Future-oriented Financial Statements for the Years Ending March 31, 2013 and March 31, 2014

Statement of Management Responsibility

Agency management is responsible for these future-oriented financial statements, including responsibility for the appropriateness of the assumptions on which these statements are prepared. These statements are based on the best information available and assumptions adopted as at November 30, 2012 and reflect the plans described in the Report on Plans and Priorities.

Assumptions and estimates are based upon information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in departmental mandate and strategic objectives.

The actual results achieved for the fiscal years covered in the accompanying financial information will vary from the information presented, and the variations may be material.

Geoffrey Hare
Chairman and Chief Executive Officer

Linda Harrison
Chief Financial Officer

Gatineau, Canada
February 22, 2013

Future-oriented Statement of Financial Position (Unaudited) as at March 31 (in thousands of dollars)

	Estimated Results 2013	Planned Results 2014
Departmental net financial position	$(1,825)	$(1,291)
Liabilities
Accounts payable and accrued liabilities (note 6)	$1,455	$1,382
Vacation pay and compensatory leave	941	930
Lease obligation for tangible capital assets (note 7)	10	-
Employee future benefits (note 8)	2,130	1,153
Total net liabilities	4,536	3,465
Financial assets
Due from Consolidated Revenue Fund	1,395	1,299
Accounts receivable and advances (note 9)	118	113
Total gross financial assets	1,513	1,412
Financial assets held on behalf of Government
Accounts receivable and advances (note 9)	(20)	-
Total financial assets held on behalf of Government	(20)	-
Total net financial assets	1,493	1,412
Departmental net debt	3,043	2,053
Non-financial assets
Prepaid expenses	78	97
Inventory (note 10)	101	108
Tangible capital assets (note 11)	1,039	557
Total non-financial assets	1,218	762

Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to November 30, 2012.

Contractual obligations (note 12).

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

Geoffrey Hare
Chairman and Chief Executive Officer

Linda Harrison
Chief Financial Officer

Gatineau, Canada
February 22, 2013

Future-oriented Statement of Operations and Departmental Net Financial Position (Unaudited) for the Year Ending March 31 (in thousands of dollars)

	Estimated Results 2013	Planned Results 2014
Departmental net financial position - End of year	$(1,825)	$(1,291)
Expenses
Economic regulation	$13,870	$14,319
Adjudication and alternative dispute resolution	9,477	10,136
Internal services	8,860	8,692
Total expenses	32,207	33,147
Revenues
Revenues from fines	50	75
Sales of goods and services	40	-
Miscellaneous revenues	-	-
Revenues earned on behalf of Government	(90)	(75)
Total revenues	-	-
Net cost of operations before government funding and transfers	32,207	33,147
Government funding and transfers
Net cash provided by Government	28,105	29,971
Change in due from Consolidated Revenue Fund	193	(96)
Services provided without charge by other government departments (note 13)	3,949	3,806
Net cost of operations after government funding and transfers	(40)	(534)
Departmental net financial position - Beginning of year	(1,865)	(1,825)

Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to November 30, 2012.

Segmented information (note 14).

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

Future-oriented Statement of Change in Departmental Net Debt (Unaudited) for the Year Ending March 31 (in thousands of dollars)

	Estimated Results 2013	Planned Results 2014
Departmental net debt - End of year	$3,043	$2,053
Net cost of operations after government funding and transfers	$(40)	$(534)
Change due to tangible capital assets
Acquisition of tangible capital assets	195	180
Amortization of tangible capital assets	(727)	(648)
Proceeds from disposal of tangible capital assets	-	-
Net (loss) or gain on disposal of tangible capital assets	(10)	(14)
Other	(3)	-
Total change due to tangible capital assets	(545)	(482)
Change due to inventories	(14)	7
Change due to prepaid expenses	(25)	19
Net increase (decrease) in departmental net debt	(624)	(990)
Departmental net debt - Beginning of year	3,667	3,043

Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to November 30, 2012.

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

Future-oriented Statement of Cash Flows (Unaudited) for the Year Ending March 31 (in thousands of dollars)

	Estimated Results 2013	Planned Results 2014
Net cash provided by Government of Canada	$28,105	$29,971
Operating activities
Net cost of operations before government funding and transfers	$32,207	$33,147
Non-cash items:
Amortization of tangible capital assets	(727)	(648)
Gain (loss) on disposal of tangible capital assets	(10)	(14)
Services provided without charge by other government departments (note 13)	(3,949)	(3,806)
Other	(3)	-
Variations in Future-oriented Statement of Financial Position:
Increase (decrease) in accounts receivable and advances	(38)	15
Increase (decrease) in prepaid expenses	(25)	19
Increase (decrease) in inventory	(14)	7
Decrease (increase) in accounts payable and accrued liabilities	(147)	73
Decrease (increase) in vacation pay and compensatory leave	(23)	11
Decrease (increase) in future employee benefits	626	977
Cash used in operating activities	27,897	29,781
Capital investment activities:
Acquisitions of tangible capital assets	195	180
Proceeds from disposal of tangible capital assets	-	-
Cash used in capital investment activities	195	180
Financing activities:
Lease payments for tangible capital assets	13	10
Cash used in financing activities	13	10

Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to November 30, 2012.

