Consolidated departmental financial statements for year ended March 31, 2017 (unaudited)

Consolidated Departmental Financial Statements for year ended March 31, 2017 (unaudited) (PDF​, 1.0MB)

On this page

Statement of management responsibility including internal control over financial reporting

Responsibility for the integrity and objectivity of the accompanying consolidated departmental financial statements for the year ended March 31, 2017, and all information contained in these statements rests with Public Services and Procurement Canada (PSPC) management. These consolidated departmental financial statements have been prepared by management using the government'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 consolidated departmental financial statements. Some of the information in the consolidated departmental 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 PSPC's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in PSPC's Departmental Results Report, is consistent with these consolidated departmental 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 PSPC 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.

For the year ended March 31, 2017, a risk-based assessment of the system of ICFR was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in Annex A.

The effectiveness and adequacy of PSPC's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of PSPC'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 Minister.

The consolidated departmental financial statements of PSPC have not been audited.

Marie Lemay, P.Eng., ing.
Deputy Minister
Gatineau, Canada
August 30, 2017

Marty Muldoon, CPA, CMA, MBA
Chief Financial Officer
Gatineau, Canada
August 30, 2017

Consolidated statement of financial position (unaudited) as at March 31

This financial statement in table format, presents the assets and liabilities that the department is responsible for administering, the departmental net debt, and the departmental net financial position as at March 31, 2017 and 2016.

Comparative of consolidated statement of financial position (unaudited) as at March 31, 2017 and 2016 (in thousands of dollars)
  2017 2016
Liabilities
Accounts payable and accrued liabilities (note 4) 977,778 857,827
Environmental liabilities (note 5) 217,810 258,591
Vacation pay and compensatory leave 50,301 48,193
Other liabilities (note 6) 45,268 60,837
Seized property working capital account 4,925 2,749
Lease obligations for tangible capital assets (note 7) 2,251,222 2,408,680
Obligation under public private partnership (note 8) 135,989 137,852
Lease inducements 37,629 37,074
Employee future benefits (note 9) 52,739 69,147
Total net liabilities 3,773,661 3,880,950
Financial assets
Due from consolidated revenue fund 649,260 542,723
Accounts receivable and advances (note 11) 468,686 463,371
Total gross financial assets 1,117,946 1,006,094
Financial assets held on behalf of Government
Accounts receivable (note 11) (26,550) (12,358)
Total financial assets held on behalf of Government (26,550) (12,358)
Total net financial assets 1,091,396 993,736
Departmental net debt 2,682,265 2,887,214
Non-financial assets
Prepaid expenses 5,146 5,140
Tangible capital assets (note 12) 6,670,811 6,458,843
Total non-financial assets 6,675,957 6,463,983
Departmental net financial position (note 13) 3,993,692 3,576,769

Contingent liabilities (note 10)

Contractual obligations (note 14)

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

Marie Lemay, P.Eng., ing.
Deputy Minister
Gatineau, Canada
August 30, 2017

Marty Muldoon, CPA, CMA, MBA
Chief Financial Officer
Gatineau, Canada
August 30, 2017

Consolidated statement of operations and departmental net financial position (unaudited) for the year ended March 31

This financial statement in table format, reports the revenues and expenses by major program activity, as well as net cost of operations for the years ended March 31, 2017 and 2016.

Comparative of consolidated statement of operations and departmental net financial position (unaudited) for the year ended March 31, 2017 and 2016 (in thousands of dollars)
  2017 planned results 2017 2016
Expenses
Accommodation and real property services 4,211,702 4,314,144 3,992,561
Acquisitions 383,523 351,911 398,206
Federal pay and pension administration 241,769 299,292 227,422
Internal services 254,813 269,451 243,914
Specialized programs and services 145,857 177,921
101,389
Linguistic management and services 173,431 174,354 179,624
Receiver General for Canada 126,828 123,708 131,769
Integrity programs and services 30,430 31,504 33,162
Procurement Ombudsman 4,354 3,414 4,055
Total expenses 5,572,707 5,745,699 5,312,102
Revenues
Sales of goods and information products 1,416,163 1,489,928 1,306,871
Rentals 1,025,005 855,318 798,510
Services of a non-regulatory nature 453,155 484,207 489,967
Other revenues 49,763 232,565 71,664
Services of a regulatory nature 179,727 157,560 164,904
Revenue from seized property proceeds account (note 13) 29,957 26,274 32,686
Revenues earned on behalf of Government (98,131) (216,077) (109,872)
Total revenues 3,055,639 3,029,775 2,754,730
Net cost of operations before government funding and transfers 2,517,068 2,715,924 2,557,372
Government funding and transfers
Net cash provided by Government of Canada 0  2,995,403 2,766,873
Change in due from consolidated revenue fund 0  106,537 45,015
Services provided without charge by other government departments (note 15) 0  73,520 65,485
Transfer of tangible capital assets (to) from other government departments (note 15) 0  (42,577) 1,786
Transfer of salary overpayments to other government departments 0 (29) 0
Transfer of the transition payments for implementing salary payments in arrears 0 (7) (366)
Net cost of operations after government funding and transfers 0  (416,923)  (321,421)
Departmental net financial position—beginning of year 0 3,576,769 3,255,348
Departmental net financial position—end of year (note 13) 0 3,993,692 3,576,769

Segmented information (note 16)

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

Consolidated statement of change in departmental net debt (unaudited) for the year ended March 31

This financial statement in table format, presents the difference between the department's net cost of operations and the change in departmental net debt for the years ended March 31, 2017 and 2016.

