Financial Statements (Unaudited) For the Year Ended March 31, 2011

Table of Contents

Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2011 and all information contained in these statements rests with the Office of Infrastructure Canada's management. These financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment and gives due consideration to materiality. To fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of INFC's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Office of Infrastructure Canada's Departmental Performance Report is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the Office of Infrastructure Canada.

Management has established an external Departmental Audit Committee (DAC) that provides leadership oversight and advice in the spirit of the Treasury Board policy on Internal Audit and Directive on Departmental Audit Committees. The committee serves both Transport Canada and the Office of Infrastructure of Canada and includes four external members, one of whom serves as Chair. The DAC is responsible for exercising active oversight of core areas of departmental control and accountability which includes reviewing the departmental financial statements and all significant accounting estimates and judgments therein. DAC has reviewed these financial statements.

The financial statements of the Office of Infrastructure Canada have not been audited.

Original signed by:

Yaprak Baltacıoğlu,
Deputy Head

Date

David Miller,
Chief Financial Officer

Date

Signed at Ottawa, ON, August 31, 2011

Statement of Financial Position (Unaudited)
At March 31, 2011
(in thousands of dollars)

  2011 Restated (Note Note 11. Adoption of new accounting policies and Note 13. Restatement of prior-year Financial Statement) 2010
Assets    
Financial Assets    
Due from Consolidated Revenue Fund 1,716,604 437,162
Accounts receivable and advances (note 4. Accounts receivable and advances) 62,635 116,477
Non-financial assets    
Tangible capital assets (note 5. Tangible Capital Assets) 5,881 6,773
Total assets 1,785,120 560,412
Liabilities    
Accounts payable and accrued liabilities(note 6. Accounts payable and accrued liabilities) 1,774,249 529,094
Vacation pay and compensatory leave 2,430 1,217
Employee future benefits (note 7. Employee Benefits) 7,019 5,629
Total Liabilities 1,783,698 535,940
Equity of Canada 1,422 24,472

Contractual obligations (Note 8. Contractual Obligations)
The accompanying notes form an integral part of these financial statements.

Statement of Operations (Unaudited)
For the Year Ended March 31, 2011
(in thousands of dollars)

  2011 2010
Expenses    
Infrastructure Stimulus Fund 2,407,069 468,749
Gas Tax Fund 1,752,031 1,873,977
Provincial-Territorial Infrastructure Base Fund 437,394 672,046
Building Canada Fund - Major Infrastructure Component 405,133 196,581
Canada Strategic Infrastructure Fund 330,954 416,155
Building Canada Fund - Communities Component Top-Up 303,606 30,793
Building Canada Fund - Communities Component 224,521 101,153
Municipal Rural Infrastructure Fund 146,396 221,439
Border Infrastructure Fund 66,114 80,796
Internal Services 63,480 57,907
Green Infrastructure Fund 34,651 5,801
G8 4,571 40,676
Economic Analysis and Research 1,495 4,228
National Trails Coalition & CSA (633) 25,107
Total expenses 6,176,782 4,195,408
Revenues 7 8
Net Cost of Operations 6,176,775 4,195,400

Segmented Information (note 10)
The accompanying notes form an integral part of these financial statements.

Statement of Equity of Canada (Unaudited)
At March 31, 2011
(in thousands of dollars)

  2011 Restated
(Note Note 11. Adoption of new accounting policies and Note 13. Restatement of prior-year Financial Statement)
2010
Equity of Canada, beginning of year 24,472 4,272
Net cost of operations (6,176,775) (4,195,400)
Net cash provided by Government 4,870,975 3,853,782
Change in Due from the Consolidated Revenue Fund 1,279,442 359,264
Services provided without charge by other government departments (note 9a) 3,308 2,554
Equity of Canada, end of year 1,422 24,472

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

Statement of Cash Flow (Unaudited)
At March 31, 2011
(in thousands of dollars)

  2011 Restated
(Note Note 11. Adoption of new accounting policies and Note 13. Restatement of prior-year Financial Statement)
2010
Operating activities    
Net cost operations 6,176,775 4,195,400
Non-cash items:    
Amortization of tangible capital assets (7,957) (4,902)
Services provided without charge by other government departments (3,308) (2,554)
Variations in Statement of Financial Position:    
Increase (decrease) in receivables and advances (53,842) 66,150
Increase in accounts payable and accrued liabilities (1,245,155) (400,872)
Decrease (increase) in vacation pay and compensatory leave (1,213) (346)
Decrease in employee future benefits (1,390) (1,866)
Cash used by operating activities 4,863,910 3,851,010
Capital investment activities:    
Net acquisition of tangible capital assets (note 5. Tangible Capital Assets) 7,065 2,772
Cash used by capital investment activities 7,065 2,772
Net cash provided by Government of Canada 4,870,975 3,853,782

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

Notes to the 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.

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. Summary of Significant Accounting Policies

These 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 appropriations – 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. Parliamentary Appropriations 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:
    1. 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;
    2. vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment;
    3. 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 amounts expected to be ultimately realized; a provision is made 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.

