Financial Statements for the period ended March 31, 2022

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2022, and all information contained in these financial statements rests with the management of the Canadian Transportation Agency (the CTA). These financial statements have been prepared by management using the Government of Canada's accounting policies, which are based on Canadian public sector accounting standards.

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 fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the CTA’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the CTA’s Departmental Results Report, is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) 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; through 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 CTA and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an on-going process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

The CTA is subject to periodic Core Control Audits performed by the Office of the Comptroller General (OCG) and uses the results of such audits to comply with the Treasury Board Policy on Financial Management.

A Core Control Audit was performed in 2014-2015 by the OCG for transactions completed in 2013-2014. The Audit Report and related Management Action Plan are posted on the CTA's website.

The financial statements of the CTA have not been audited.

 

Statement of Financial Position (Unaudited) as at March 31 (in dollars)

 

	2022	2021
Liabilities
Accounts payable and accrued liabilities (note 4)	$ 3,512,179	$ 4,819,146
Vacation pay and compensatory leave	2,400,693	2,610,094
Employee future benefits (note 5)	755,369	882,839
Total liabilities	6,668,241	8,312,079
Financial assets
Due from Consolidated Revenue Fund	3,333,235	4,809,879
Accounts receivable and advances (note 6)	484,021	215,640
Total gross financial assets	3,817,256	5,025,519
Financial assets held on behalf of Government
Accounts receivable and advances (note 6)	(162,058)	(71,096)
Total financial assets held on behalf of Government	(162,058)	(71,096)
Total net financial assets	3,655,198	4,954,423
Agency net debt	3,013,043	3,357,656
Non-financial assets
Prepaid expenses	263,982	294,310
Inventory	38,566	38,566
Tangible capital assets (note 7)	757,038	778,947
Total non-financial assets	1,059,586	1,111,823
Agency net financial position	$  (1,953,457)	$  (2,245,833)

Contractual obligations (note 8)

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

Statement of Operations and Agency Net Financial Position (Unaudited) for the Year Ended March 31 (in dollars)

	2022 Planned Results	2022	2021
Expenses
Independent regulatory and dispute-resolution services for transportation providers and users	$ 27,257,334	$ 32,606,817	$ 34,963,138
Internal services	11,461,446	13,766,788	11,843,277
Total expenses	38,718,780	46,373,605	46,806,415
Revenues
Revenues from fines	131,150	605,433	22,750
Sales of goods and services	60	-	-
Gain on disposal of assets	-	-	6,486
Miscellaneous revenues	-	80	734
Revenues earned on behalf of Government	(131,210)	(605,433)	(22,750)
Total revenues	-	80	7,220
Net cost of operations before government funding and transfers	$ 38,718,780	$ 46,373,525	$ 46,799,195
Government funding and transfers
Net cash provided by Government of Canada		44,254,544	40,296,419
Change in due from Consolidated Revenue Fund		(1,476,644)	1,094,580
Services provided without charge by other government departments (note 9)		3,815,654	4,947,729
Other transfers of assets and liabilities (to) / from other government departments		72,347	21,862
Net cost of operations after government funding and transfers		(292,376)	438,605
Agency net financial position – Beginning of year		(2,245,833)	(1,807,228)
Agency net financial position – End of year		$ (1,953,457)	$ (2,245,833)

Segmented information (note 10)

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

Statement of Change in Agency Net Debt (Unaudited) for the Year Ended March 31 (in dollars)

	2022	2021
Net cost of operations after government funding and transfers	$ (292,376)	$ 438,605
Change due to tangible capital assets
Acquisition of tangible capital assets	267,837	310,805
Amortization of tangible capital assets	(289,746)	(226,152)
Proceeds from disposal of capital assets	-	(8,220)
Net (loss) or gain on disposal of tangible capital assets including adjustments	-	6,486
Total change due to tangible capital assets	(21,909)	82,919
Change due to inventory	-	(2,021)
Change due to prepaid expenses	(30,328)	168,871
Net increase (decrease) in Agency net debt	(344,613)	688,374
Agency net debt – Beginning of year	3,357,656	2,669,282
Agency net debt – End of year	$  3,013,043	$  3,357,656

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

Statement of Cash Flows (Unaudited) for the Year Ended March 31 (in dollars)