Comparative of consolidated statement of change in departmental net debt (unaudited) for the year ended March 31, 2017 and 2016 (in thousands of dollars)
  2017 2016
Net cost of operations after government funding and transfers (416,923) (321,421)
Change due to tangible capital assets
Acquisitions of tangible capital assets (note 12) 617,098 569,440
Acquisitions of leased tangible capital assets (note 12) 21,488 25,047
Amortization of tangible capital assets (note 12) (424,643) (407,830)
Net loss on disposals of tangible capital assets including adjustments (73,465) (13,104)
Reclassification of assets under construction 71,490 (53,043)
Total change due to tangible capital assets 211,968 120,510
Change due to non-capital assets
Change due to prepaid expenses 6 (140)
Total change due to non-capital assets 6 (140)
Net decrease in departmental net debt (204,949) (201,051)
Departmental net debt—beginning of year 2,887,214 3,088,265
Departmental net debt—end of year 2,682,265 2,887,214

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

Consolidated statement of cash flows (unaudited) for the year ended March 31

This financial statement in table format, presents how the department generated and used cash in the accounting periods ended March 31, 2017 and 2016.

Comparative of consolidated statement of cash flows (unaudited) for the year ended March 31, 2017 and 2016 (in thousands of dollars)
  2017 2016
Operating activities
Net cost of operations before government funding and transfers 2,715,924 2,557,372
Non-cash items:
Amortization of tangible capital assets (note 12) (424,643) (407,830)
Adjustments of tangible capital assets/net loss on disposals (73,465) (13,104)
Reclassification of assets under construction 71,490 (53,043)
Services provided without charge by other government departments (note 15) (73,520) (65,485)
Transfer of the transition payments for implementing salary payments in arrears 7 366
Variations in consolidated statement of financial position:
(Increase) in accounts payable and accrued liabilities (119,951) (160,148)
Decrease in environmental liabilities 40,781 55,959
(Increase) in vacation pay and compensatory leave (2,108) (1,740)
Decrease (increase) in other liabilities 15,569 (810)
(Increase) decrease in seized property working capital account (2,176) 9,457
(Increase) decrease in lease inducements (555) 3,798
Decrease in employee future benefits 16,408 3,580
(Decrease) increase in accounts receivable and advances (8,877) 114,749
Increase (decrease) in prepaid expenses 6 (140)
Transfers of tangible capital assets to (from) other government departments (note 15) 42,577 (1,786)
Transfer of salary overpayments to other government departments 29 0
Cash used in operating activities 2,197,496 2,041,195
Capital investing activities
Acquisitions of tangible capital assets (note 12) 617,098 569,440
Acquisitions of assets under construction on leased tangible capital assets (note 12) 591 383
Gain on variation of obligation 1,179 0
Cash used in capital investing activities 618,868 569,823
Financing activities
Payments on lease obligations for tangible capital assets 177,176 154,170
Payments on obligation under public private partnership 1,863 1,685
Cash used in financing activities 179,039 155,855
Net cash provided by Government of Canada 2,995,403 2,766,873

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

Notes to the consolidated financial statements (unaudited) for the year ended March 31

The following notes contain information in addition to the consolidated financial statements.

1. Authority and objectives

The department of Public Works and Government Services Canada (PWGSC) was established effective June 20, 1996, under the department of Public Works and Government Services Act. This legislation specifies that PWGSC shall provide common, central and shared services to other government departments and agencies, thereby enabling them to provide programs and services to Canadians. As of November 4, 2015, PWGSC operates as Public Services and Procurement Canada (PSPC). PSPC's services are delivered through the following programs:

2. Summary of significant accounting policies

These consolidated 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

PSPC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to PSPC does not parallel financial reporting according to Canadian generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the consolidated statement of operations and departmental net financial position, and the consolidated 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 consolidated statement of operations and departmental net financial position are the amounts reported in the future-oriented statement of operations included in the 2016 to 2017 Report on Plans and Priorities. Planned results are not presented in the "Government funding and transfers" section of the consolidated statement of operations and departmental net financial position and in the consolidated statement of change in departmental net debt because these amounts were not included in the 2016 to 2017 Report on Plans and Priorities.

B. Consolidation

These consolidated financial statements include the accounts of four revolving funds as listed below, one of them being inactive. The three active revolving funds prepare a complete set of financial statements annually that are audited and published in the Public Accounts of Canada. The accounts of these revolving funds have been consolidated with those of PSPC and intradepartmental balances and transactions have been eliminated.

