Financial Statements 2011-2012

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Canadian Space Agency

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, 2012, and all information contained in these statements rests with the management of the Canadian Space Agency. These financial statements have been prepared by management using the Government's accounting standards, which are based on the Government's accounting policies and Canadian accounting standards stated in the Public Sector Accounting Handbook.

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 Agency's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Agency'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 (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 Agency, 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 ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

A risk-based assessment of the system of ICFR for the year ended March 31, 2012 was completed in accordance with the Treasury Board Policy on Internal Control. The results of this assessment and the action plans are summarized in the annex.

The effectiveness and adequacy of the Agency's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the Agency's operations, and by the Departmental Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends the financial statements to the Deputy Head of the Agency.

The financial statements of the Canadian Space Agency have not been audited.

The original version was signed by Steve MacLean, President, in Longueuil, Quebec, Canada, on August 30, 2012.

The original version was signed by Marie-Claude Guérard, CPA, CGA, Chief Financial Officer, in Longueuil, Quebec, Canada, on August 30, 2012.

Statement of Financial Position (Unaudited)

As at March 31
(in thousands of dollars)
2012
$
2011
$
Restated
(note 15)
Liabilities
Accounts payable and accrued liabilities (note 4) 97,020 97,785
Vacation pay and compensatory leave 4,437 4,429
Deferred revenue (note 5) 76 9
Severance benefits (note 6(b)) 11,961 13,072
Other liabilities (note 7) 8,454 21,486
Total net liabilities 121,948 136,781
Assets
Financial assets
Due from the Consolidated Revenue Fund 84,856 92,897
Accounts receivable and advances (note 8) 2,056 2,760
Total gross financial assets 86,912 95,657
Financial assets held on behalf of Government
Accounts receivable and advances (note 8) (826) (628)
Total financial assets held on behalf of Government (826) (628)
Total net financial assets 86,086 95,029
Agency's net debt 35,862 41,752
Non-financial assets
Prepaid expenses (note 9) 315,288 364,912
Tangible capital assets (note 10) 932,180 940,726
Other receivables (note 7) 8,224 -
Total non-financial assets 1,255,692 1,305,638
Agency's net financial position 1,219,830 1,263,886

Contractual obligations (note 11)

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

The original version was signed by Steve MacLean, President, in Longueuil, Quebec, Canada, on August 30, 2012.

The original version was signed by Marie-Claude Guérard, CPA, CGA, Chief Financial Officer, in Longueuil, Quebec, Canada, on August 30, 2012.

Statement of Operations and the Agency's Net Financial Position (Unaudited)

For the Year Ended March 31
(in thousands of dollars)
2012
$
Planned
2012
$
2011
$
Restated
(note 15)
Expenses
Space Exploration 176,278 242,498 227,997
Space Data, Information and Services 167,255 96,309 89,790
Future Canadian Space Capacity 88,181 74,307 69,636
Internal Services 46,028 54,592 47,651
Expenses incurred on behalf of Government (17) (7) -
Total Expenses 477,725 467,699 435,074
Revenues
Sale of goods and services 5,000 5,311 3,650
Sale of rights and privileges 931 715 1,213
Location and use of public property 340 282 324
Other revenues - 21,063 58
Revenues earned on behalf of Government (6,271) (5,977) (4,021)
Total Revenues - 21,394 1,224
Net cost from continuing operations 477,725 446,305 433,850
Transferred operations (note 13)
Expenses 7,963 3,680 7,252
Net cost of transferred operations 7,963 3,680 7,252
Net cost of operations before government funding and transfers 485,688 449,985 441,102
Government funding and transfers
Net cash provided by Government 416,141 409,150 351,994
Change in due from Consolidated Revenue Fund 21,387 (8,041) 19,608
Services provided without charge by other government departments (note 12(a)) 6,196 6,292 5,828
Transfer of assets and liabilities to another government department (note 13) - (1,437) -
Transfer of capital assets to another government department (note 10) - (35) -
Total Government funding and transfers 443,724 405,929 377,430
Net cost of operations after government funding and transfers 41,964 44,056 63,672
Agency's net financial position - Beginning of year 1,245,046 1,263,886 1,327,558
Agency's net financial position - End of year 1,203,082 1,219,830 1,263,886

Segmented information (Note 14)

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

Statement of Change in the Agency's Net Debt (Unaudited)