	2022	2021
Operating activities
Net cost of operations before government funding and transfers	$  46,373,525	$  46,799,195
Non-cash items:
Amortization of tangible capital assets	(289,746)	(226,152)
Gain (loss) on disposal of tangible capital assets	-	6,486
Services provided without charge by other government departments	(3,815,654)	(4,947,729)
Net transfer of salary overpayments to (from) other government departments	(72,347)	(21,862)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances	177,419	(14,347)
Increase (decrease) in prepaid expenses	(30,328)	168,871
Increase (decrease) in inventory	-	(2,021)
Decrease (increase) in accounts payable and accrued liabilities	1,306,967	(1,021,347)
Decrease (increase) in vacation pay and compensatory leave	209,401	(877,140)
Decrease (increase) in employee future benefits	127,470	129,880
Cash used in operating activities	43,986,707	39,993,834
Capital investment activities:
Acquisitions of tangible capital assets	267,837	310,805
Proceeds from disposal of capital assets	-	(8,220)
Cash used in capital investment activities	267,837	302,585
Net cash provided by Government of Canada	$  44,254,544	$  40,296,419

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

Notes to the Financial Statements (Unaudited) for the Year Ended March 31 (in dollars)

1. Authority and objectives

The CTA was established with the coming into force of the Canada Transportation Act (S.C. 1996, c. 10) on July 1^st, 1996, as the continuation of the National Transportation Agency. The CTA is Canada’s longest-standing independent, quasi-judicial tribunal and regulator having been established in its original form in 1904. The CTA has, with respect to all matters necessary for the exercise of its jurisdiction, all the powers of a superior court. The CTA has three mandates:

• It helps ensure that the national transportation system runs efficiently and smoothly in the interests of all Canadians: those who work and invest in it; the producers, shippers, travellers and businesses who rely on it; and the communities where it operates.
• It protects the human right of persons with disabilities to an accessible transportation network.
• It provides consumer protection for air passengers.

In delivering its mandates, the CTA operates under the following core responsibilities:

• Independent regulatory and dispute-resolution services for transportation providers and users. This core responsibility is supported by the following three key programs:
  • Determinations and Compliance: This program provides analysis and recommendations when industry needs a determination from the CTA to proceed with an activity in the marketplace (e.g. an air carrier licence). It also monitors compliance with legislation and regulations, as well as CTA decisions, orders and determinations and initiates enforcement actions in cases of non-compliance.
  • Dispute Resolution: This program provides dispute resolution services, upon application, for air, rail, marine and accessibility disputes within the CTA's jurisdiction. It does this using a range of approaches from relatively informal facilitation and mediation to more formal arbitration and adjudication.
  • Analysis and Outreach: This program leads CTA regulatory and guidance material modernization and provides strategic research, analysis and legislative advice regarding the national transportation system and key issues. It enhances the accessibility of the federal transportation network. It also leads the CTA's external partnerships, communications and outreach.
• Internal Services. Internal Services are those groups of related activities and resources that the federal government considers to be services in support of programs and/or required to meet corporate obligations of an organization. Internal services refer to the activities and resources that support program delivery in the organization, such as human resources management, financial management, information management and information technology.

2. Summary of significant accounting policies

These financial statements are prepared using the CTA'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:

a) Parliamentary authorities

The CTA is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the CTA 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 Agency Net Financial Position and in 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. The planned results amounts in the “Expenses” and “Revenues” sections of the Statement of Operations and Agency Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2021-2022 Departmental Plan. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and Agency Net Financial Position and in the Statement of Change in Agency Net Debt because these amounts were not included in the 2021-2022 Departmental Plan.

b) Net Cash Provided by Government

The CTA operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the CTA is deposited to the CRF, and all cash disbursements made by the CTA 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.

c) Amounts due from or to the CRF

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 the CTA is entitled to draw from the CRF without further appropriations to discharge its liabilities.

d) Revenues

Revenues from regulatory fees are recognized based on the services provided in the year.

All other revenues, including revenues from fines, are recognized in the period in which the underlying transaction or event that gave rise to the revenue takes place.

Revenues that are non-respendable are not available to discharge the CTA's liabilities. While the Chair and CEO is expected to maintain accounting control, she has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the entity's gross revenues.

e) Expenses

Expenses are recorded on the accrual basis:

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, employer contributions to the health and dental insurance plans, legal services and workers' compensation are recorded as operating expenses at their estimated cost.

f) Employee future benefits

i) Pension benefits: Eligible employees participate in the Public Service Pension Plan (the Plan), a multiemployer pension plan administered by the Government. The CTA's contributions to the Plan are charged to expenses in the year incurred and represent the total CTA obligation to the Plan. The CTA’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognised in the financial statements of the Government of Canada, as the Plan’s sponsor.

ii) Severance benefits: The accumulation of severance benefits for voluntary departures ceased for applicable employee groups. The remaining obligation for employees who did not withdraw benefits is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

g) Accounts receivable

Accounts receivable are stated at the lower of cost and net recoverable value. When necessary, an allowance for valuation is recorded to reduce the carrying value of accounts receivable to amounts that approximate their net recoverable value.

h) Inventory

Inventory is valued at cost using the average cost method and consists of brochures held for future program delivery and is not intended for resale. Inventory that no longer has service potential is deemed obsolete and is written off.