The PSPC revolving funds are as follows:

C. Net cash provided by government

PSPC operates within the consolidated revenue fund (CRF), which is administered by the Receiver General for Canada. All cash received by PSPC is deposited to the CRF and all cash disbursements made by PSPC are paid from the CRF. The net cash provided by Government of Canada, with the exception of amounts held on behalf of government, is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.

D. Amounts due from the consolidated revenue fund

These 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 PSPC is entitled to draw from the CRF, without further authorities, in order to discharge its liabilities.

E. Revenues

Revenues are recorded on an accrual basis of accounting:

F. Expenses

Expenses are recorded on an accrual basis of accounting:

G. Employee future benefits

  1. Pension benefits: eligible employees participate in the public service pension plan, a multiemployer pension plan administered by the Government of Canada. PSPC's contributions to the plan are charged to expenses in the year incurred and represent the total departmental obligation to the plan. PSPC's responsibility with regard to the plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the plan's sponsor
  2. Severance benefits: 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

H. Accounts receivable and advances

Accounts receivable and advances are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain.

I. Lease inducements

Lease inducements represent incentives received by PSPC to enter into a lease. Lease inducements include incentives such as: free rent, cash received to be applied to rent, lump sum cash, leasehold improvements and moving costs paid by the lessor. Lease inducements are accounted for as follows:

J. Contingent liabilities

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

K. Environmental liabilities

Environmental liabilities consist of estimated costs related to the remediation of contaminated sites as well as estimated costs related to obligations associated with the retirement of tangible capital assets and other environmental liabilities.

Contaminated sites

A liability for remediation of contaminated sites is recognized when all of the following criteria are satisfied: an environmental standard exists, contamination exceeds the environmental standard, the department is directly responsible or accepts responsibility, it is expected that future economic benefits will be given up, and a reasonable estimate of the amount can be made. The liability reflects the department's best estimate of the amount required to remediate the sites to the current minimum standard for its use prior to contamination. When the cash flows required to settle or otherwise extinguish a liability are expected to occur over extended future periods, a present value technique is used. The discount rate applied is taken from the government's consolidated revenue fund monthly lending rates for periods of one year and over which is based on the Government's cost of borrowing. The discount rates used are based on the term rate associated with the estimated number of years to complete remediation. For remediation costs with estimated future cash flows spanning more than 25 years, the Government of Canada's 25-year consolidated revenue fund lending rate is used as the discount rate.

The recorded environmental liabilities are adjusted each year, as required, for present value adjustments, inflation, new obligations, and changes in management estimates and actual costs incurred.

If the likelihood of the department's responsibility is not determinable, a contingent liability is disclosed in the notes to the financial statements. If measurement uncertainty exists, it is also disclosed in the notes to the financial statements.

L. Tangible capital assets

Tangible capital assets are recorded at their acquisition cost according to the following capitalization threshold:

PSPC does not capitalize intangibles; works of art and historical treasures that have cultural, aesthetic or historical value; immovable assets located on Indian reserves; or museum collections.

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of each asset as follows:

This note to the financial statements in table format represents the tangible capital asset classes (infrastructure, buildings, machinery, vehicles and Information technology [IT] software) with their respective amortization period. The tangible capital assets classes are on the left side of this table and the amortization period is on the right side of this table.

Tangible capital assets
Asset class Amortization period
Buildings 20 to 60 years
Works and infrastructure 20 to 40 years
Machinery and equipment 3 to 20 years
Informatics hardware and software 1 to 10 years
Vehicles 3 to 25 years
Leasehold improvements Lesser of the remaining term of the lease or the useful life of the improvement
Leased tangible capital assets In accordance with asset class if ownership is likely to transfer to PSPC; otherwise, over the lease term

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.

M. Seized property working capital account

The seized property working capital account was established pursuant to section 12 of the Seized Property Management Act. Expenses incurred, and advances made, to maintain and manage any seized or restrained property and other properties subject to a management order or forfeited to Her Majesty, are charged to this account. The seized property working capital account is credited when expenses and advances to third parties are repaid or recovered and when revenues from these properties or proceeds from their disposal are received and credited with seized cash upon forfeiture.

The total amount authorized to be outstanding at any time is $50,000,000.

Any shortfall between the proceeds from the disposition of any property forfeited to Her Majesty and the amounts that were charged to this account and that are still outstanding, is charged to a seized property proceeds account and credited to the seized property working capital account.

N. Measurement uncertainty

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the consolidated financial statements. At the time of preparation of these consolidated statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are the allowance for doubtful accounts, contingent liabilities, environmental liabilities, accounts receivable held on behalf of government, the liability for vacation pay and compensatory leave, 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 consolidated financial statements in the year they become known.

