Translation Bureau Revolving Fund

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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 Treasury Board Policy 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 financial 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. 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 accounting and financial management. 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, 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. Management also seeks to ensure 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.

Management has presented the financial statements to the external auditor, who audited them and has provided an independent auditor's report opinion which is appended to these financial statements.

Approved by:

Michel D'Amour
A/Chief Financial Officer
for Marty Muldoon, CPA, CMA, MBA
Chief Financial Officer
Public Services and Procurement Canada

Stéphan Déry
Chief Executive Officer,
Translation Bureau
Public Services and Procurement Canada

May 30, 2017
Gatineau, Canada

Statement of authority provided (used) (unaudited) for the year ended March 31

(in thousands of dollars)

  2017 2016
EstimatesLink to footnote 1 Actual EstimatesLink to footnote 1 Actual
Net results 3 8,529 2,254 1,818
Items not requiring use of funds 3,919 3,743 1,475 3,795
Operating source of funds 3,922 12,272 3,729 5,613
Items requiring use of funds
Net tangible capital assets acquisitions (negative 3,000) (negative 1,616) (negative 2,573) (negative 1,760)
Transition payments for implementing salary payments in arrears (negative 3) (negative 45)
Net other assets and liabilities (negative 603) (negative 1,575) (negative 1,128) 2,446
Subtotal (negative 3,603) (negative 3,194) (negative 3,701) 641
Authority provided 319 9,078 28 6,254

Reconciliation of unused authority (unaudited) as at March 31

(in thousands of dollars)

  2017 2016
Debit balance in the accumulated net charge against the Fund's authority 28,229 20,333
Payables charged against the appropriation at year-end (negative 11,787) (negative 11,075)
Receivables credited to the appropriation at year-end 9,581 7,624
Other items 6,328 6,391
Net authority provided, end of year 32,351 23,273
Authority limit (Note 1) 20,000 20,000
Unused authority carried forward 52,351 43,273

Independent auditor's report

To the Deputy Minister, Public Services and Procurement Canada

We have audited the accompanying financial statements of the Translation Bureau Revolving Fund (the "Fund"), which comprise the statement of financial position as at March 31, 2017, and the statements of operations and net liabilities and of cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information. The financial statements have been prepared by management of the Fund based on the financial reporting provisions of 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 the financial reporting provisions of 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 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 of the Fund for the year ended March 31, 2017 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 describe the basis of accounting. The financial statements have been prepared to assist the Fund to meet the financial reporting 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 Fund and the Treasury Board of Canada and should not be used by parties other than the Fund and the Treasury Board of Canada.

Deloitte LLP
Chartered Professional Accountants,
Licensed Public Accountants

May 30, 2017
Ottawa, Canada

Statement of financial position as at March 31

(in thousands of dollars)

  2017 2016
Assets
Financial assets
Cash in transit 3 4
Accounts receivable (Note 3) 11,537 7,889
Other assets (Note 4) 878 774
Subtotal 12,418 8,667
Non-financial assets
Prepaid expenses 19
Tangible capital assets (Note 5) 5,624 7,751
Subtotal 5,624 7,770
Total 18,042 16,437
Liabilities
Current liabilities
Accounts payable and accrued liabilities (Note 6) 17,356 14,404
Vacation pay and compensatory leave 3,106 3,241
Subtotal 20,462 17,645
Long-term liabilities
Employee severance benefits (Note 7) 4,160 6,002
Total 24,622 23,647
Net liabilities (Note 8) (negative 6,580) (negative 7,210)
Net financial position of the Fund 18,042 16,437

Statement of operations and net liabilities for the year ended March 31

(in thousands of dollars)

  2017 2016
Revenues
Translation services 126,306 129,342
Interpretation services 17,675 16,932
Terminology services 14,145 13,850
Other 6,026 6,935
Subtotal 164,152 167,059
Operating expenses
Salaries and employee benefits 92,934 97,338
Professional and special services 34,661 32,152
Corporate and administrative services 17,924 21,386
Occupancy costs 5,337 7,822
Amortization (Note 5) 3,743 3,795
Transportation and telecommunications 1,351 1,046
Utilities, materials and supplies 543 127
Other expenses 531 655
Employee severance benefits (Note 7) (negative 1,401) 920
Subtotal 155,623 165,241
Net results 8,529 1,818
Net liabilities, beginning of year (negative 7,210) (negative 528)
Transfer of the transition payments for implementing salary payments in arrears (negative 3) (negative 45)
Net financial resources provided and change in the accumulated net charge against the Fund's authority, during the year (Note 8) (negative 7,896) (negative 8,455)
Net liabilities, end of year (Note 8) (negative 6,580) (negative 7,210)

Statement of cash flow for the year ended March 31

(in thousands of dollars)

  2017 2016
Operating activities
Net results 8,529 1,818
Items not requiring use of funds
Amortization of tangible capital assets (Note 5) 3,743 3,795
Variations in statement of financial position
Decrease (increase) in cash in transit 1 (negative 2)
Decrease (increase) in accounts receivable (negative 3,648) 2,852
Decrease (increase) in other assets (negative 104) (negative 114)
Decrease (increase) in prepaid expenses 19 43
Increase (decrease) in accounts payable and accrued liabilities 2,952 2,006
Increase (decrease) in vacation pay and compensatory leave (negative 135) (negative 97)
Increase (decrease) in employee severance benefits (negative 1,842) (negative 41)
Subtotal (negative 2,757) 4,647
Transition payments for implementing salary payments in arrears (negative 3) (negative 45)
Net financial resources provided by operating activities 9,512 10,215
Capital investing activities
Acquisitions of tangible capital assets (Note 5) (negative 1,616) (negative 1,760)
Net financial resources used by capital investing activities (negative 1,616) (negative 1,760)
Net financial resources provided and change in the accumulated net charge against the Fund's authority, during the year (Note 8) 7,896 8,455
Accumulated net charge against the Fund's authority, beginning of year 20,333 11,878
Accumulated net charge against the Fund's authority, end of year 28,229 20,333

Notes to the financial statements for the year ended March 31, 2017

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 the 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.