i) Tangible capital assets

The costs of acquiring equipment and other capital property are capitalized as tangible capital assets. All tangible capital assets having an initial cost of $10,000 or more are recorded at their acquisition cost. 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
Machinery and equipment	7 years
Computer hardware	5 years
Computer software	3 years
Furniture	10 years
Vehicles	7 years

Assets under construction are recorded in the applicable asset class in the year they are put into service and are not amortized until they are put into service.

j) Contingent Liabilities

Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, a provision is accrued and an expense recorded to other expenses. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

k) Contingent assets

Contingent assets are possible assets which may become actual assets when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, the contingent asset is disclosed in the notes to the financial statements.

l) Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported and disclosed amounts of assets, liabilities, revenues and expenses reported in the financial statements and accompanying notes as at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the Government's best estimate of the related amount at the end of the reporting period. The most significant items where estimates are used are the liability for employee future 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.

m) Related party transactions

Inter-entity transactions are transactions between commonly controlled entities. Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis and are measured at the carrying amount, except for the following:

1. ) Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
2. ) Certain services received on a without charge basis are recorded for departmental financial statement purposes at the carrying amount.

3. Parliamentary authorities

The CTA receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Agency 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, the CTA 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

	2022	2021
Net cost of operations before government funding and transfers	$  46,373,525	$  46,799,195
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(289,746)	(226,152)
Gain (loss) on disposal of tangible capital assets	-	6,486
Services provided without charge by other government departments	(3,815,654)	(4,947,729)
Decrease (increase) in vacation pay and compensatory leave	209,401	(877,140)
Decrease (increase) in employee future benefits	127,470	129,880
Bad debt expense	(48,346)	-
Refunds of prior years' expenditures	96,569	9,556
Other expenditures not affecting authorities	(1,689)	423
Total items affecting net cost of operations but not affecting authorities	(3,721,995)	(5,904,676)
Adjustment for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets	267,837	310,805
Loans issued on behalf of government	(1,152)	25,055
Increase (decrease) in inventory	-	(2,021)
Increase (decrease) in prepaid expenses	(30,328)	168,871
Total items not affecting net cost of operations but affecting authorities	236,357	502,710
Current year authorities used	$  42,887,887	$  41,397,229

b) Authorities provided and used

	2022	2021
Authorities provided:
Vote 25: Operating expenditures	$ 41,320,362	$ 41,429,446
Statutory amounts	4,434,112	4,638,078
Less:
Lapsed: Operating	(2,866,587)	(4,670,295)
Current year authorities used	$ 42,887,887	$ 41,397,229

4. Accounts payable and accrued liabilities

The following table presents details of the CTA’s accounts payable and accrued liabilities:

	2022	2021
Accounts payable – Other government departments and agencies	$ 758,950	$ 1,252,203
Accounts payable – External parties	767,288	983,704
Total accounts payable	1,526,238	2,235,907
Accrued liabilities	1,985,941	2,583,239
Total accounts payable and accrued liabilities	$ 3,512,179	$ 4,819,146

5. Employee future benefits

a) Pension benefits

The CTA's employees participate in the Public Service Pension Plan (the “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/Québec Pension Plan benefits and are indexed to inflation.

Both the employees and the CTA contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

The 2021-2022 expense amounts to $2,995,686 ($3,159,415 in 2020-2021). For Group 1 members, the expense represents approximately 1.01 times (1.01 times in 2020-2021) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2020-2021) the employee contributions.

The CTA's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the Consolidated Financial Statements of the Government of Canada, as the Plan's sponsor.

b) Severance benefits

Severance benefits provided to the CTA’s employees were previously based on an employee’s eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. By March 31, 2022, substantially all settlements for immediate cash out were completed. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

The changes in the obligations during the year were as follows:

	2022	2021
Accrued benefit obligation – Beginning of year	$  882,839	$  1,012,719
Expense for the year	94,496	50,310
Benefits paid during the year	(221,966)	(180,190)
Accrued benefit obligation – End of year	$  755,369	$  882,839

6. Accounts receivable and advances

The following table presents details of the CTA’s accounts receivable and advances balances:

	2022	2021
Receivables – Other government departments and agencies	$  320,085	$  123,006
Receivables – External parties	212,282	74,823
Employee advances	-	17,811
Allowance for doubtful accounts on receivables from external parties	(48,346)	-
Gross accounts receivable	484,021	215,640
Accounts receivable held on behalf of Government	(162,058)	(71,096)
Net accounts receivable	$  321,963	$  144,544