3. Parliamentary authorities

PSPC receives most of its funding through annual parliamentary authorities. Items recognized in the consolidated statement of operations and departmental net financial position and the consolidated statement of financial position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, PSPC 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 costs of operations to current year authorities used (in thousands of dollars)

  2017 2016
Net cost of operations before government funding and transfers

2,715,924

2,557,372

Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (note 12) (424,643) (407,830)
Adjustments of tangible capital assets/ net loss on disposals (15,892) (13,104)
Reclassification of assets under construction including capitalization of previous years 71,490 (53,043)
Services provided without charge by other government departments (note 15) (73,520) (65,485)
Refunds / Adjustments to previous years' expenses 38,815 20,695
Refund of program expenditures 10,422 7,614
Revenues not available for spending in the current year (6,901) (15,462)
Net revenue from seized property proceeds account (note 13) (2,985) 18,541
(Increase) in vacation pay and compensatory leave (2,205) (1,740)
Decrease in employee future benefits 16,786 3,544
Decrease in environmental liabilities 40,781 55,959
Decrease (increase) allowance for contingent liabilities 2,259 (1,121)
(Increase) in accrued liabilities not affecting authorities (11,366) (4,998)
Payment in lieu of taxes payment not yet recovered 31,455 0
Other (376) 894
Subtotal of adjustments for items affecting net cost of operations but not affecting authorities (325,880) (455,536)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets (note 12) 617,098 569,440
Acquisitions of assets under construction as leased tangible capital assets (note 12) 591 383
Payments of lease obligations for tangible capital assets 177,176 154,170
Payments of obligation under public private partnership 1,863 1,685
Transfer of the transition payments for implementing salary payments in arrears 7 366
Net cash variation of prepaid expenses and advances affecting authorities 2,316 463
Variation of lease inducements affecting authorities 394 4,973
Account receivable related to salary overpayment 15,938 0
Subtotal of adjustments for items not affecting net cost of operations but affecting authorities 815,383 731,480
Current year budgetary authorities used 3,205,427 2,833,316

B. Authorities provided and used (in thousands of dollars)

  2017 2016
Vote 1—operating expenditures 2,005,221 1,775,975
Vote 5—capital expenditures 1,399,494 1,327,297
Statutory items:
Revolving funds 365,824 349,805
Other 134,973 107,575
Authorities provided 3,905,512 3,560,652
Less:
Authorities available for future years (413,413) (366,188)
Lapsed authorities (286,672) (361,148)
Current year budgetary authorities used 3,205,427 2,833,316
Seized Property Management Act (2,177) 9,457
Imprest fund 34 265
Current year non-budgetary authorities used (2,143) 9,722

4. Accounts payable and accrued liabilities

The following table presents details of PSPC's accounts payable and accrued liabilities (in thousands of dollars)
  2017 2016
Accounts payable—other government departments and agencies 46,718 43,885
Accounts payable—external parties 428,312 366,914
Total accounts payable 475,030 410,799
Accrued salaries and wages 87,311 65,481
Accrued liabilities 327,606 306,321
Contractors' holdbacks 87,831 75,226
Total accounts payable and accrued liabilities 977,778 857,827

5. Environmental liabilities

This note presents the departmental environmental liabilities.

Remediation of contaminated sites

The government has developed a "Federal Approach to Contaminated Sites", which incorporates a risk-based approach to the management of contaminated sites. Under this approach the government has inventoried the contaminated sites on federal lands that have been identified, allowing them to be classified, managed and recorded in a consistent manner. This systematic approach aides in the identification of the high risk sites in order to allocate limited resources to those sites which pose the highest risk to the environment and human health.

The department has identified 150 sites (156 sites in 2016) where contamination may exist and assessment, remediation and monitoring may be required. Of these, the department has assessed 77 sites (79 sites in 2016) where action is possible and for which a liability of $215,278,786 ($250,501,890 in 2016) has been recorded. This liability estimate has been determined after the sites are assessed and is based on environmental experts reviewing the results of site assessments, and proposing possible remediation solutions.

In addition, a statistical model based upon a projection of the number of sites that will proceed to remediation and upon which current and historical costs are applied is used to estimate the liability for a group of unassessed sites. As a result, there are 10 unassessed sites (18 sites in 2016) ‎where a liability estimate of $2,530,774 ($8,089,392 in 2016) has been recorded using this model.

These two estimates combined, totalling $217,809,560 ($258,591,282 in 2016) represent management's best estimate of the costs required to remediate the sites to the current minimum standard for its use prior to contamination, based on information available at the financial statement date.

Of the remaining 63 sites (59 sites in 2016), no liability for remediation has been recognized. Some of these sites are at various stages of testing and evaluation and if remediation is required, liabilities will be reported as soon as a reasonable estimate can be determined.

For other sites, the department does not expect to give up any future economic benefits (there is likely no significant environmental impact or human health threats). These sites will be re-examined and a liability for remediation will be recognized if future economic benefits will be given up.