For the Year Ended March 31
(in thousands of dollars)
2012
$
Planned
2012
$
2011
$
Net cost of operations after government funding and transfers 41,964 44,056 63,672
Change due to tangible capital assets
Acquisition of tangible capital assets 128,581 106,581 80,590
Amortization of tangible capital assets (111,722) (98,809) (104,565)
Proceeds from disposal of tangible capital assets - (3) -
Loss on disposal, write-offs and write-downs of tangible capital assets - (14,252) (156)
Transfer to another government department (note 13) - (2,028) -
Transfer of capital assets to another government department - (35) -
Total change due to tangible capital assets 16,859 (8,546) (24,131)
Change due to prepaid expenses (49,667) (49,624) (37,258)
Change due to other receivables - 8,224 -
Net increase (decrease) in the Agency's net debt 9,156 (5,890) 2,283
Agency's net debt - Beginning of year 40,128 41,752 39,469
Agency's net debt - End of year 49,284 35,862 41,752

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

Statement of Cash Flows (Unaudited)

For the Year Ended March 31
(in thousands of dollars)
2012
$
2011
$
Restated
(note 15)
Operating Activities
Net cost of operations before government funding and transfers 449,985 441,102
Non-cash items:
Amortization of tangible capital assets (note 10) (98,809) (104,565)
Loss on disposal, write-offs and write-downs of tangible capital assets (14,252) (156)
Services provided without charge by other government departments (note 12(a)) (6,292) (5,828)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances (902) 587
Decrease in prepaid expenses (49,624) (37,258)
Increase in other receivables 8,224 -
Decrease (increase) in accounts payable and accrued liabilities 765 (15,449)
Decrease (increase) in deferred revenue (67) 26
Increase in vacation pay and compensatory leave (8) (396)
Decrease (increase) in severance benefits 1,111 (2,366)
Decrease (increase) in other liabilities 13,032 (4,293)
Transfer of prepaids and liabilities to another government department (note 13) (591) -
Cash used in operating activities 302,572 271,404
Capital Investing Activities
Acquisition of tangible capital assets (note 10) 106,581 80,590
Proceeds from disposal of capital assets (3) -
Cash used in capital investing activities 106,578 80,590
Net cash provided by Government of Canada 409,150 351,994

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

Notes to the Financial Statements (Unaudited)

For the Year Ended March 31

1. Authority and Objectives

The Canadian Space Agency "Agency" was decreed a "Department" on March 1st, 1989 under the Financial Administration Act , Section 2, paragraph (b).

For its part, the Canadian Space Agency Act, on legal notice of the Prime Minister, and under Section 29 of the Act to establish the Canadian Space Agency and to provide for other matters in relation to space, was sanctioned on May 10, 1990 under Chapter 13 of the Laws of Canada (L.C. 1990). His excellence, the Governor-in-Council, had fixed the effective date of this Act at December 14, 1990. The objectives of the Canadian Space Program (CSP) are to ensure the development and application of space science and technology to meet Canadian needs and to ensure the development of an international competitive space industry in Canada.

According to the approved Program Activity Architecture (PAA), the Statement of Operations and the Agency's Net Financial Position was detailed by the following Program Activities (Business Lines):

Space Data, Information and Services

This Program Activity utilizes space-based solutions to assist Government of Canada (GoC) organizations in delivering growing, diversified or cost-effective programs and services within their mandate, which is related to key national priorities, such as sovereignty, defence, safety and security, resource management, environmental monitoring and the North. It also provides academia with data required to perform its own research.

Space Exploration

This Program Activity provides valuable Canadian science, signature technologies and qualified astronauts to international space exploration endeavours. This Program Activity contributes to the Government of Canada's Science and Technology Strategy. It could also generate spin-offs that contribute to a higher quality of life for Canadians and could foster nation-building.

Future Canadian Space Capacity

This Program Activity secures the nation's strategic and ongoing presence in space in the future and to preserves Canada's capability to deliver internationally renowned space assets for future generations.

Internal Services

In accordance with the Management Accountability Framework (MAF), this Program Activity serves to implement the Government's commitment to modern Public Service management.

2. 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:

(a) 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 Statement of Financial Position and the Statement of Operations and Agency Net Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the two bases of reporting. The planned results amounts in the Statement of Operations and Agency Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2011-2012 Report on Plans and Priorities.

The future-oriented financial statements for 2011-2012 have been restated to reflect the revenue net of non-respendable amounts. This restatement resulted in an increase of $6,271 thousands in net costs of operations before government funding and transfers. In addition, the future-oriented financial statements have also been reclassified to conform to the current year presentation.

(b) 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.

