements of Treasury Board Accounting Policies which are based on Canadian generally accepted accounting principles for the public sector.
3. Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience adjusted for changes in the approach to the forecasting methodology for contribution programs. The general historical pattern is expected to continue.
4. Estimated year-end information for 2013 is used as the opening position for the 2014 forecasts.

These assumptions are adopted as at December 17, 2012.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for 2012-13 and for 2013-14, 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 December 17, 2012.

4. Summary of 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.

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 Departmental Net Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3. Variations and Changes to the Forecast Financial Information provides a reconciliation between the bases of reporting. The planned results amounts in the Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2013-14 Report on Plans and Priorities.
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 or 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 without further appropriations to discharge its liabilities.
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 an accrual basis:
   • Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program.
   • 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:
   • 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. INFC'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 entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. 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 receivable and advances (including prepaid expenses) 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:

Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.

1. 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 authorities

INFC 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, INFC 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:

a) Reconciliation of net cost of operations to current year authorities used
(in thousands of dollars)

	2013 Estimated Results	2014 Planned Results
Net cost of operations before government funding and transfers	4,394,759	3,926,201
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(787)	(1,332)
Services provided without charge by other government departments	(2,472)	(6,045)
Increase (Decrease) in vacation pay and leave	411	0
Increase (Decrease) in employee future benefits	2,493	481
Refund of previous year's expenditures	55,000	5,000
Total items affecting net cost of operations but not affecting authorities	4,449,134	3,924,305
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets	2,200	400
Change in advances	(8)	0
Total items affecting net cost of operations but not affecting authorities	2,192	400
Current year authorities used	4,451,326	3,924,705

b) Authorities provided and used
(in thousands of dollars)

	2013 Estimated Results	2014 Planned Results
Authorities provided
Vote 40 – Operating Expenditures	53,160	42,160
Vote 45 – Contributions	5,284,201	3,877,559
Statutory Amounts
Employee Benefit Plan	4,889	4,986
Green Infrastructure Fund	99,418	0
Less:
Authorities available for future years
Lapsed: Operating	(6,259)	0
Lapsed: Contributions	(984,083)	0
Current year authorities used	4,451,326	3,924,705

6. Accounts payable and accrued liabilities
(in thousands of dollars)

	2013 Estimated Results	2014 Planned Results
Accounts Payable – Other government departments and agencies	387	387
Accounts Payable – External parties	280,461	280,461
Total accounts payable	280,848	280,848
Accrued Liabilities	215	334
Total accounts payable and accrued liabilities	281,063	281,182

7. Employee future benefits

1. Pension benefits:

   INFC's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. 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/Québec Pension Plans benefits and they are indexed to inflation.

   Both the employees and INFC contribute to the cost of the Plan. In each of 2012-13 and 2013-2014 expense amounts are $3,550,742 ($3,672,649 in 2011-12), which represents approximately 1.4 times (1.8 in 2011-12) the contributions by employees.

   INFC'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.

2. Severance benefits:

   INFC 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. Information about the severance benefits, measured as at March 31, is as follows:

   As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given 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. These changes have been reflected in the calculation of the outstanding severance benefit obligation.
   (in thousands of dollars)

   	2013 Estimated Results	2014 Planned Results
   Accrued benefit obligation – Beginning of year	4,244	1,751
   Expense for the year	(1,809)	(133)
   Benefits paid during year	(684)	(348)
   Accrued benefit obligation – End of year	1,751	1,270

8. Accounts receivable and advances

(in thousands of dollars)

	2013 Estimated Results	2014 Planned Results
Receivables – Other government departments and agencies	62,000	43,000
Advances – Employees	1	1
Total accounts receivable and advances	62,001	43,001

9. Tangible Capital Assets
(in thousands of dollars)

View Tangible Capital Assets (in thousands of dollars)

10. Contractual obligations

View Contractual Obligations (in thousands of dollars)

11. Related party transactions

INFC is related as a result of common ownership to all Government departments, agencies, and Crown corporations. INFC enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, INFC received common services which were obtained without charge from other Government departments as disclosed below.

a) Common services provided without charge by other government departments

During the year, INFC received services without charge from certain common service organizations, related to accommodation and the employer's contribution to the health and dental insurance plans. These services provided without charge have been recorded in INFC's Statement of Operations and Departmental Net Financial Position as follows:
(in thousands of dollars)

	2013 Estimated Results	2014 Planned Results
Employer's contribution to the health and dental insurance plans	2,633	2,721
Accommodation	109	3,324
Total	2,742	6,045

The Government has centralized some of its administrative activities for efficiency and 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 Public Works and Government Services Canada, are not included as an expense in INFC's Statement of Operations and Departmental Net Financial Position.

b) Other transactions with related parties
(in thousands of dollars)

	2013 Estimated Results	2014 Planned Results
Accounts receivable – Other government departments and agencies	178,947	57,638
Accounts payable – Other government departments and agencies	247	527
Expenses – Other government departments and agencies	14,746	18,597

12. Segmented information

View Segmented Information (in thousands of dollars)

13. Comparative information

During 2012, amendments were made to Treasury Board Accounting Standard 1.2—Departmental and Agency Financial Statements to improve financial reporting by government departments and agencies. The amendments were effective for financial reporting of fiscal years ending March 31, 2012, and subsequent years.