The following table presents the total estimated amounts of these liabilities by nature and source, the associated expected recoveries and the total undiscounted future expenditures as at March 31, 2017, and March 31, 2016. When the liability estimate is based on a future cash requirement, the amount is adjusted for inflation using a forecast Consumer Price Index (CPI) rate of 2%. Inflation is included in the undiscounted amount. The Government of Canada lending rate applicable to loans with similar terms to maturity has been used to discount the estimated future expenditures. The March 2017 rates range from 0.89% for a 2-year term to 2.55% for a 25-year term or greater.

The department's ongoing efforts to assess contaminated sites, asset retirement obligations and unexploded explosive ordnance (UXO) affected sites may result in additional environmental liabilities. Any additional liabilities will be accrued in the year in which they become known and can be reasonably estimated.

Environmental liabilities (in thousands of dollars)
Nature and source Number of sites 2017 Discounted estimated liability 2017 Estimated total undiscounted expenditures 2017 Number of sites 2016 Discounted estimated liability 2016 Estimated total undiscounted expenditures 2016
Former mineral exploration sitesFootnote 1 40 83,912 137,348 38 75,160 114,832
Military and former military sitesFootnote 2 15 7,587 6,538 19 5,013 5,051
Fuel related practicesFootnote 3 9 6,989 7,091 9 4,437 4,455
Landfill/waste sitesFootnote 4 4 24,765 25,890 4 26,930 28,103
Engineered asset/air and land transportationFootnote 5 40 92,151 93,164 43 138,308 140,264
Marine facilities/aquatic sitesFootnote 6 5 0 0 8 0 0
Parks and protected areasFootnote 7 1 752 77 1 4,657 4,657
Office/commercial/industrial operationsFootnote 8 31 1,654 1,430 31 4,086 4,086
OtherFootnote 9 5 0 0 3 0 0
Total 150 217,810 271,538 156 258,591 301,448

6. Other liabilities

This note presents the departmental other liabilities.

Seized property—Cash

This account was established pursuant to the Seized Property Management Act, to record seized cash. These funds will be deposited to the consolidated revenue fund and credited to the account until returned to the owner or forfeited.

Contractors' security deposits—Cash and bonds

This account was established to record contractors' security deposits that are required for the satisfactory performance of work in accordance with the government contracts regulations.

Deposits

This account was established to report transactions associated with deposits on disposals for PSPC, security deposits and revenues of leased space belonging to PSPC.

The following table presents details of other liabilities (in thousands of dollars)
  April 1, 2016 Receipts and credits Payments and charges March 31, 2017
Seized property—Cash 51,246 17,491 (27,888) 40,849
Contractors' security deposits—Cash and bonds 8,434 5,013 (9,244) 4,203
Deposits 1,157 1,595 (2,536) 216
Total 60,837 24,099 (39,668) 45,268

7. Lease obligations for tangible capital assets

PSPC has entered into capital lease agreements for tangible capital assets with a cost of $2,614,293,000 and accumulated amortization of $1,096,480,701 as at March 31, 2017 ($2,718,323,892 and $1,077,931,549 respectively as at March 31, 2016). The obligations for upcoming years include the following:

Lease obligations for tangible capital assets (in thousands of dollars)
  Total future minimum lease payments Imputed interest
(weighted average rate 5.6%; 5.6% in 2016)
2017 2016
Land 4,262 590 3,672 4,647
Buildings 3,437,437 1,189,887 2,247,550 2,404,033
Total 3,441,699 1,190,477 2,251,222 2,408,680
The following table presents the future minimum capital lease payments (in thousands of dollars)
  2018 2019 2020 2021 2022 2023 and thereafter Total
Land 1,382 1,382 1,382 116 0 0 4,262
Buildings 283,223 282,803 229,753 209,785 200,288 2,231,585 3,437,437
Total 284,605 284,185 231,135 209,901 200,288 2,231,585 3,441,699

8. Obligation under public private partnership

PSPC entered into a public private partnership agreement for the construction and management of the Royal Canadian Mounted Police (RCMP) E division building. Construction of the building was completed in 2013 and the cost of $294,657,316 was capitalized during the same year. The building was funded by a private partner ($142,797,000) and PSPC ($151,860,316).

The obligations for upcoming years include the following (in thousands of dollars)
  Total future minimum payments Imputed interest (10.52%) 2017 2016
Building 323,826 187,837 135,989 137,852
Total 323,826 187,837 135,989 137,852
The following table presents the future minimum payments (in thousands of dollars)
  2018 2019 2020 2021 2022 2023 and thereafter Total
Building 15,624 15,624 15,624 15,624 15,624 245,706 323,826
Total 15,624 15,624 15,624 15,624 15,624 245,706 323,826

9. Employee future benefits

This note presents the departmental employee future benefits.

A. Pension benefits

PSPC 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% 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 they are indexed to inflation.

Both the employees and the department 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 2017 expense amounts to $102,480,102 ($101,435,900 in 2016). For Group 1 members, the expense represents approximately 1.12 times (1.25 times in 2016) the employee contributions and, for Group 2 members, approximately 1.08 times (1.24 times in 2016) the employee contributions.