3. Parliamentary Appropriations

INFC receives its funding through annual Parliamentary authorities. Items recognized in the statement of operations 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:

  1. Reconciliation of net cost of operations to current year appropriations used
    (in thousands of dollars)
      2011 2010
    Net cost of operations 6,176,775 4,195,400
    Adjustments for items affecting net cost of operations but not affecting authorities:    
    Amortization of tangible capital assets (7,957) (4,902)
    Services provided without charge by other government departments (3,308) (2,554)
    Increase in vacation pay and compensatory leave (1,213) (346)
    Increase in employee future benefits (1,390) (1,866)
    Bad debt expense (3) -
    Other charges not charged to the vote 40 -
    Refunds of previous year's expenditures 101,325 5,005
    Revenue not available for spending 7 8
    Total of adjustments for items affecting net cost of operations but not affecting authorities 6,264,276 4,190,745
    Adjustments for items not affecting net cost of operations but affecting authorities:    
    Acquisitions of tangible capital assets 7,065 2,772
    Change in advances (19,550) 24,543
    Current year authorities used 6,251,791 4,218,060
  2. Authorities provided and used
    (in thousands of dollars)
      2011 2010
    Vote 55 – Operating Expenditures 64,892 66,319
    Vote 60 – Contributions 7,280,064 4,694,565
    Statutory Amounts    
    Employee Benefit Plan 4,962 4,446
    Infrastructure Stimulus Fund 1,461,666 490,729
    Provincial-Territorial Infrastructure Base Funding Program Accelerated 158,109 179,383
    Communities Component of the Building Canada Fund Top Up 219,955 30,045
    Green Infrastructure Fund 33,537 5,160
    Less:    
    Lapsed Appropriations:    
    Operating (1,457) (6,928)
    Contributions (2,969,937) (1,245,659)
    Current year appropriations used 6,251,791 4,218,060

4. Accounts receivable and advances
(in thousands of dollars)

  2011 2010
Receivables from other government department and agencies 57,638 91,930
Advances to external parties 4,996 24,546
Employee advances 1 1
Total 62,635 116,477

Funds are advanced to other Federal Government departments and agencies such as Transport Canada and Western Diversification during the fiscal year for the administration of programs on behalf of INFC. An account receivable is recorded for the unused portion that will be returned to INFC after year end.

Under the Infrastructure Stimulus Fund (ISF), a portion of funds was advanced to recipients for eligible project costs. At year end, the outstanding balance for ISF advances was $5.0M as compared to $24.5M in the previous year.

5. Tangible Capital Assets
(in thousands of dollars)

Click here to see the table of Tangible Capital Assets

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

  2011 2010
Payables to other government departments and agencies 527 4,578
Payables to external parties 1,773,617 524,467
Accrued Liabilities 105 49
Total 1,774,249 529,094

The increase in the Payables to external parties relates to the Infrastructure Stimulus Fund (ISF) claims which account for $1.2B of the $1.8B total.

7. 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 INFC contribute to the cost of the Plan. The 2010-11 expense amounts to $3,483,615 ($3,210,356 in 2009-10), which represents approximately 1.9 times (1.9 in 2009-10) 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 final salary. 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:
    (in thousands of dollars)

      2011 Restated
    (Note Note 11. Adoption of new accounting policies and Note 13. Restatement of prior-year Financial Statement)
    2010
    Accrued benefit obligation, beginning of year 5,629 3,763
    Expense for the year 1,530 2,270
    Benefits paid during year (140) (404)
    Accrued benefit obligation, end of year 7,019 5,629

8. Contractual Obligations
(in thousands of dollars)

Click here to see the table of Contractual Obligation

9. 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.

  1. Services provided without charge by other government departments

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

      2011 2010
    Employer's contribution to the health and dental insurance plan 2,617 2,108
    Accommodation 691 446
    Total 3,308 2,554

    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.

10. Segmented Information
(in thousands of dollars)

Click here to see the table of Segmented Information

11. Adoption of new accounting policies

During the year, the Department adopted the revised Treasury Board accounting policy TBAS 1.2: Departmental and Agency Financial Statements which is effective for the Department for the 2010-11 fiscal year. The major change in the accounting policies of the Department required by the adoption of the revised TBAS 1.2 is the recording of amounts due from the Consolidated Revenue Fund as an asset on the Statement of Financial Position.

The adoption of the new Treasury Board accounting policies have been accounted for retroactively with the following impact on the comparatives for 2009-10:
(in thousands of dollars)

  2010
As previously stated		 Effect of changes 2010
Statement of Financial Position:
Assets 123,250 437,162 560,412
Employee Severance Benefits 4,787 844 5,629
Equity of Canada (411,848) 436,320 24,472

12. Comparative Information

Comparative figures have been reclassified to conform to the current year's presentation.

13. Restatement of Prior-Year Financial Statement

In 2009-2010, INFC included in its financial statements an adjustment to the severance liability in the amount of $842,000 based on information received from Treasury Board after the fiscal year had closed. The figures for 2009-2010 were adjusted to remove this amount in order to show it in 2010-11.