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

Notes to the Future-oriented Financial Statements (Unaudited) for the Year Ending March 31

1. Authority and Objectives

The Canadian Transportation Agency (the Agency) was established on July 1, 1996, under the Canada Transportation Act, (S.C. 1996, c. 10), as the continuation of the National Transportation Agency. Under the Act and related legislation, it has various powers to help implement the federal government's transportation policy. The Chairman and Chief Executive Officer is appointed by the Governor-in-Council.  The Agency pursues one objective: transparent, fair and efficient economic regulation of the federal transportation system.

As an independent, quasi judicial, administrative tribunal of the Government of Canada, the Agency is responsible for:

• Dispute resolution, to resolve complaints about transportation services, rates, fees and charges;
• Accessibility, to ensure that the federal transportation system is accessible, particularly to persons with disabilities; and
• Economic regulation, to provide approvals, licences, and make decisions on matters involving federally-regulated air, rail and marine transportation.

In exercising its court-like powers, the Agency employs processes that are responsive, fair and transparent, and considers the interests of all parties to disputes involving the national transportation system. Its adjudicative formal decision-making process is governed by the rules of natural justice and fairness.

Through its actions, and by working closely with Transport Canada, other departments, its clients and stakeholder groups, the Agency supports the goal of a Canadian transportation system that is competitive, efficient and accessible – and that meets the needs of those who provide or use transportation services.

The Program Activity Architecture explains how the program activities and allocation of resources contribute to the Agency's strategic outcome.

Transparent, fair and timely dispute resolution and economic regulation of the national transportation system.

This is achieved through three program activities:

Program Activity	Expected Result
Economic Regulation	Economic and other interests of transportation users, service providers and other affected parties are protected.
Adjudication and Alternative Dispute Resolution	Access to a specialized dispute resolution system that is cost-effective, responsive, fair and timely, and serves the needs of users, service providers and other affected parties within the national transportation system.
Internal Services	Support the needs of programs and other corporate obligations of the Agency.

2. Methodology and 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 information in the estimated results for fiscal year 2012-2013 is based on actual results as at November 30, 2012 and forecasts for the remainder of the fiscal year. Estimated year end information for 2012-2013 is used as the opening position for the 2013-2014 planned results, and forecasts have been made for the planned results for the 2013-2014 fiscal year.

The main assumptions underlying the forecasts are as follows:

1. The Agency's activities will remain substantially the same as for the previous year, with the addition of a new mandate assumed by the Agency without additional funding authorities.
2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
3. Based on resources provided, the Agency will deliver the expected results specified in the Report on Plans and Priorities.
4. Estimated information is based on the parliamentary appropriations granted to the Canadian Transportation Agency through its 2013-2014 Main Estimates.

These assumptions are adopted as at November 30, 2012.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2012-2013 and for 2013-2014, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

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

Factors that could lead to material differences between the future-oriented financial statements and the historical financial statements include:

1. The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.
2. Implementation of new collective agreements.
3. Economic conditions may affect both the amount of revenue earned and the collectability of loan receivables.
4. Interest rates in effect at the time of issue will affect the net present value of non-interest bearing leans.
5. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, the Canadian Transportation Agency will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of Significant Accounting Policies (in thousands of dollars)

These future-oriented financial statements have been prepared in accordance with the Treasury Board Accounting Policies in effect November 30, 2012. These accounting policies, stated below, 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 - the Agency is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Agency 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 Future-oriented Statement of Operations and Departmental Net Financial Position and in the Future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a reconciliation between the bases of reporting. 
2. Net Cash Provided by Government - the Agency operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Agency is deposited to the CRF and all cash disbursements made by the Agency 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 the Agency is entitled to draw from the CRF without further parliamentary authorities to discharge its liabilities.
4. Revenues:
   1. Revenues from regulatory fees are recognized in the accounts based on the services provided in the year. 
   2. Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.
   3. Revenues that are non-respendable are not available to discharge the Agency's liabilities. While the deputy head (DH) is expected to maintain accounting control, he or 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.
5. Expenses – Expenses are recorded on the accrual basis:
   1. Vacation pay and compensatory leave are accrued as the benefits are earned under their respective terms of employment.
   2. Services provided without charge by other government departments for accommodation, the employer's contributions to the health and dental insurance plans, legal services and workers' compensation are reported as operating expenses at their estimated cost. 
6. Employee future benefits
   1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The Agency's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Agency'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.  
   2. 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. 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 are stated at the lower of cost and net recoverable value. A valuation allowance is established for accounts receivables where recovery is considered uncertain.
8. Inventory - Inventory consists of brochures held for future program delivery and not intended for resale.  Inventory is valued at cost using the average cost method. If there is no longer any service potential, inventory is valued at the lower of cost or net realisable value.. 
9. Tangible capital assets – All tangible capital assets and leasehold improvements are recorded at their acquisition cost (refer to the following table for the initial cost threshold). The Agency 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.