(c) Due from the Consolidated Revenue Fund (CRF)

Amounts due from 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 authorities to discharge its liabilities.

(d) Revenues

  • Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes places.
  • Funds that have been received are recorded as deferred revenue, provided the Agency has an obligation to other parties for the provision of goods, services or the use of assets in the future (note 5).
  • Revenues that are non-respendable are not available to discharge the Agency's liabilities. While the deputy head is expected to maintain accounting control, he 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:

  • Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements for the transfer payment program.
  • Vacation pay and compensatory leave are accrued as the benefits are earned by the 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 and legal services are recorded as operating expenses at their estimated cost.

(f) Employee future benefits (note 6)

  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 Agency's total obligation to the Plan. The Agency's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recongnized 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.

(g) Accounts receivables and advances

Accounts receivables and advances are stated at the lower of cost and net recoverable value. A provision is recorded for receivables where recovery is considered uncertain.

(h) Foreign currency transactions

Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars using the rate of exchange in effect at year-end. Gains and losses resulting from foreign currency transactions are included in "others" on the Statement of Operations and the Agency's Net Financial Position.

(i) 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. 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.

Asset class Amortization period
Buildings, works and infrastructure 15-40 years
Material and equipment 9-20 years
Computer material 5-10 years
Computer software 3 years
Other equipment including furniture 3-30 years
Motor vehicles 5 years
Other vehicles 10 years

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.

The space assets are not considered operational until they have attained orbit or their expected trajectory or the landing date on the International Space Station.

(j) 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 Authorities

The Agency receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Financial Position and the Statement of Operations and the Agency's 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 current year authorities used

(in thousands of dollars) 2012
$
2011
$
Restated
(note 15)
Net cost of operations before government funding and transfers 449,985 441,102
Adjustments for items affecting net cost of operations but not affecting authorities
Add (Less):
Amortization of tangible capital assets (note 10) (98,809) (104,565)
Revenue not available for spending 555 1,212
Services provided without charge by other government departments (note 12(a)) (6,292) (5,828)
Refund of previous years' expenditures 1,080 401
Decrease (increase) in severance benefits 651 (2,366)
Increase in vacation pay and compensatory leave (139) (396)
Loss on disposal, write-offs and write-downs of tangible capital assets (14,252) (156)
Change in non-monetary exchange CSA/NASA (note 7) 20,748 -
Other (1,346) 100
352,181 329,504
Adjustments for items not affecting net cost of operations but affecting authorities
Add (Less):
Acquisition of tangible capital assets (note 10) 106,581 80,590
Proceeds from disposal of tangible capital assets (3) -
Decrease in prepaid expenses (49,624) (37,258)
56,954 43,332
Current year authorities used 409,135 372,836

(b) Authorities provided and used

(in thousands of dollars) 2012
$
2011
$
Authorities provided
Vote 25 - Operating expenditures 253,796 263,368
Vote 30 - Capital expenditures 118,663 83,894
Vote 35 - Grants and contributions 58,159 47,634
Statutory amounts 11,400 10,943
442,018 405,839
Less:
Authorities available for future years 11 9
Lapsed : Operating 5,894 19,580
Lapsed : Capital 15,860 7,186
Lapsed : Grants and contributions 11,118 6,228
32,883 33,003
Current year authorities used 409,135 372,836

4. Accounts Payable and Accrued Liabilities

(in thousands of dollars) 2012
$
2011
$
Accrued liabilities 52,777 56,844
Accounts payable 27,402 35,474
Contractor's holdback 11,640 3,664
Accrued salaries and wages 3,365 341
Accounts payable – Other Departments 1,787 1,454
Other accounts payable 49 8
97,020 97,785

5. Deferred Revenue

Deferred revenue represents the balance at year-end of unearned revenues stemming from amounts received prior to services being performed as part of the activities of RADARSAT-2 to cover expenses related to the reception, archiving, cataloguing and satellite acquisition services and to the accommodation and installation of MacDonald Dettwiler and Associates Ltd. (MDA) employees. Revenue is recognized in the period that these expenditures are incurred or the service is performed. Details of the transactions related to this account are as follows:

(in thousands of dollars) 2012
$
2011
$
Deferred revenue as at April 1st 9 35
Plus: Amounts received 1,441 1,443
Less: Services rendered 1,374 1,469
Deferred revenue as at March 31 76 9

6. Employee Future Benefits

(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. Benefits are integrated with Canada/Quebec Pension Plans benefits and they are indexed to inflation.

