Canadian Pari-Mutuel Agency Revolving Fund

Public Accounts of Canada 2015 Volume III - Top of the page Navigation

Statement of Management Responsibility

We have prepared the accompanying financial statements of the Canadian Pari‑Mutuel Agency Revolving Fund as required by and in accordance with the policy of Treasury Board on Special Revenue Spending Authorities. These financial statements were prepared by the management of the Fund in accordance with the significant accounting policies set out in Note 2 of the statements, on a basis consistent with that of the preceding year.

Responsibility for the integrity and objectivity of these financial statements rests with the management of the Fund. The information included in these financial statements is based on management's best estimates and judgement with due consideration given to materiality. To fulfil its accounting and reporting responsibilities, the Fund maintains a set of accounts which provides a centralized record of the Fund's financial transactions. Financial information submitted to the Public Accounts of Canada and included in the department's Departmental Performance Report is consistent with that in these financial statements.

The Fund's Corporate Services division develops and disseminates financial management and accounting policies and issues specific directives which maintain standards of accounting and financial management. The Fund maintains systems of financial management and internal control which gives due consideration to costs, benefits and risks. They are designed to provide reasonable assurance that transactions are properly authorized by Parliament, are executed in accordance with prescribed regulations, and are properly recorded to maintain accountability of Government funds and safeguard the assets under the Fund's administration. Financial management and internal control systems are augmented by the maintenance of internal audit programs. The Fund also seeks to assure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility and by communication programs aimed at ensuring that its regulations, policies, standards and managerial authorities are understood throughout the organization.

Management has presented the financial statements to an external auditing firm, which has audited them and has provided an independent opinion that has been appended to these financial statements.

Approved by:

Steve Suttie
Executive Director,

Matt Shea
Director General,
Finance and Resource Management Services
Deputy Chief Financial Officer

Pierre Corriveau
Assistant Deputy Minister, Corporate Management
Chief Financial Officer

May 26, 2015

Statement of Authority provided (Used) (Unaudited) for the year ended March 31

Table Summary

The table presents on a comparative basis the statement of Authority provided (Used) (Unaudited). It consists of five columns: item descriptions, current year with two columns — estimates and actual, and previous year with two columns — estimates and actual. Subtotals are displayed at operating source (use) of funds and totals are displayed at authority provided (used).

(in thousands of dollars)

  2015 2014
Estimates Actual Estimates Actual
Net results 1,317 2,126 (negative 540) 1,856
Add: items not requiring use of funds 395 476 417 459
Operating source (use) of funds 1,712 2,602 (negative 123) 2,315
Less: items requiring use of funds        
Net capital acquisitions 375 303 200 (negative 5)
Net other assets and liabilities   (negative 18)   162
Transition payments for implementing salary payments in arrears   84    
Authority provided (used) 1,337 2,233 (negative 323) 2,158

Reconciliation of Unused Authority (Unaudited) as at March 31

Table Summary

The table presents on a comparative basis the reconciliation of Unused Authority (Unaudited). It consists of three columns: item descriptions, current year and previous year. Subtotals are displayed at net authority provided end of year and totals are displayed at the unused authority carried forward.

(in thousands of dollars)

  2015 2014
Debit balance in the accumulated net charge against the Fund's authority (negative 8,057) (negative 5,357)
Add: payables at year‑end charged against the appropriation after March 31 856 401
Less: amounts credited to the appropriation after March 31 104 116
Net authority provided, end of year (negative 7,305) (negative 5,072)
Transfer from Treasury Board ‑ paylist requirements (Vote 30) 352 402
Authority limit 2,000 2,000
Unused authority carried forward 9,657 7,474

Independent Auditor's Report

To the Assistant Deputy Minister, Corporate Management, Agriculture and Agri‑Food Canada

We have audited the accompanying financial statements of the Canadian Pari-Mutuel Agency Revolving Fund, which comprise the statement of financial position as at March 31, 2015, and the statements of operations and net assets, and cash flow for the year then ended, and the related notes, which comprise a summary of significant accounting policies and other explanatory information. These financial statements have been prepared by management of the Fund to meet the requirements of section 6.4 of the Treasury Board of Canada's Special Revenue Spending Authorities.

Management's responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Section 6.4 of the Treasury Board of Canada's Policy on Special Revenue Spending Authorities, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Canadian Pari‑Mutuel Agency Revolving Fund as at March 31, 2015 and the results of its operations and its cash flows for the year then ended in accordance with Section 6.4 of the Treasury Board of Canada's Policy on Special Revenue Spending Authorities.