   The capitalization of software and leasehold improvements has been done on a prospective basis from April 1, 2001.  As of April 1, 2012, the Agency has changed prospectively the threshold and the amortization period of its tangible capital assets. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the capital asset as identified in the table below:

   Asset Class	Amortization Period	Threshold (initial cost equal/or more than)
   Machinery and equipment	7 years	$10
   Furniture	10 years	$10
   Vehicles	7 years	$10
   Computer Hardware	5 years	$10
   Computer Software	3 years	$10
   Leased tangible capital assets	Over term of lease/useful life	$10

   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.

10. Measurement uncertainty - The preparation of these future-oriented financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the future-oriented financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Actual results could significantly differ from those estimated.

5. Parliamentary Authorities (in thousands of dollars)

The Agency receives most of its funding through annual parliamentary authorities. Items recognized in the Future-oriented Statement of Operations and Departmental Net Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the Agency 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 requested authorities

	Estimated Results 2013	Planned Results 2014
Forecast authorities available	$29,529	$29,883
Net cost of operations before government funding and transfers	$32,207	$33,147
Adjustments for items affecting net cost of operations, but not affecting authorities:
Amortization of tangible capital assets	(727)	(648)
Gain (loss) on disposal of tangible capital assets	(10)	(14)
Services provided without charge by other federal government departments and agencies	(3,949)	(3,806)
Decrease (increase) in vacation pay and compensatory leave	(23)	11
Decrease (increase) in employee future benefits	626	977
Refunds of prior years' expenditures	55	-
Other	(3)	-
Total items affecting net cost of operations but not affecting authorities	(4,031)	(3,480)
Adjustment for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets	195	180
Decrease in lease obligations for tangible capital assets	13	10
Increase (decrease) in inventory	(14)	7
Increase (decrease) in prepaid expenses	(25)	19
Total items not affecting net cost of operations but affecting authorities	169	216
Forecast current year lapse	1,184	-

b) Authorities requested

	Estimated Results 2013	Planned Results 2014
Forecast authorities available	$29,529	$29,883
Authorities requested:
Vote 25 - Operating expenditures	$26,045	$26,376
Statutory amounts	3,484	3,507

Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in Estimates documents and, when reasonable estimates can be made, estimates of amounts to be allocated from Treasury Board central votes.

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

The following table presents details of the Agency's accounts payable and accrued liabilities:

	Estimated Results 2013	Planned Results 2014
Total accounts payable and accrued liabilities	$1,455	$1,382
Accounts payable - Other government departments and agencies	$104	$62
Accounts payable - External parties	-	737
Total accounts payableNote 1	104	799
Accrued liabilitiesNote 2	1,351	583

7. Lease obligation for tangible capital assets (in thousands of dollars)

The Agency has entered into agreements to lease photocopiers under capital leases with a cost of $62 and accumulated amortization of $41 as at March 31, 2012. The obligations related to the upcoming years include the following:

	Estimated Results 2013	Planned Results 2014
Balance of obligations under leased tangible capital assets	$10	$ -
2014	$10	-
Total future minimum lease payments	10	-
Less: imputed interest (2.49%)	-	-

Note: The lease contracts for capital asset will expire in 2014.  After this date, the Agency will no longer be capitalizing leases for photocopiers. 

8. Employee future benefits (in thousands of dollars)

a) Pension benefits

The Agency'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 the Agency contribute to the cost of the Plan. The forecast expenses are $3,484 in 2012-2013 and $3,507 in 2013-2014, representing approximately 1.8 times the contributions by employees.

The Agency'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.

b) Severance benefits

The Agency 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 the date of these statements, is as follows:

	Estimated Results 2013	Planned Results 2014
Accrued benefit obligation - End of year	$2,130	$1,153
Accrued benefit obligation - Beginning of year	$2,756	$2,130
Expense (adjustment) for the year	148	(93)
Expected benefits paid during the year	(774)	(884)

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.

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

The following table presents details of the Agency's accounts receivable and advances balances:

	Estimated Results 2013	Planned Results 2014
Net accounts receivable	$98	$113
Receivables - Other government departments and agencies	$90	$113
Receivables - External parties	28	-
Employee advances	-	-
Gross accounts receivable	118	113
Accounts receivable held on behalf on the Government	(20)	-

10.  Inventory (in thousands of dollars)

The following table presents details of the inventory, measured at cost using the average cost method.