2. Significant accounting policies

These financial statements have been prepared in accordance with the significant accounting policies set out below to comply with the requirements of the Treasury Board of Canada Policy on Special Revenue Spending Authorities and the reporting requirements for revolving funds prescribed by the Receiver General for Canada. The basis of accounting used in these financial statements differs from Canadian public sector accounting standards because:

The significant accounting policies are as follows:

(a) Revenue recognition

Revenues 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.

Revenues from the terminology standardization program, interpretation services, and other services are recognized as services are rendered.

(b) Accounts receivable

Accounts receivable are stated at amounts expected to be ultimately realized. An allowance is made for receivables where recovery is considered uncertain. Accounts receivable include the estimated amount of revenue earned for services rendered but not billed at year end.

(c) Expense recognition

All expenses are recorded on an accrual basis.

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

(d) Tangible capital assets

Tangible capital assets are amortized from the year of acquisition on a straight-line basis over their estimated useful life as follows:

Category Estimated useful life
Machinery and equipment 3 to 15 years
Computer hardware 3 to 5 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

(e) Employee future benefits

  1. Pension benefits

    Eligible employees of the Fund 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.

  2. Severance benefits

    Eligible employees of the Fund are entitled to severance benefits under labour contracts or conditions of employment. These benefits are earned 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.

(f) Sick leave

Employees are permitted to accumulate unused sick leave. However, such leave entitlements may only be used in the event of an illness. As per current government practice, unused sick leave upon employee termination is not payable to the employee. Accordingly, no liability has been accrued in these financial statements. Payments of sick leave benefits are included in current operations as incurred.

(g) 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 receivables from outside parties, the estimated useful lives of tangible capital assets, the amount of certain liabilities, the liability for vacation pay and compensatory leave, and the liability for employee severance benefits. Actual results could significantly differ from those estimates. 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

(in thousands of dollars)

  2017 2016
Other government departments and agencies 9,581 7,624
Outside parties 1,957 268
Subtotal 11,538 7,892
Less: allowance for doubtful accounts on receivables from outside parties (negative 1) (negative 3)
Net accounts receivable 11,537 7,889

4. Other assets

(in thousands of dollars)

  2017 2016
Sales tax refundable advances 712 768
Other advances 166 6
Total other assets 878 774

5.Tangible capital assets

(in thousands of dollars)

Cost Balance at beginning of year Acquisitions Dispositions and transfers Balance at end of year
Computer hardware 1,930 1,930
Computer software 30,336 139 31 30,506
Leasehold improvements 8,747 8,747
Assets under construction 852 1,477 (negative 31) 2,298
Total 41,865 1,616 43,481
Accumulated amortization Balance, beginning of the year Current year amortization Dispositions and transfers Balance at end of the year
Computer hardware (negative 1,930) (negative 1,930)
Computer software (negative 25,480) (negative 3,120) (negative 28,600)
Leasehold improvements (negative 6,704) (negative 623) (negative 7,327)
Total (negative 34,114) (negative 3,743) (negative 37,857)
Net book value 2017 2016
Computer hardware
Computer software 1,906 4,856
Leasehold improvements 1,420 2,043
Assets under construction 2,298 852
Total 5,624 7,751

6. Accounts payable and accrued liabilities

(in thousands of dollars)

  2017 2016
Outside parties 10,817 9,705
Other government departments and agencies 970 1,370
Subtotal 11,787 11,075
Accrued liabilities 5,569 3,329
Total accounts payable and accrued liabilities 17,356 14,404

7. 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.

Information about the severance benefits, measured as at March 31, is as follows:

(in thousands of dollars)

  2017 2016
Employee severance benefit obligation, beginning of year 6,002 6,043
Expense for the year (negative 1,401) 920
Benefits paid during the year (negative 441) (negative 961)
Employee severance benefit obligation, end of year 4,160 6,002

8. 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 (ANCAFA) represents the cumulative receipts and disbursements over the life of the Fund.

(in thousands of dollars)

  2017 2016
Accumulated surplus, beginning of year 13,123 11,350
Net results 8,529 1,818
Transfer of the transition payments for implementing salary payments in arrears (negative 3) (negative 45)
Accumulated surplus, end of year 21,649 13,123
Accumulated net charge against the Fund's authority, beginning of year (negative 20,333) (negative 11,878)
Net financial resources provided and change in the accumulated net charge against the Fund's authority, during the year (negative 7,896) (negative 8,455)
Accumulated net charge against the Fund's authority, end of year (negative 28,229) (negative 20,333)
Net liabilities, end of year (negative 6,580) (negative 7,210)

9. 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:

(in thousands of dollars)

Year ending March 31
2018 6,811
2019 3,479
2020 441
2021 295
2022 and thereafter 1,773
Total contractual obligations 12,799

10. 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.

11. Comparative figures

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

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