Basis of accounting and restriction on use

Without modifying our opinion, we draw attention to Note 2 to the financial statements, which describes the basis of accounting. The financial statements are prepared to assist the Canadian Pari‑Mutuel Agency Revolving Fund to meet requirements of section 6.4 of the Treasury Board of Canada's policy on Special Revenue Spending Authorities. As a result, the financial statements may not be suitable for another purpose. Our report is intended solely for the management of the Canadian Pari‑Mutual Agency Revolving Fund and the Treasury Board of Canada and should not be used by parties other than the Canadian Pari‑Mutual Agency Revolving Fund or the Treasury Board of Canada.

PricewaterhouseCoopers LLP
Chartered Professional Accountants,
Licensed Public Accountants
Ottawa, Canada
May 26, 2015

Statement of Financial Position as at March 31

Table Summary

The table presents on a comparative basis the statement of Financial Position. It consists of three columns: item descriptions, current year and previous year. Item descriptions are grouped in two: assets and liabilities, both displaying totals. Assets and liabilities are further divided into current and long‑term, displaying subtotals for each.

(in thousands of dollars)

  2015 2014
Assets    
Current    
Cash in transit 65 97
Accounts receivable    
Government of Canada 36 21
Outside parties 236 274
Accountable advances to employees 1 1
Prepaid expenses 6 12
Subtotal 344 405
Long‑term    
Capital assets (Note 3)    
At cost 4,901 4,608
Less: accumulated amortization (negative 3,472) (negative 3,077)
Subtotal 1,429 1,531
Total 1,773 1,936
Liabilities    
Current    
Accounts payable and accrued liabilities    
Government of Canada 60 47
Outside parties    
Accounts payable 750 341
Vacation pay 219 199
Current portion of the employee termination benefits liability (Note 4) 47 13
Subtotal 1,076 600
Long‑term    
Employee termination benefits liability (Note 4) 111 92
Net assets (Note 5) 586 1,244
Total 1,773 1,936

Approved by:

Pierre Corriveau
Chief Financial Officer

Statement of Operations and Net Assets for the year ended March 31

Table Summary

The table presents on a comparative basis the statement of Operations and Net Assets. It consists of three columns: item descriptions, current year and previous year. Item descriptions for revenues and for operating expenses are grouped together, each displaying subtotals. Subtotals for revenues and operating expenses are displayed at net results and totals are displayed at net assets end of year.

(in thousands of dollars)

  2015 2014
Revenue    
Pari‑mutuel levy 10,074 10,152
Other revenues 25 79
Subtotal 10,099 10,231
Operating expenses    
Salaries and employee benefits 3,293 3,758
Provision for employee termination benefits 71 47
Professional and special services    
Drug control 2,506 2,539
Drug research 291 291
Other 673 385
Transportation and telecommunications 265 266
Rentals 308 525
Amortization of capital assets 395 417
Utilities, materials and supplies 109 90
Other expenses 62 57
Subtotal 7,973 8,375
Net results 2,126 1,856
Net assets, beginning of year 1,244 890
Net financial resources provided and change in the accumulated net charge against the Fund's authority, during the year (negative 2,700) (negative 1,502)
Transfer of the transition payments for implementing salary payments in arrears (Note 9) (negative 84)  
Net assets, end of year 586 1,244

Statement of Cash Flows for the year ended March 31

Table Summary

The table presents on a comparative basis the statement of Cash Flows. It consists of three columns: item descriptions, current year and previous year. Item descriptions are grouped in two: operating activities and investing activities. Subtotals are displayed at net financial resources provided (used) and change in the accumulated net charge against the Fund's authority during the year. Totals are displayed at accumulated net charge against the Fund's authority end of year.

(in thousands of dollars)

  2015 2014
Operating activities    
Net results 2,126 1,856
Items not affecting the use of cash:    
Provision for employee termination benefits 71 47
Amortization of capital assets 395 417
Loss (Gain) on disposal of capital assets   (negative 5)
Write‑off of capital assets 10  
Subtotal 2,602 2,315
Changes in current assets and liabilities (Note 7) 503 (negative 584)
Payment of employee termination benefits (negative 18) (negative 234)
Transition payments for implementing salary payments in arrears (negative 84)  
Net financial resources provided by operating activities 3,003 1,497
Investing activities    
Purchase of capital assets (negative 303)  
Proceeds from disposal of capital assets   5
Net financial resources provided (used) by investing activities (negative 303) 5
Net financial resources provided and change in the accumulated net charge against the Fund's authority, during the year 2,700 1,502
Accumulated net charge against the Fund's authority, beginning of year 5,357 3,855
Accumulated net charge against the Fund's authority, end of year 8,057 5,357

Notes to the financial statements for the year ended March 31, 2015

1. Authority and purpose

The Canadian Pari‑Mutuel Agency Revolving Fund ("CPMA" or the "Fund") was established under Appropriation Act No. 1, 1970, which authorized the operation of the Fund in the current and subsequent fiscal years in accordance with terms and conditions prescribed by the Treasury Board of Canada ("Treasury Board") for the purpose of providing race track supervision in Canada. The Appropriation Act No. 1, 1970 was repealed and replaced by section 2 of the Revolving Funds Act in 1985.

CPMA has a continuing non‑lapsing authority from Parliament to make payments out of the Consolidated Revenue Fund for working capital, capital asset acquisitions and temporary financing of accumulated operating deficits, the total of which is not to exceed $2,000,000 at any time.

CPMA's mandate is to regulate and supervise pari‑mutuel betting at racetracks across Canada, thereby ensuring that pari‑mutuel betting is conducted in a way that is fair to the betting public.

CPMA is not subject to income tax under the provisions of the Income Tax Act.

On March 21, 2012, CPMA received an allotment transfer from the Treasury Board Vote 30 (Paylist Requirements) in the amount of $503,000. This increase in available authority is for the provision to eliminate the accumulation of severance for voluntary termination for CPMA employees who have opted for the immediate cash‑out of accumulated severance pay. CPMA is to repay Treasury Board over 10 years, starting in the fiscal year ended March 31, 2013.

2. Significant accounting policies

These financial statements have been prepared in accordance with the significant accounting policies issued by the Treasury Board and the reporting requirements of the Receiver General for Canada. The basis of accounting used in these financial statements differs from Canadian generally accepted accounting principles for the public sector because the employees' vacation pay is based on management's estimates of the liabilities rather than based on actuarial valuations.

The significant accounting policies are as follows:

a. Revenue recognition

Pari‑mutual levy revenues are generated through a levy of 0.8 percent applied to every dollar bet at Canadian race tracks and are recognized as bets are made. Other revenues are recognized in the period in which they are earned.

b. Cash in Transit

Cash in transit includes cash and cheques received prior to March 31, but not deposited until the subsequent year.

c. Accounts receivable

Accounts receivable are stated at amounts expected to be ultimately realized; a provision is made for receivables when a recovery is considered uncertain.

d. Capital assets

Capital assets are recorded at cost and are amortized from the year of the acquisition on a straight‑line basis over their estimated useful lives as follows:

Table Summary

The table presents capital assets and consists of 2 columns: the asset categories with respective amortization periods.

Furniture and equipment 10 to 15 years
Electronic data processing equipment 3 to 5 years
Automotive 8 to 10 years
Buildings 20 to 25 years
Assets under construction Once in service, in accordance with asset class
Leasehold improvements Lesser of the remaining of the occupancy instrument or useful life of the improvement

e. Pension plan

Employees of CPMA are covered by the Public Service Superannuation Act and the Supplementary Retirement Benefits Act. The Government of Canada's portion of the pension cost is included in the employee benefits charge assessed against CPMA. The actual payment of the pension is made from the Public Service Superannuation and the Supplementary Retirement Benefits Account. CPMA is not required under the present legislation to make contributions with respect to actuarial deficiencies.

f. Vacation Pay

Vacation pay is expensed as the benefits accrue to employees under their respective terms of employment.

g. Employee termination benefits

Employees of CPMA are entitled to specified termination benefits, calculated based on salary levels in effect at the time of termination as provided for under collective agreements and conditions of employment. The cost of these benefits is recorded in the accounts as the benefits accrue to the employees. The liability relating to the benefits earned by CPMA employees is calculated using information derived from the results of the actuarially determined liability for employee termination benefits for the Government of Canada as a whole.

h. Sick leave

Employees are permitted to accumulate unused sick leave. However, such leave entitlements may only be used in the event of an illness. Unused sick leave upon employee termination is not payable to the employee. No amount has been accrued in these financial statements and payments of sick leave benefits are included in current operations as incurred.

i. Use of estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods covered by the financial statements. The principal financial statement components, subject to measurement uncertainty, includes employee termination benefits, accrued liabilities, the allowance for doubtful accounts and the estimated useful lives of capital assets. Actual results could differ from these estimates. These estimates are reviewed annually and as adjustments become necessary, they are recorded in the financial statements in the year in which they become known.

3. Capital assets

Table Summary

The table presents capital assets (above) and accumulated amortization (below), both displaying subtotals. The capital asset section of the table consists of five columns (item descriptions, opening balance, acquisitions, disposals and write‑offs and closing balance) and the accumulated amortization section of the table consists of five columns (item descriptions, opening balance, amortization, disposals and closing balance). The last row presents the net book value.