PSPC'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

Severance benefits provided to PSPC 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, 2017, 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:

Severance benefits (in thousands of dollars)
  2017 2016
Accrued benefit obligation, beginning of year 69,147 72,727
Expense (12,144) 8,342
Benefits paid during the year (4,264) (11,922)
Accrued benefit obligation, end of year 52,739 69,147

10. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. PSPC is involved in contingent liabilities for claims and litigations.

Claims and litigation

Claims have been made against PSPC in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. PSPC has recorded an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to $38,859,012 ($69,396,332 in 2016) at March 31, 2017.

11. Accounts receivable and advances

The following table presents details of PSPC's accounts receivable and advances (in thousands of dollars)
  2017 2016
Accounts receivable—Other government departments and agencies 359,668 362,104
Accounts receivable—External parties 112,242 104,729
Advances 2,261 101
Subtotal accounts receivable and advances 474,171 466,934
Less: Allowance for doubtful accounts on receivables from external parties (5,485) (3,563)
Gross accounts receivable and advances 468,686 463,371
Accounts receivable held on behalf of Government (26,550) (12,358)
Net accounts receivable and advances 442,136 451,013

12. Tangible capital assets

This note to the financial statements in table format presents the detail by category, of acquisitions and other adjustments of the account "tangible capital assets" presented at the consolidated statement of financial position, and this, for the year ended March 31, 2017.

Cost of tangible capital assets (in thousands of dollars)
  Opening balance Acquisitions Adjustments Disposals and write-offs Closing balance
Tangible capital assets
Land 243,001 0 4,784 (2,003) 245,782
Buildings 5,096,863 0 526,762 (128,321) 5,495,304
Works and infrastructure 1,320,064 0 97,423 (3,630) 1,413,857
Machinery and equipment 23,268 43 1,347 (817) 23,841
Informatics hardware and software 598,008 662 140,100 (401) 738,369
Vehicles 9,456 320 16 (537) 9,255
Leasehold improvements 933,283 0 22,417 (847) 954,853
Subtotal tangible capital assets 8,223,943 1,025 792,849 (136,556) 8,881,261
Assets under construction
Buildings 1,133,449 474,353 (515,170) 0 1,092,632
Works and infrastructure 43,245 84,302 (49,541) 0 78,006
Informatics hardware and software 103,785 40,968 (134,068) 0 10,685
Leasehold improvements 10,807 16,450 (11,022) 0 16,235
Subtotal assets under construction 1,291,286 616,073 (709,801) 0 1,197,558
Public private partnership
Building 294,657 0 0 0 294,657
Subtotal public private partnership 294,657 0 0 0 294,657
Leased tangible capital assets
Land 39,058 0 (8,342) 0 30,716
Buildings 2,679,266 20,897 (91,208) (26,582) 2,582,373
Assets under construction 0 591 613 0 1,204
Subtotal leased tangible capital assets 2,718,324 21,488 (98,937) (26,582) 2,614,293
Total 12,528,210 638,586 (15,889) (163,138) 12,987,769

This note to the financial statements in table format presents the detail by category, of cumulated amortization, of the account "tangible capital assets" presented at the consolidated statement of financial position, and this, for the year ended March 31, 2017 and the net book value for the years ended March 31, 2017 and 2016.

Accumulated amortization of tangible capital assets (in thousands of dollars)
  Opening balance Amortization Adjustments Disposals and write-offs Closing balance Net book value 2017 Net book value 2016
Tangible capital assets
Land 0 0 0 0 0 245,782 243,001
Buildings 3,498,116 106,307 33,361 (89,148) 3,548,636 1,946,668 1,598,747
Works and infrastructure 576,296 49,651 46 (1,712) 624,281 789,576 743,768
Machinery and equipment 10,082 1,254 16 (817) 10,535 13,306 13,186
Informatics hardware and software 301,344 69,020 19 (368) 370,015 368,354 296,664
Vehicles 6,483 666 12 (528) 6,633 2,622 2,973
Leasehold improvements 569,934 54,767 0 (729) 623,972 330,881 363,349
Subtotal tangible capital assets 4,962,255 281,665 33,454 (93,302) 5,184,072 3,697,189 3,261,688
Assets under construction
Buildings 0 0 0 0 0 1,092,632 1,133,449
Works and infrastructure 0 0 0 0 0 78,006 43,245
Informatics hardware and software 0 0 0 0 0 10,685 103,785
Leasehold improvements 0 0 0 0 0 16,235 10,807
Subtotal assets under construction 0 0 0 0 0 1,197,558 1,291,286
Public private partnership
Building 29,181 7,222 2 0 36,405 258,252 265,476
Subtotal public private partnership 29,181 7,222 2 0 36,405 258,252 265,476
Leased tangible capital assets
Land 0 0 0 0 0 30,716 39,058
Buildings 1,077,931 135,756 (91,657) (25,549) 1,096,481 1,485,892 1,601,335
Assets under construction 0 0 0 0 0 1,204 0
Subtotal leased tangible capital assets 1,077,931 135,756 (91,657) (25,549) 1,096,481 1,517,812 1,640,393
Total 6,069,367 424,643 (58,201) (118,851) 6,316,958 6,670,811 6,458,843

13. Departmental net financial position

A portion of PSPC's net financial position is restricted and earmarked for specified purposes.