Both the employees and the Agency contribute to the cost of the Plan. The 2011-2012 expense amounts to $8.2 million ($7.7 million in 2010-2011), which represents approximately 1.8 times (1.9 times in 2010-2011) employees' contributions.

The Agency's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficits 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. Severance benefits, as at March 31, are as follows:

(in thousands of dollars) 2012
$
2011
$
Accrued benefits obligation, beginning of year 13,072 10,706
Transferred to another government department, effective November 15, 2011 (note 13) (460) -
12,612 10,706
Plus: Expense for the year 2,901 2,919
Less: Benefits paid during the year (3,552) (553)
Accrued benefits obligation, end of year 11,961 13,072

As part of collective agreement negociations 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 in 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 oustanding severance benefit obligation.

7. Other Liabilities and Other Receivables

(a) Other Liabilities

(in thousands of dollars) 2012
$
2011
$
Non-monetary exchange CSA/NASA - 12,571
Contractor's holdbacks 8,357 8,818
Participation of provinces – RADARSAT-1 97 97
8,454 21,486

(b) Other Receivables

(in thousands of dollars) 2012
$
2011
$
Non-monetary exchange CSA/NASA 8,177 -
Other non-monetary exchange 47 -
8,224 -

Non-monetary exchange CSA/NASA

Under the International Space Station Agreement, which was executed in 1998, and ratified by Canada in year 2000, following the passing of the Civil International Space Station Agreement Implementation Act, in 1999 the Agency signed a barter agreement with NASA in August 2001, which the fair value was estimated at $20.8 million U.S. This agreement provided that the Agency would exchange a part of its utilization rights on the International Space Station and agreed to assume repair costs for its Special Purpose Dexterous Manipulator. In return, NASA would provide to the Agency, astronaut training, satellite and launch services. The transactions under this barter agreement took place over the lifetime of the International Space Station. During fiscal years 2002 to 2012, the Agency received all of the astronaut training valued at $12.6 million CDN and NASA did exercise the option to access its proportion of Canada's utilization rights on the International Space Station valued at $20.8 million CDN. Therefore, as at March 31, 2012, the Agency recorded a net value of $8.2 million CDN as other receivables. Relative to this barter agreement or other agreements of the same kind that the Agency may enter into with its International Partners under the Agreement on the International Space Station, the Treasury Board grants to the Agency an exemption under the Policy on Accounting for Non-Monetary Transactions and does not have to charge the transaction(s) to its appropriation.

Participation of provinces – RADARSAT-1

This account was established to record moneys received for both cost-sharing and advance payments for RADARSAT scenes. RADARSAT-1 is an Earth Observation satellite to monitor environmental change and planets natural resources. It provides information to both commercial and scientific users in the fields of agriculture, cartography, hydrology, forestry, oceanography, ice studies and coastal monitoring.

8. Accounts Receivable and Advances

(in thousands of dollars) 2012
$
2011
$
Restated
(note 15)
Receivables from other federal departments or organizations 1,012 1,595
Receivables from external entities 1,005 1,169
Employee advances 69 23
Less: Allowance for doubtful accounts on receivables from external entities (30) (27)
Gross accounts receivable 2,056 2,760
Accounts receivable held on behalf of Government (826) (628)
Net accounts receivable 1,230 2,132

9. Prepaid Expenses

(in thousands of dollars) 2012
$
2011
$
RADARSAT-2 prepaid services 311,800 361,054
Prepaid transfer payments 2,961 3,304
Other prepaid expenses 527 554
315,288 364,912

RADARSAT-2 prepaid services

Under a private-public partnership agreement, the Agency has invested $445.9 million in the construction and launch of the RADARSAT-2 satellite. For its participation, the Agency received credits for the supply of data (imagery) to Canadian Government departments and agencies over the life of the mission. During fiscal years 2010 to 2012, federal departments and organizations received imagery valued at $134.1 million.