(in thousands of dollars)

Capital assets Opening balance Acquisitions Disposals Closing balance
Furniture and equipment 1,557     1,557
Electronic data processing equipment 1,493 51   1,544
Automotive 59 27   86
Buildings 575     575
Assets under construction 10 225 (negative 10) 225
Land 98     98
Leasehold improvements 816     816
Total 4,608 303 (negative 10) 4,901
Accumulated amortization Opening balance Amortization Disposals Closing balance
Furniture and equipment 896 114   1,010
Electronic data processing equipment 732 280   1,012
Automotive 58 1   59
Buildings 575     575
Leasehold improvements 816     816
Total 3,077 395   3,472
Net book value 1,531 (negative 92) (negative 10) 1,429

4. Employee termination benefits liability

The Fund provides termination benefits to its employees based on eligibility, years of service and salary at termination of employment. These termination benefits are not pre‑funded and will be paid from future authorities.

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 termination benefits under the employee termination pay program ceased for these employees commencing in 2011. 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 termination benefit liability.

Table Summary

The table presents on a comparative basis the employee termination benefits liability. It consists of three columns: item descriptions, current year and previous year. Subtotals are displayed at employee termination benefits liability end of year and totals are displayed at long‑term portion of employee termination benefits liability.

(in thousands of dollars)

  2015 2014
Employee termination benefits liability, beginning of year 105 292
Employee termination benefits paid during the year (negative 18) (negative 234)
Provision for employee termination benefits 71 47
Employee termination benefits liability, end of year 158 105
Less: current portion of employee termination benefits liability (negative 47) (negative 13)
Long‑term portion of employee termination benefits liability 111 92

5. Net assets

Table Summary

The table presents on a comparative basis the net assets. It consists of three columns: item descriptions, current year and previous year. The last row presents the total for all item descriptions.

(in thousands of dollars)

  2015 2014
Accumulated surplus    
Opening balance 6,601 4,745
Net results 2,126 1,856
Transfer of the transition payments from implementing salary payments in arrears (negative 84)  
Closing balance 8,643 6,601
Accumulated net charge against the Fund's authority    
Opening balance (negative 5,357) (negative 3,855)
Change in net resources provided (negative 2,700) (negative 1,502)
Closing balance (negative 8,057) (negative 5,357)
Total net assets 586 1,244

The accumulated net charge against the Fund's authority is the non‑lapsing authority amount that has been used since the inception of the Fund.

The accumulated surplus is an accumulation of each year's surpluses and deficits including the absorption of the opening net assets upon establishment of the Fund.

6. Contractual obligations

CPMA leases its premises under occupancy instruments. An occupancy instrument is a formal agreement between CPMA and Public Works and Government Services Canada recording the terms and conditions that govern the provision and occupancy of the accommodation. CPMA is also engaged in contractual obligations for rental of equipment. Expected future payments are as follows:

Table Summary

The table presents on a yearly basis the contractual obligations. It consists of two columns: year and expected future payment.

(in thousands of dollars)

2016 208
2017 187
2018 29
2019 29
2020 and thereafter 65

7. Changes in current assets and liabilities

Table Summary

The table presents on a comparative basis the changes in current assets and liabilities. It consists of three columns: item descriptions, current year and previous year. The last row presents the total for all item descriptions.

(in thousands of dollars)

  2015 2014
Cash in transit 32 (negative 48)
Accounts receivable    
Government of Canada (negative 15) 35
Outside parties 38 38
Prepaid expenses 6 (negative 12)
Accounts payable and accrued liabilities    
Government of Canada 12 (negative 8)
Outside parties — accounts payable 409 (negative 557)
Outside parties — vacation pay 21 (negative 32)
Total 503 (negative 584)

8. Contingent liabilities

In the normal course of its operations, the CPMA becomes involved in various legal actions. Some of these potential liabilities 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 is recorded in the financial statements.

9. Transfer of the transition payments for implementing salary payments in arrears

The Government of Canada implemented salary payments in arrears in 2015–2015. As a result, a one‑time payment was issued to employees and will be recovered from them in the future. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay process. This change to the pay system had no impact on the expenses of the Revolving Fund. However, it did result in the use of authorities by the Revolving Fund and impacted the accumulated net charge against the Fund's authority. Prior to year end, transition payments for implementing salary payments in arrears were transfered to a central account administered by Public Works and Government Services Canada, who is responsible for the administration of the Government pay system.

10. Economic dependence

CPMA is funded solely by a federal levy on pari‑mutuel betting in Canada on horse racing, a significant portion of which is generated by the largest racetrack in Canada ‑ the Woodbine Racetrack ("Woodbine") in Toronto, Ontario.

Woodbine generated $6,304,486 (2014 — $5,416,424) or 63 percent (2014 — 53 percent) of CPMA's total pari‑mutuel levy for the year ending March 31, 2015. As at March 31, 2015, $18,627 (2014 — $111,848) or 8 percent (2014 — 41 percent) of CPMA's accounts receivable — Outside parties were owed from this organization.

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