7. Tangible capital assets

Cost

Capital Asset Class	Opening Balance	Acquisitions	Adjustments	Disposals and Write-offs	Closing Balance
Machinery and equipment	$  105,746	-	-	-	$  105,746
Computer hardware	2,723,127	15,077	-	(88,371)	2,649,833
Computer software	4,077,784	252,760	-	-	4,330,544
Furniture	665,441	-	-	-	665,441
Vehicles	35,600	-	-	-	35,600
Total	$  7,607,698	$  267,837	-	$  (88,371)	$  7,787,164

Accumulated Amortization

Capital Asset Class	Opening Balance	Amortization	Adjustments	Disposals and Write-offs	Closing Balance
Machinery and equipment	$ 105,746	-	-	-	$ 105,746
Computer hardware	2,024,388	237,459	-	(88,371)	2,173,476
Computer software	4,038,405	42,414	-	-	4,080,819
Furniture	656,398	4,787	-	-	661,185
Vehicles	3,814	5,086	-	-	8,900
Total	$  6,828,751	$  289,746	-	$  (88,371)	$  7,030,126

Net Book Value

Capital Asset Class	2022	2021
Machinery and equipment	-	-
Computer hardware	476,357	698,739
Computer software	249,725	39,379
Furniture	4,256	9,043
Vehicles	26,700	31,786
Total	$  757,038	$  778,947

8. Contractual obligations

The nature of the CTA’s activities can result in some large multi-year contracts and obligations whereby the CTA will be obligated to make future payments when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

	2023	2024	2025	2026 and thereafter	Total
Professional and special services	$ 689,205	$ 116,698	$ 63,402	$ 21,436	$ 890,741
Software maintenance agreements	664,640	300,994	228,254	243,023	1,436,911
Machinery and equipment	35,490	42,193	13,250	-	90,933
Other goods and services	194,700	49,200	19,560	-	263,460
Total	$ 1,584,035	$ 509,085	$ 324,466	$ 264,459	$ 2,682,045

9. Related party transactions

The CTA is related, as a result of common ownership, to all government departments, agencies, and Crown corporations. Related parties also include individuals who are members of key management personnel or close family members of those individuals, and entities controlled by, or under shared control of, a member of key management personnel or a close family member of that individual.

The CTA enters into transactions with these entities in the normal course of business and on normal trade terms.

a) Common services provided without charge by other government departments

During the year, the CTA received services without charge from certain common service organizations, related to accommodation, the employer's contribution to the health and dental insurance plans, and workers' compensation coverage. These services provided without charge have been recorded in the Statement of Operations and Agency Net Financial Position as follows:

	2022	2021
Accommodation	$  949,611	$  2,199,023
Employer's contribution to the health and dental insurance plans	2,860,223	2,748,706
Worker's compensation	5,820	-
Total	$  3,815,654	$  4,947,729

The Government has centralized some of its administrative activities for efficiency, 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 Services and Procurement Canada (PSPC) and audit services provided by the Office of the Auditor General are not included in the CTA's Statement of Operations and Agency Net Financial Position.

b) Other transactions with other government departments and agencies

	2022	2021
Expenses	$  8,428,432	$  7,331,786
Revenues	-	-
Total	$  8,428,432	$  7,331,786

Expenses and revenues disclosed in (b) exclude common services provided without charges, which are already disclosed in (a).

10. Segmented information

Presentation by segment is based on the Department's core responsibility. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the main core responsibility, by major object of expense and by major type of revenue. The segment results for the period are as follows:

	Independent regulatory and dispute-resolution services for transportation and users	Internal Services	Total 2022	Total 2021
Operating expenses
Salaries and employee benefits	$ 30,485,850	$ 7,567,967	$ 38,053,817	$ 39,678,823
Professional and special services	895,473	3,601,199	4,496,672	2,095,154
Rentals	31,217	1,201,203	1,232,420	821,609
Accommodation	743,808	205,803	949,611	2,199,022
Machinery and equipment	77,495	620,702	698,197	1,007,540
Information	170,348	186,442	356,790	345,703
Amortization of tangible capital assets	80,174	209,572	289,746	226,152
Transportation and telecommunication	44,741	81,801	126,542	231,331
Utilities, materials and supplies	26,980	33,256	60,236	80,647
Repair and maintenance	305	32,486	32,791	100,626
Other	50,426	26,357	76,783	19,808
Total expenses	32,606,817	13,766,788	46,373,605	46,806,415
Revenues
Revenues from fines	605,433	-	605,433	22,750
Sales of goods and services	-	-	-	-
Gain on disposal of assets	-	-	-	6,486
Miscellaneous revenues	80	-	80	734
Revenues earned on behalf of Government	(605,433)	-	(605,433)	(22,750)
Total revenues	80	-	80	7,220
Net cost of operations before government funding and transfers	$ 32,606,737	$ 13,766,788	$ 46,373,525	$ 46,799,195