10. Tangible Capital Assets

Cost
(in thousands of dollars)
Opening Balance
as at April 1st, 2011
$
Acquisitions
$
AdjustmentsFootnote 1
$
Disposals,
Write-Offs
and Write-Downs
$
Closing Balance
as at March 31, 2012
$
Land 85 - - - 85
Buildings, works and infrastructure 120,945 - 7,201 - 128,146
Material and equipment 41,521 676 678 (950) 41,925
Computer material 19,035 377 (5,123) (26) 14,263
Computer software 7,031 32 728 (46) 7,745
Other equipment 1,864,256 977 9,866 (14,145) 1,860,954
Motor vehicles 53 - - - 53
Other vehicles 444 - - - 444
Assets under construction 278,957 104,519 (18,871) (71) 364,534
2,332,327 106,581 (5,521) (15,238) 2,418,149
Accumulated amortization
(in thousands of dollars)
Opening Balance
as at April 1st, 2011
$
Amortization
$
AdjustmentsFootnote 1
$
Disposals,
Write-Offs
and Write-Downs
$
Closing Balance
as at March 31, 2012
$
Buildings, works and infrastructure 68,570 4,751 - - 73,321
Material and equipment 27,681 2,094 - (912) 28,863
Computer material 12,987 1,437 (3,163) (26) 11,235
Computer software 5,465 985 (131) (45) 6,274
Other equipment 1,276,668 89,505 (164) - 1,366,009
Motor vehicles 30 6 - - 36
Other vehicles 200 31 - - 231
1,391,601 98,809 (3,458) (983) 1,485,969
Net book value
(in thousands of dollars)
Opening Balance
as at April 1st, 2011
$
Closing Balance
as at March 31, 2012
$
Land 85 85
Buildings, works and infrastructure 52,375 54,825
Material and equipment 13,840 13,062
Computer material 6,048 3,028
Computer software 1,566 1,471
Other equipment 587,588 494,945
Motor vehicles 23 17
Other vehicles 244 213
Assets under construction 278,957 364,534
Net Book Value 940,726 932,180

On November 15, 2011, the Agency transferred computer material, computer software and other equipment with a net book value of $2,027,773 to Shared Services Canada. This transfer is included in the Adjustments columns (refer to note 13 for further detail on the transfer).

Also, during the year, the Agency transferred computer material with a net book value of $35,378 to the Department of Finance. This transfer is included in the Adjustments column.

11. Contractual Obligations

The nature of the Agency's activities can result in some large multi-year contracts and obligations whereby the Agency will be obligated to make future payments in order to carry out its transfer payment programs and for the acquisitions of goods and services. Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in thousands of dollars) 2013
$
2014
$
2015
$
2016
$
2017
& thereafter
$
Total
$
Acquisitions of goods and services 74,512 2,250 - - - 76,762
Transfer payments 23,531 20,119 18,831 15,818 12,191 90,490
Total 98,043 22,369 18,831 15,818 12,191 167,252

The contractual obligations for the acquisition of goods and services are mostly related to the construction of RADARSAT Constellation and to the Canadian Space Station Program, while the obligations for transfer payments are related to the contributions to the European Space Agency.

12. Related Party Transactions

The Agency is related as a result of common ownership to all government departments, organizations, 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 services organizations, related to accommodation, legal services and the employer's contribution to the health and dental insurance plans. These services provided without charge have been recorded in the Agency's Statement of Operations and Agency Net Financial Position as follows:

(in thousands of dollars) 2012
$
2011
$
Employer's contribution to the health and dental insurance plans 5,823 5,372
Legal Services 257 246
Accommodation 212 210
6,292 5,828

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 services organizations so that one department performs services for all departments and organizations without charge. The costs of these services, such as payroll and cheque issuance services provided by Public Works and Government Services Canada, are not included in the Agency's Statement of Operations and the Agency's Net Financial Position.

(b) Other transactions with related parties

(in thousands of dollars) 2012
$
2011
$
Expenses - other government departments and organizations 36,478 38,583
Revenues - other government departments and organizations 141 79

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

13. Transfers to another Government Department

Effective November 15, 2011, the Agency transferred the responsibility for e-mail, data centre and network services to Shared Services Canada (SSC) in accordance with the Order-in-Council P.C. 2011-1297, including the stewardship responsibility for the assets and liabilities related to the program. Accordingly, the Agency transferred the following assets and liabilities to SSC on November 15, 2011:

(in thousands of dollars) $
Assets:
Tangible capital assets (net book value) (note 10) 2,028
Total assets transferred 2,028
Liabilities:
Vacation pay and compensatory leave 131
Severance benefits (note 6) 460
Total liabilities transferred 591
Adjustment to the Agency's net financial position 1,437

In addition, in 2011, comparative figures have been reclassified on the Statement of Operations and the Agency's Net Financial Position to present the revenues and expenses of the transferred operations.

During the transition period, the Agency continued to administer the transferred activities on behalf of SSC. The adnministered expenses amounted to $2,807,737 respectively, for the year. These expenses are not recorded in these financial statements.