	Estimated Results 2013	Planned Results 2014
Brochures	$101	$108

The cost of consumed inventory recognized as an expense in the Future-oriented Statement of Operations and Departmental Net Financial Position is $14 in 2012-2013 and -$7 in 2013-2014.

11.  Tangible capital assets (in thousands of dollars)

Capital asset class	Cost
	Opening balance	Acquisitions	AdjustmentsNote 3	Disposals and write-offs	Closing balance
Total	$7,549	$180	$  -	$602	$7,127
Furniture	$1,259	$ -	$ -	$29	$1,230
Machinery and Equipment	106	-	-	-	106
Vehicles	31	30	-	31	30
Leased tangible capital assets	62	-	-	62	-
Computer hardware	2,096	75	-	479	1,692
Computer software	3,995	-	75	1	4,069
hAssets under constructionh	-	75	(75)	-	-

 

Capital asset class	Accumulated amortization
	Opening balance	Acquisitions	AdjustmentsNote 3	Disposals and write-offs	Closing balance
Total	$6,510	$648	$ -	$588	$6,570
Furniture	$998	$60	$ -	$25	$1,033
Machinery and Equipment	106	-	-	-	106
Vehicles	22	4	-	24	2
Leased tangible capital assets	54	8	-	62	-
Computer hardware	1,501	350	-	476	1,375
Computer software	3,829	226	-	1	4,054
Assets under construction	-	-	-	-	-

 

Capital asset class	Net book value
	2014	2013
Total	$557	$1,039
Furniture	$197	$261
Machinery and Equipment	-	-
Vehicles	28	9
Leased tangible capital assets	-	8
Computer hardware	317	595
Computer software	15	166
Assets under construction	-	-

12.  Contractual Obligations (in thousands of dollars)

The nature of the Agency's activities can result in some large multi-year contracts and obligations whereby the department 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:

	2013	2014	2015	2016	2017 and thereafter	Total
Total	$723	$671	$643	$543	$543	$3,123
Professional and special services	$290	$361	$361	$261	$261	$1,534
Other goods and services	406	174	174	174	174	1,102
Software maintenance agreements	17	93	92	92	92	386
Operating leases and rental of storage	10	43	16	16	16	101

13.  Related Party Transactions (in thousands of dollars)

The Agency is related as a result of common ownership to all government departments, agencies, and Crown Corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the Agency 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 the Agency received services without charge from certain common service organizations, related to accommodation, legal services, 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 Agency's Future-oriented Statement of Operations and Departmental Net Financial Position as follows:

	Estimated Results 2013	Planned Results 2014
Total	$3,949	$3,806
Accommodation	$2,099	$2,038
Employer's contribution to the health and dental insurance plans	1,841	1,759
Worker's compensation	8	8
Legal services	1	1

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 Works and Government Services Canada and audit services provided by the Office of the Auditor General are not included in the Agency's Future-oriented Statement of Operations and Departmental Net Financial Position.

b) Other transactions with related parties

	Estimated Results 2013	Planned Results 2014
Revenues - Other Government departments and agencies	1	1
Accounts receivable - Other government departments and agencies	$90	$113
Accounts payable - Other government departments and agencies	104	62
Expenses - Other Government departments and agencies	4,449	4,365

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

14.  Segmented information (in thousands of dollars)

Presentation by segment is based on the Agency's program activity architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 4. The following table presents the forecasted expenses incurred and forecasted revenues generated for the main program activities, by major object of expense and by major type of revenue. The segment results for the period are as follows:

	2013 Total	2014
		Economic Regulation	Adjudication and Alternative Dispute Resolution	Internal Services	Total
Net cost from continuing operations	$32,207	$14,319	$10,136	$8,692	$33,147
Operating Expenses
Salaries and employee benefits	$25,306	$10,983	$7,775	$6,648	$25,406
Professional and special services	2,045	1,128	799	691	2,618
Accommodation	2,099	878	622	538	2,038
Transportation and telecommunication	647	344	243	211	798
Amortization of tangible capital assets	727	279	198	171	648
Repair and maintenance	357	190	134	116	440
Information	339	183	129	112	424
Utilities, materials and supplies	273	133	94	81	308
Rentals	248	113	80	69	262
Machinery and equipment	99	52	37	33	122
Other	67	36	25	22	83
Total Expenses	32,207	14,319	10,136	8,692	33,147
Revenues
Revenues from fines	50	75	-	-	75
Sales of goods and services	40	-	-	-	-
Miscellaneous revenues	-	-	-	-	-
Revenues earned on behalf of Government	(90)	(75)	-	-	(75)
Total Revenues	-	-	-	-	-