The seized property proceeds account was established pursuant to section 13 of the Seized Property Management Act. The net proceeds, fines, or funds received from the disposition of seized and forfeited properties to Her Majesty and governments of foreign states (respectively) pursuant to agreements for the purpose of the act are to be earmarked for specified purposes. Under the act, expenses to be charged against the revenues include: operating expenses incurred in carrying out the purpose of the act, amounts paid as a result of claims and repayments of advances from the Minister of Finance, interest on the drawdown from the seized property working capital account and distribution of the proceeds to the relevant jurisdictions and the consolidated revenue fund.

Related revenues and expenses are included in the consolidated statement of operations and departmental net financial position. Activity in the account is as follows:

Departmental net financial position (in thousands of dollars)
  2017 2016
Seized property proceeds account—restricted, beginning of year 37,510 18,969
Revenues 26,274 32,686
Expenses (29,259) (14,145)
Subtotal of seized property proceeds account—restricted (2,985) 18,541
Seized property proceeds account—restricted, end of year 34,525 37,510
Unrestricted 3,959,167 3,539,259
Departmental net financial position—end of year 3,993,692 3,576,769

14. Contractual obligations

The nature of PSPC'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 ($10 million or more) that can be reasonably estimated are summarized as follows:

This note to the financial statements in table format presents a summary of future payments by year under existing contractual obligations at March 31, 2017.

Contractual obligations (in thousands of dollars)
  2018 2019 2020 2021 2022 and thereafter Total
Tangible capital assets 378,034 32,360 2,037 0 0 412,431
Tangible capital assets—future capital leases 488 5,460 6,318 6,318 110,332 128,916
Operating leases 302,715 305,593 302,645 280,552 884,136 2,075,641
Purchases 1,751,126 1,609,941 1,710,137 1,466,646 5,612,938 12,150,788
Purchases—future capital leases 0 2,754 3,004 3,051 60,230 69,039
Total 2,432,363 1,956,108 2,024,141 1,756,567 6,667,636 14,836,815

15. Related party transactions

PSPC is related as a result of common ownership to all government departments, agencies and Crown corporations of Canada. PSPC enters into transactions with these entities in the normal course of business and on normal trade terms, as disclosed below.

A. Common services provided without charge by other government departments

During the year, PSPC received services without charge from certain common service organizations related to 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 PSPC's Consolidated statement of operations and departmental net financial position as follows:

Common services provided without charge by other government departments (in thousands of dollars)
  2017 2016
Employer's contribution to the health and dental insurance plans (excluding revolving funds) paid by Treasury Board 63,298 58,210
Legal services provided by Justice Canada 6,888 4,946
Workers' compensation coverage provided by Employment and Social Development Canada 3,334 2,329
Total 73,520 65,485

The government has centralized some of its administrative activities for efficiency, cost-effectiveness 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 audit services provided by the Office of the Auditor General and information technology infrastructure services provided by Shared Services Canada are not included in PSPC's consolidated statement of operations and departmental net financial position.

B. Common services provided without charge to other government departments

As a federal common service provider, PSPC provides accommodation without charge to other government departments. Throughout the fiscal year, PSPC provided accommodation without charge to other government departments for a fair value amounting to $1,258,527,615 ($1,278,144,000 in 2016). These accommodation services are not recognized as revenues in the consolidated statement of operations and departmental net financial position.

C. Other transactions with related parties (in thousands of dollars)

  2017 2016
Accounts receivable—other government departments and agencies 359,668 362,104
Accounts payable—other government departments and agencies 46,718 43,885
Consolidated expenses—other government departments and agencies 567,419 440,188
Consolidated revenues—other government departments and agencies 2,781,113 2,362,407

Expenses and revenues disclosed above exclude common services provided without charge, which are already disclosed in note 15A and 15B.

D. Transfers of tangible capital assets from other government departments

During the year, PSPC transferred out lands and buildings to Library and Archive Canada and Correctional Services Canada. In the previous year, PSPC transferred in lands, buildings and works and infrastructure from the department of National Defence and transferred out lands to Fisheries and Oceans Canada and vehicles to Transport Canada. The transfers were measured at their net book values.