14. Segmented Information

Presentation by segment is based on the Agency's Program Activity Architecture (PAA). 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 program activities, by major object of expense and by major type of revenue. The results for the period are as follows:

(in thousands of dollars) Space
Exploration
$
Space Data,
Information and Services
$
Future Canadian
Space Capacity
$
Internal Services
$
2012
$
2011
$
Restated
(note 15)
Operating expenses
Professional and special services 110,445 25,385 6,157 8,919 150,906 146,684
Amortization of tangible capital assets 90,958 2,338 917 4,162 98,375 103,869
Salaries and employee benefits 25,818 13,761 14,541 30,584 84,704 80,323
Acquisition of machinery and material 349 50,050 732 874 52,005 40,532
Loss on disposal, write-offs and write-downs of tangible capital assets 10,706 - 3,537 9 14,252 156
Travel and communications 2,444 1,278 1,185 1,141 6,048 6,335
Rentals 254 385 601 2,539 3,779 1,535
Utilities, materials and supplies 151 1,631 401 1,384 3,567 6,172
Information 6 39 613 1,674 2,332 2,809
Purchased repair and maintenance 58 18 177 860 1,113 1,536
Other 87 433 433 2,446 3,399 3,233
Expenses incurred on behalf of Government - - - (7) (7) -
Total operating expenses 241,276 95,318 29,294 54,585 420,473 393,184
Transfer payments
International organizations - - 35,419 - 35,419 33,966
Other Levels of Government 1,222 711 9,324 - 11,257 6,959
Industry - 280 - - 280 606
Individuals - - 203 - 203 316
Non-Profit Organizations - - 67 - 67 43
Total transfer payments 1,222 991 45,013 - 47,226 41,890
Total expenses 242,498 96,309 74,307 54,585 467,699 435,074
Revenues
Sale of rights and privileges - 715 - - 715 1,213
Sale of goods and services - - 5,311 - 5,311 3,650
Location and use of public property - 30 - 252 282 324
Gain on disposal of tangible assets - - - 30 30 10
Other revenues 20,803 114 7 109 21,033 48
Revenues earned on behalf of Government - (303) (5,313) (361) (5,977) (4,021)
Total Revenues 20,803 556 5 30 21,394 1,224
Net cost from continuing operations 221,695 95,753 74,302 54,555 446,305 433,850

15. Accounting changes

During 2011, amendments were made to Treasury Board Accounting Standard 1.2 - Departmental and Agency Financial Statements to improve financial reporting by government departments and organizations. The amendments are effective for financial reporting of fiscal years ending March 31, 2012, and later. The significant changes to the Agency's financial statements are described below. These changes have been applied retroactively, and comparative information for 2010-11 has been restated.

Net debt (calculated as liabilities less financial assets) is now presented in the Statement of Financial Position. Accompanying this change, the Agency now presents a Statement of Change in Net Debt and no longer presents a Statement of Equity.

Revenue and related accounts receivable are now presented net of non-respendable amounts in the Statement of Operations and the Agency's Net Financial Position, and the Statement of Financial Position. The effort of this change was to increase the net cost of operations before government funding and transfers by $5,977 thousands for 2012 ($4,021 thousands for 2011) and decrease total financial assets by $826 thousands for 2012 ($628 thousands for 2011).

Government funding and transfers, as well as the credit related to services provided without charge by other government departments, are now recognized in the Statement of Operations and the Agency's Net Financial Position under "Net cost of operations before government funding and transfers." In previous years, the Agency recognized these transactions directly in the Statement of Equity of Canada. The effect of this change was to decrease the net cost of operations after government funding and transfers by $405,928 thousands for 2012 ($377,430 thousands for 2011).

(in thousands of dollars) 2011
As previously stated
$
Effect of change
$
2011
Restated
$
Statement of Financial Position:
Assets held on behalf of Government - (628) (628)
Agency's financial position 1,264,514 (628) 1,263,886
Statement of Operations and the Agency's Net Financial Position:
Revenues 5,245 (4,021) 1,224
Government funding and transfers
Net cash provided by Government - 351,994 351,994
Change in due from Consolidated Revenue Fund - 19,608 19,608
Services provided without charge by other government departments - 5,828 5,828

16. Comparative information

Comparative figures have been reclassified in order to comply with the current year's presentation.

Footnotes

Footnote 1

Adjustments include assets under construction of $18,871,083 that were transferred to the other categories upon completion of the assets (buildings, works and infrastructure $7,200,921; material and equipment $678,336; computer material $38,628; computer software $867,006; and other equipment $10,086,192).

Return to first footnote 1 referrer