Translation Bureau 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 Translation Bureau Revolving Fund as required by and in accordance with the policy of the Treasury Board on Special Revenue Spending Authorities and the reporting requirements of the Receiver General for Canada. These financial statements were prepared 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 judgment with due consideration given to materiality. To fulfill its accounting and reporting responsibilities, management 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 Departmental Performance Report is consistent with these financial statements.

Management develops and disseminates financial management and accounting policies and issues specific directives which maintain standards of financial management, accounting and reporting. Management maintains systems of financial management and internal control which give 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. Management also seeks to assure the objectivity and integrity of data in its financial statements by the 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.

With the exception of the Statement of Authority Provided (Used) and the Reconciliation of Unused Authority, management has presented the financial statements to external auditors who have audited them and have provided an independent opinion which is appended to these financial statements. The Statement of Authority Provided (Used) and the Reconciliation of Unused Authority were not audited as it is not required by the Treasury Board policy.

Approved by:

Alex Lakroni
Chief Financial Officer,
Public Works and Government Services Canada

Donna Achimov
Chief Executive Officer,
Translation Bureau
Public Works and Government Services Canada

May 28, 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 the authority provided (used).

(in thousands of dollars)

  2015 2014
Estimates Actual Estimates Actual
Net results (negative 1,341) 9,017 (negative 7,022) 9,698
Items not requiring use of funds   2,923   1,650
Operating source (use) of funds (negative 1,341) 11,940 (negative 7,022) 11,348
Items requiring use of funds        
Net capital acquisitions   (negative 2,871)   (negative 3,142)
Allocation for employee severance benefits   (negative 1,336) (negative 540) (negative 5,567)
Transition payments for implementing salary payments in arrears (Note 10) (negative 1,511) (negative 3,246)    
Net other assets and liabilities   85   (negative 93)
Subtotal (negative 1,511) (negative 7,368) (negative 540) (negative 8,802)
Authority provided (used) (negative 2,852) 4,572 (negative 7,562) 2,546

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
Accumulated net charge against the Fund's authorityLink to footnote 1 11,878 7,750
Payables at year‑end charged against the appropriation account after March 31 (negative 6,778) (negative 6,293)
Amounts credited to the appropriation account after March 31 10,408 8,939
Authority provided, end of year 15,508 10,396
Allocation from Treasury Board for the transition to salary payments in arrears (Note 1) 1,511  
Allocation from the Treasury Board for payment of severance pay benefits   540
Net authority provided, end of year 17,019 10,936
Authority limit (Note 1) 20,000 20,000
Unused authority carried forward 37,019 30,936

Independent Auditors' Report

To the Deputy Minister
Public Works and Government Services Canada

We have audited the accompanying financial statements of the Translation Bureau Revolving Fund, which comprise the statement of financial position as at March 31, 2015, and the statements of operations and net liabilities, and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. These financial statements have been prepared by management of the Translation Bureau Revolving Fund to comply with section 6.4 of the Treasury Board of Canada's Policy on Special Revenue Spending Authorities.

Management's responsibility for the financial statements

Management is responsible for the preparation 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.

Auditors' 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 auditors' 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 auditors consider 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 in our audit is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements of the Translation Bureau Revolving Fund as at and for the year ended March 31, 2015 are prepared, in all material respects, in accordance with section 6.4 of the Treasury Board of Canada's Policy on Special Revenue Spending Authorities.

Basis of accounting and restrictions 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 Translation Bureau Revolving Fund to comply with 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 auditors' report is intended solely for the information and use of the Translation Bureau Revolving Fund and the Treasury Board of Canada and should not be used by parties other than the Translation Bureau Revolving Fund and the Treasury Board of Canada.

Ernst & Young LLP
Chartered Professional Accountants,
Licensed Public Accountants

Ottawa, Canada
May 28, 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: the assets and the liabilities and net liabilities, both displaying totals. Current item descriptions are grouped together for assets and for liabilities, both displaying subtotals.

(in thousands of dollars)

  2015 2014
Assets    
Current    
Cash in transit 2 8
Accounts receivable (Note 3) 10,741 9,190
Other assets (Note 4) 722 520
Subtotal 11,465 9,718
Long‑term    
Capital assets, net (Note 5) 9,786 10,141
Total 21,251 19,859
Liabilities and net liabilities    
Current    
Accounts payable and accrued liabilities (Note 6) 11,680 10,518
Vacation pay and compensatory leave 3,338 3,892
Other liabilities (Note 7) 718  
Subtotal 15,736 14,410
Long‑term    
Employee severance benefits (Note 8) 6,043 7,620
Total 21,779 22,030
Net liabilities (Note 9) (negative 528) (negative 2,171)
Total 21,251 19,859

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

Table Summary

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

(in thousands of dollars)

  2015 2014
Revenue    
Translation services 127,074 129,512
Interpretation services 17,165 17,123
Terminology services 14,017 13,985
Other 7,352 7,891
Net revenue 165,608 168,511
Operating expenses    
Salaries and employee benefits 97,040 111,041
Professional and special services 23,589 21,634
Corporate and administrative services 21,861 11,589
Occupancy costs 8,659 9,729
Amortization 3,164 1,676
Transportation and telecommunications 1,221 1,488
Utilities, materials and supplies 649 624
Other expenses 649 981
Employee severance benefits (negative 241) 51
Subtotal 156,591 158,813
Net results 9,017 9,698
Net liabilities, beginning of year (negative 2,171) (negative 8,840)
Transfer of the transition payments for implementing salary payments in arrears (Note 10) (negative 3,246)  
Net financial resources provided and change in the accumulated net charge against the Fund's authority account, during the year (Note 9) (negative 4,128) (negative 3,029)
Net liabilities, end of year (negative 528) (negative 2,171)

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, both displaying subtotals. Subtotals are displayed at net financial resources used and change in the accumulated net charge against the Fund's authority account during the year. Totals are displayed at accumulated net charge against the Fund's authority account end of year.

(in thousands of dollars)

  2015 2014
Operating activities    
Net results 9,017 9,698
Non‑cash items:    
Amortization 3,164 1,676
Loss on disposal of capital assets 62  
Provision for employee severance benefits (negative 241) 51
Subtotal 12,002 11,425
Changes in current assets and liabilities    
Decrease in cash in transit 6  
(Increase) decrease in accounts receivable (negative 1,551) 375
Increase in other assets (negative 202) (negative 270)
Increase in accounts payable and accrued liabilities 1,162 348
Decrease in vacation pay and compensatory leave (negative 554) (negative 63)
Increase (decrease) in other liabilities 718 (negative 77)
Subtotal (negative 421) 313
Changes in other assets and liabilities    
Payments on provision for employee severance benefits (negative 1,336) (negative 5,567)
Transition payments for implementing salary payments in arrears (Note 10) (negative 3,246)  
Net financial resources provided by operating activities 6,999 6,171
Investing activities    
Acquisition of capital assets (negative 2,871) (negative 3,142)
Net financial resources used by investing activities (negative 2,871) (negative 3,142)
Net financial resources provided and change in the accumulated net charge against the Fund's authority account, during the year (Note 9) 4,128 3,029
Accumulated net charge against the Fund's authority account, beginning of year 7,750 4,721
Accumulated net charge against the Fund's authority account, end of year 11,878 7,750

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

1. Authority and purpose

The Translation Bureau Revolving Fund (the "Fund") is a Special Operating Agency that provides, on a cost recovery basis, translation, technolinguistic and other linguistic services to the judiciary and federal departments and agencies and, upon request, to other governments in Canada and international organizations. Although the Translation Bureau has existed since 1934 when the Translation Bureau Act came into effect, it was not until April 1993 that Treasury Board approved the establishment of the Bureau as a Special Operating Agency, effective April 1, 1995. The Translation Bureau also became a Revolving Fund on April 1, 1995.

The Fund has a continuing non‑lapsing authority from Parliament to make payments out of the Consolidated Revenue Fund for the purposes of working capital, capital acquisitions and the temporary financing of accumulated operating deficits, the total of which is not to exceed $20,000,000 at any time.

The Fund received authorization from the Treasury Board to access its net authority provided for a total amount of up to $1,340,709 in fiscal year 2015 to allow sustained funding of its investment program (fiscal year 2014: $7,022,229).

The Treasury Board agreed, as per existing policies and regulations, to cover a portion of employee severance benefits paid by the Fund in fiscal year 2015. The Fund did not receive any funding for this in fiscal year 2015 (fiscal year 2014: $539,921).

The Treasury Board also agreed to cover a portion of the costs paid by the Fund in fiscal year 2015 to transition to salary payments in arrears. The Fund received a non‑reimbursable amount of $1,511,000 (fiscal year 2014: $0 ).

2. Significant accounting policies

The financial statements have been prepared in accordance with the Treasury Board Accounting policies and the reporting requirements of the Receiver General for Canada. The financial statements are not presented on a basis consistent with Canadian public sector accounting standards as:

  • The liabilities for vacation pay and employee severance benefits are based on management's estimate rather than actuarial valuations;
  • No liability is recorded for sick leave;
  • The statement of financial position does not segregate non‑financial assets; and
  • The net debt indicator and statement of change in net debt are not presented in the financial statements.

The significant accounting policies are as follows:

a. Accounts receivable

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

b. Revenue

Revenue from translation services performed by the Fund for other government departments and agencies and external clients are recognized using the percentage of completion method based on the proportion of services provided at year end.

Revenue from the Parliamentary vote for the terminology standardization program and revenues for interpretation services are recognized as costs are incurred by the Fund.

Revenue from other services and recoveries are recognized as costs are incurred by the Fund.

c. Capital assets

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

Table Summary

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

Category Estimated useful life
Machinery and equipment 3 to 15 years
Computer hardware 3 to 10 years
Computer software 3 years
Leasehold improvements Lesser of the remaining term of the occupancy instrument or useful life of the improvement
Assets under construction Once in service, in accordance with asset class

d. Employee future benefits

i. Pension benefits

Eligible employees participate in the Public Service Pension Plan (the "Plan"), a multiemployer pension plan administered by the Government of Canada. The Fund's contributions to the Plan are charged to expenses in the year incurred and represent the total Fund obligation to the Plan. The Fund'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.

ii. Severance benefits

Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services are rendered. The obligation relating to the benefits earned by employees is calculated using information derived from management's estimate of the liability. The liability for benefits is recorded in the accounts as the benefits accrue to employees.

iii. Vacation pay and compensatory leave

Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.

e. Financial instruments

The fair value of the financial instruments approximates costs unless otherwise specified. The Fund's financial instruments consist of cash in transit, accounts receivable, other assets, and accounts payable. It is management's opinion that the Fund is not exposed to significant interest, currency or credit risks rising from these financial instruments.

f. Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses reported in the financial statements. At the time of preparation of these financial statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are the allowance for doubtful accounts on external receivables, the liability for vacation pay and compensatory leave and the liability for employee severance benefits. 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. Accounts receivable

Table Summary

The table presents on a comparative basis the accounts receivable. It consists of three columns: item descriptions, current year and previous year. The last row presents the totals.

(in thousands of dollars)

  2015 2014
Other government departments and agencies 10,408 8,939
External parties 337 254
Less: allowance for doubtful accounts on receivables from external parties (negative 4) (negative 3)
Total 10,741 9,190

4. Other assets

Table Summary

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

(in thousands of dollars)

  2015 2014
Sales Tax refundable advances 655 483
Prepaid expenses 62 30
Other advances 5 7
Total 722 520

5. Capital assets

Table Summary

The table presents the capital assets (above) and the accumulated amortization (below), both displaying subtotals. The capital assets section of the table consists of five columns (item descriptions, balance beginning of year, dispositions and transfers, acquisitions and balance end of year) and the accumulated amortization section of the table consists of five columns (item descriptions, balance beginning of year, dispositions and transfers, current year amortization and balance end of year). The bottom of the table displays the capital assets, net of accumulated amortization totals at net for the columns: balance beginning of year and balance end of year.

(in thousands of dollars)

Capital assets Balance beginning of year Dispositions and transfers Acquisitions Balance end of year
Machinery and equipment 114     114
Computer hardware 2,001 (negative 71)   1,930
Computer software 26,319 642 2,174 29,135
Leasehold improvements 8,937   283 9,220
Assets under construction 679 (negative 642) 414 451
Subtotal 38,050 (negative 71) 2,871 40,850
Accumulated amortization Balance beginning of year Dispositions and transfers Amortization Balance end of year
Machinery and equipment (negative 114)     (negative 114)
Computer hardware (negative 1,939) 9   (negative 1,930)
Computer software (negative 19,614)   (negative 2,635) (negative 22,249)
Leasehold improvements (negative 6,242)   (negative 529) (negative 6,771)
Subtotal (negative 27,909) 9 (negative 3,164) (negative 31,064)
Net 10,141 (negative 62) (negative 293) 9,786

6. Accounts payable and accrued liabilities

Table Summary

The table presents the accounts payable and accrued liabilities on a comparative basis. It consists of three columns: item descriptions, current year and previous year. The last row presents the totals.

(in thousands of dollars)

  2015 2014
Other government departments and agencies 1,655 3,949
External parties and accrued liabilities 10,025 6,569
Total 11,680 10,518

7. Other liabilities

Table Summary

The table presents on a comparative basis the other liabilities. It consists of three columns: item descriptions, current year and previous year. The last row presents the totals.

(in thousands of dollars)

  2015 2014
Provision for unsigned collective agreements 718  

8. Employee severance benefits

The Fund 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 by future authorities.

Commencing in 2012, as part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non‑represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees. 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 to collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation. These estimates do not include expenses related to employ ee benefits pay able to Treasury Board as they cannot be reasonably determined. Information about the severance benefits, measured as at March 31, is as follows:

Table Summary

The table presents on a comparative basis the employee severance benefits. It consists of three columns: item descriptions, current year and previous year. The totals net of the expense for the year are displayed at accrued benefit obligation end of year.

(in thousands of dollars)

  2015 2014
Accrued benefit obligation ‑ beginning of year 7,620 13,136
Benefits paid during the year:    
Retirements and departures from the Public Service (negative 1,196) (negative 1,542)
Employees who opted to cash out their accumulated balances as per new collective agreements (negative 140) (negative 4,025)
Subtotal (negative 1,336) (negative 5,567)
Expense for the year (negative 241) 51
Accrued benefit obligation ‑ end of year 6,043 7,620

9. Net liabilities

The accumulated surplus is the accumulation of each fiscal year's surplus net of deficits since the inception of the Fund.

The accumulated net charge against the Fund's authority represents the cumulative receipts and disbursements over the life of the funds.

Table Summary

The table presents on a comparative basis the net liabilities. It consists of three columns: item descriptions, current year and previous year. Subtotals are displayed at accumulated deficit closing balance and totals are displayed at net liabilities end of year.

(in thousands of dollars)

  2015 2014
Accumulated surplus (deficit)    
Opening balance 5,579 (negative 4,119)
Net results 9,017 9,698
Transfer of the transition payments for implementing salary payments in arrears (negative 3,246)  
Closing balance 11,350 5,579
Accumulated net charge against the Fund's authority    
Opening balance (negative 7,750) (negative 4,721)
Change during the year (negative 4,128) (negative 3,029)
Closing balance (negative 11,878) (negative 7,750)
Net liabilities, end of year (negative 528) (negative 2,171)

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

The Government of Canada implemented salary payments in arrears in 2014–2015. As a result, a one‑time payment of $3,246,346 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 processes. 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 transferred to a central account administered by Public Works and Government Services Canada, who is responsible for the administration of the Government pay system.

11. Contractual obligations

The nature of the Fund's activities can result in some large multi‑year contracts and obligations whereby the Fund will be obligated to make future payments when the services/goods are received. Estimated future payments are as follows:

Table Summary

The table presents the total annual contractual obligations. The left hand column lists the years, and the right hand column lists the estimated future payments. The last row presents the totals for those years.

(in thousands of dollars)

2016 9,754
2017 5,921
2018 5,716
2019 3,687
2020 and thereafter 2,176
Total 27,254

12. Comparative figures

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

13. Related party transactions

Through common ownership, the Fund is related to all Government of Canada departments, agencies, and Crown corporations. The Fund enters into transactions with these entities in the normal course of business and on normal trade terms.

Footnotes

Footnote 1

Debit balance in the accumulated net charge against the Fund's authority.

Return to footnote 1 referrer

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