Transfers of tangible capital assets from other government departments (in thousands of dollars)
  2017 2016
Correctional Services (920) 0
Department of National Defence 0 1,790
Fisheries and Oceans 0 (1)
Library and Archives (41,657) 0
Transport Canada 0 (3)
Total (42,577) 1,786

16. Segmented information

Presentation by segment is based on PSPC program alignment architecture. 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 by program, by major object of expense, and by major type of revenue. The segmented results for the period are as follows:

Segmented information (in thousands of dollars)
Accommodation and real property services Acquisitions Internal services Federal pay and pension administration Linguistic management and services Receiver General for Canada Specialized programs and services Integrity programs and services Procurement Ombudsman Intradepartmental transactions 2017 2016
Expenses
Transfer payments
Payments in lieu of taxes to municipalities and other taxing authorities on behalf of other departments 595,925 0 0 0 0 0 0 0 0 0 595,925 450,405
Recovery from other departments for payments in lieu of taxes (595,925) 0 0 0 0 0 0 0 0 0 (595,925) (450,405)
Subtotal of transfer payments 0 0 0 0 0 0 0 0 0 0 0 0
Operating expenses
Salaries and employee benefits 381,294 171,684 271,690 166,581 109,939 27,253 55,357 31,893 2,629 (109) 1,218,211 1,185,089
Professional and special services 1,071,614 62,840 117,830 64,233 43,372 7,421 45,832 6,872 572 (371,278) 1,049,308 754,805
Repairs and maintenance 1,052,304 8 (4,197) 1,049 90 353 1,305 150 11 (8,336) 1,042,737 899,080
Rentals 979,243 785 6,239 2,107 5,754 576 23,491 961 22 (31,856) 987,322 1,022,068
Amortization of tangible capital assets 357,923 8 955 58,750 3,743 517 2,721 24 0 0 424,641 407,830
Land, buildings and worksFootnote 10 307,565 (19) (2,130) 0 0 0 0 0 0 (353) 305,063 277,556
Utilities, materials and supplies 83,401 136,645 594 852 136 2,037 365 275 14 (9,919) 214,400 219,821
Payments in lieu of taxes 180,361 0 0 0 0 0 0 0 0 0 180,361 157,389
Interest on capital lease payments 132,842 0 0 0 0 0 0 0 0 0 132,842 143,478
Machinery and equipmentFootnote 10 49,912 286 18,475 668 437 101 4,412 215 31 (6,427) 68,110 74,094
Transportation and communications 14,825 3,348 2,833 6,252 1,366 29,474 11,723 754 37 (2,648) 67,964 69,992
Interest and banking fees 226 13 5 1 5 52,899 1 0 0 (1,662) 51,488 53,548
Expenses from seized property proceeds account (note 13) 0 0 0 0 0 0 29,259 0 0 0 29,259 14,145
Other expenses 74,891 3,997 7,240 (2,211) 53,329 798 5,671 1,788 0 (128,987) 16,516 (57,154)
Information 1,939 329 2,099 1,104 279 2,847 9,391 11 98 (2,892) 15,205 23,379
Interest on obligation under public private partnership 13,762 0 0 0 0 0 0 0 0 0 13,762 13,939
Reclassification of assets under construction (71,490) 0 0 0 0 0 0 0 0 0 (71,490) 53,043
Intradepartmental transactions (316,468) (28,013) (152,182) (94) (44,096) (568) (11,607) (11,439) 0 564,467 0 0
Consolidated expenses 4,314,144 351,911 269,451 299,292 174,354 123,708 177,921 31,504 3,414 0 5,745,699 5,312,102
Revenues
Sales of goods and information products 1,546,373 262 87 0 0 0 2,737 0 0 (59,531) 1,489,928 1,306,871
Rentals 877,618 0 1,141 0 0 0 0 0 0 (23,441) 855,318 798,510
Services of a non-regulatory nature 66,189 225,742 157,590 94 158,280 946 127,933 23,614 0 (276,181) 484,207 489,967
Other revenues 360,561 8,148 20,950 23,276 5,873 371 15,327 2,840 0 (204,781) 232,565 71,664
Services of a regulatory nature 6,004 0 642 132,208 0 19,239 0 0 0 (533) 157,560 164,904
Revenues from seized property proceeds account (note 13) 0 0 0 0 0 0 26,274 0 0 0 26,274 32,686
Revenues earned on behalf of Government (146,102) (8,111) (17,844) (23,429) (3) (1,180) (16,568) (2,840) 0 0 (216,077) (109,872)
Intradepartmental transactions (316,468) (28,013) (152,182) (94) (44,096) (568) (11,607) (11,439) 0 564,467 0 0
Consolidated revenues 2,394,175 198,028 10,384 132,055 120,054 18,808 144,096 12,175 0 0 3,029,775 2,754,730
Net cost of operations 1,919,969 153,883 259,067 167,237 54,300 104,900 33,825 19,329 3,414 0 2,715,924 2,557,372

Services of a non-regulatory nature are mainly comprised of special accommodation and real property services, real property project management services, translation services, as well as freight services, material transportation and travel procurement.

Services of a regulatory nature are mainly comprised of cost recovery for services provided to administer the Public Service Superannuation Act (PSSA) and for payment services for Receiver General functions.

17. Comparative figures

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

Date modified: