Financial Statements of Transport Canada (Unaudited) for the year ended March 31, 2017

Transport Canada

Statement of Management Responsibility Including Internal Control over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2017, and all information contained in these statements rests with the management of Transport Canada. These 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 financial statements. Some of the information in the financial statements is based on management's best estimates and judgment, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of Transport Canada’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in Transport Canada’s Departmental Performance Report, is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout Transport Canada and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

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

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

The financial statements of Transport Canada have not been audited.

Original signed by

Helena Borges, Acting as Deputy Minister
Ottawa, Canada

August 24, 2017

Date

Original signed by

André Lapointe, Chief Financial Officer
Ottawa, Canada

August 22, 2017

Date

Transport Canada

Statement of Financial Position (Unaudited)
As at March 31
(in thousands of dollars)


 
2017 2016
Restated
(Note 19)
Liabilities

Accounts payable and accrued liabilities (Note 4)

640,907 541,944

Vacation pay and compensatory leave

26,920 26,210

Environmental liabilities (Note 5)

198,378 188,400

Deffered revenue (Note 6a)

3,745 3,998

Other liabilities (Note 6b)

-Nil amount 5,740

Lease obligations for tangible capital assets (Note 7)

487,038 509,037

Employee future benefits (Note 8)

24,062 24,974

Contingent liabilities (Note 15)

54,750 56,750
Total liabilities 1,435,800 1,357,053
Financial assets

Due from Consolidated Revenue Fund

568,363 458,605

Accounts receivable and advances (Note 9)

24,106 66,337

Loans receivable (Note 10)

1,795 1,752

Total gross financial assets

594,264 526,694
Financial assets held on behalf of Government

Accounts receivable and advances (Note 9)

(15,009) (48,793)

Loans receivable (Note 10)

(1,795) (1,752)

Total financial assets held on behalf of Government

(16,804) (50,545)
Total net financial assets 577,460 476,149
Departmental net debt 858,340 880,904
Non-financial assets

Prepaid expenses

3,341 1,369

Inventory (Note 11)

12,314 12,300

Tangible capital assets (Note 12)

2,773,281 2,807,222

Total non-financial assets

2,788,936 2,820,891
Departmental net financial position (Note 13) 1,930,596 1,939,987

Contractual obligations (Note 14)
Contingent liabilities (Note 15)

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

Original signed by

Helena Borges, Acting as Deputy Minister
Ottawa, Canada

August 24, 2017

Date

Original signed by

André Lapointe, Chief Financial Officer
Ottawa, Canada

August 22, 2017

Date

Transport Canada

Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31
(in thousands of dollars)


 
2017
Planned Results
2017 2016
Restated
(Note 19)
Expenses

An Efficient Transportation System

722,964 557,860 833,678

A Safe and Secure Transportation System

473,675 470,788 505,014

Internal Services

168,821 165,407 180,672

A Clean Transportation System

68,212 94,652 131,132

Ship-Source Oil Pollution Fund, Fines for Transport of Dangerous Goods and Fund for Railway Accidents Involving Designated Goods (Note 13)

1,747 5,222 1,482

Expenses incurred on behalf of Government

(1,747) (5,222) (1,482)

Total expenses

1,433,672 1,288,707 1,650,496
Revenues

Airport rent

331,136 348,892 324,129

Monitoring and enforcement revenues

43,897 48,873 46,721

Rentals and concessions

27,476 26,008 26,161

Aircraft maintenance and flying services

25,220 25,442 25,257

Transport facilities user fees

13,998 12,309 14,245

Other

11,557 3,022 10,463

Ship-Source Oil Pollution Fund, Fines for Transport of Dangerous Goods and Fund for Railway Accidents Involving Designated Goods (Note 13)

6,295 8,302 3,010

Revenues earned on behalf of Government

(380,365) (399,584) (366,195)

Total revenues

79,214 73,264 83,791
Net cost from continuing operations 1,354,458 1,215,443 1,566,705
Net cost of operations before government funding and transfers 1,354,458 1,215,443 1,566,705
Government funding and transfers

Net cash provided by Government


 
1,073,069 2,062,878

Change in Due from Consolidated Revenue Fund


 
109,758 (496,373)

Services provided without charge by other government departments (Note 16)


 
90,421 96,790

Transfer of the transition payments for implementing salary payments in arrears


 
-Nil amount (97)

Transfer of assets to other government departments (Note 12 and Note 17)


 
(67,196) (5,380)
Net cost of operations after government funding and transfers
 
9,391 (91,113)
Departmental net financial position – Beginning of year
 
1,939,987 1,848,874
Departmental net financial position – End of year
 
1,930,596 1,939,987

Segmented information (Note 18)

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

Transport Canada

Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31
(in thousands of dollars)


 
2017 2016
Restated
(Note 19)
Net cost of operations after government funding and transfers 9,391 (91,113)
Change due to tangible capital assets

Acquisitions of tangible capital assets (Note 12)

180,772 222,935

Amortization of tangible capital assets (Note 12)

(145,439) (144,801)

Proceeds from disposal of tangible capital assets

(7,455) (5,461)

Gain on disposal of tangible capital assets (Note 18)

4,831 737

Adjustments to assets under construction (Note 12(a))

546 (824)

Transfer to other government departments (Note 17)

(67,196) (5,380)

Total change due to tangible capital assets

(33,941) 67,206
Change due to inventories (Note 11) 14 (223)
Change due to prepaid expenses 1,972 (1,366)
Net decrease in departmental net debt (22,564) (25,496)
Departmental net debt – Beginning of year 880,904 906,400
Departmental net debt – End of year 858,340 880,904

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

Transport Canada

Statement of Cash Flows (Unaudited)
For the Year Ended March 31
(in thousands of dollars)


 
2017 2016
Restated
(Note 19)
Operating activities
Net cost of operations before government funding and transfers 1,215,443 1,566,705
Non-cash items:

Amortization of tangible capital assets (Note 12)

(145,439) (144,801)

Adjustments to assets under construction (Note 12(a))

546 (824)

Services provided without charge by other government departments (Note 16)

(90,421) (96,790)

Transition payments for implementing salary payments in arrears

-Nil amount 97

Gain on disposal of tangible capital assets (Note 18)

4,831 737
Variations in Statement of Financial Position:

(Decrease) Increase in accounts receivables and advances (Note 9)

(8,447) 1,372

Decrease in rent receivable

-Nil amount (5,493)

Increase (Decrease) in prepaid expenses

1,972 (1,366)

Increase (Decrease) in inventory (Note 11)

14 (223)

(Increase) Decrease in accounts payable and accrued liabilities (Note 4)

(98,963) 477,733

Increase in vacation pay and compensatory leave

(710) (887)

Increase in environmental liabilities (Note 5)

(9,978) (41,826)

Decrease in deferred revenue (Note 6a)

253 802

Decrease in other liabilities (Note 6b)

5,740 19,049

Decrease in employee future benefits (Note 8)

912 653

Decrease in contingent liabilities (Note 15)

2,000 49,425

Cash used in operating activities

877,753 1,824,363
Capital investing activities

Acquisitions of tangible capital assets (Note 12)

180,772 222,935

Proceeds from disposal of tangible capital assets

(7,455) (5,461)

Cash used in capital investing activities

173,317 217,474
Financing activities

Decrease in lease obligation for tangible capital assets (Note 7)

21,999 21,041

Cash used in financing activities

21,999 21,041
Net cash provided by Government of Canada 1,073,069 2,062,878

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

Transport Canada

Notes to the Financial Statements (Unaudited)
For the Year Ended March 31

1. Authority and objectives

Transport Canada is a department of the Government of Canada named in Schedule 1 of the Financial Administration Act and reports to Parliament through the Minister of Transport.

Transport Canada is responsible for the transportation policies, programs and goals set by the Government of Canada, which are supported through the following departmental programs:

  • An Efficient Transportation System program: supports trade, economic prosperity and a better quality of life through low costs, high productivity, the best use of all modes and innovation in transportation. Transport Canada promotes an efficient transportation system in Canada by: modernizing marketplace frameworks so that the transportation sector can adapt, innovate and remain competitive; implementing gateways and corridors initiatives; ensuring the renewal of federal transportation infrastructure; encouraging innovation in the transportation sector; and partnering with provinces, territories, municipal governments, and public and private sector entities in various transportation initiatives.
  • A Clean Transportation System program: advances the federal government’s environmental agenda in the transportation sector and complements other federal programs designed to reduce air emissions to protect the health of Canadians and the environment for generations to come; protects the marine environment by reducing the pollution of water from transportation sources; and fulfills Transport Canada’s responsibilities in working towards a cleaner and healthier environment with regard to its own operations.
  • A Safe and Secure Transportation System program: moves people and goods across Canada, and to international destinations, without loss of life, injury, or damage to property. Transport Canada supports a safe and secure transportation system by influencing the behaviour of the public and industry through policies, standards, regulations and laws. Harmonized and streamlined regulatory regimes, informed by the expertise of multiple countries and stakeholders, aid effective, safe and secure transportation practices and a sound safety and security culture. Transport Canada ensures that Canadians and the transportation industry are in compliance with the regulatory framework through its oversight program.
  • The Internal Services program: Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: management and oversight services; communications services; legal services; human resources management services; financial management services; information management services; information technology services; real property services; materiel services; and acquisition services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

Transport Canada delivers its programs and services under numerous legislative and constitutional authorities including the Department of Transport Act, Canada Transportation Act, Aeronautics Act, Canada Marine Act, Marine Liability Act, Canada Shipping Act, Navigable Waters Protection Act, Railway Safety Act, Transportation of Dangerous Goods Act, Motor Vehicle Safety Act, Canadian Air Transport Security Authority Act, Marine Transportation Security Act and Safe and Accountable Rail Act.

2. Summary of significant accounting policies

These financial statements have been prepared using the Government’s accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

  1. (a) Parliamentary authorities – Transport Canada is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to Transport Canada do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position and in the 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 Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-Oriented Statement of Operations included in the 2016-17 Report on Plans and Priorities. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2016-17 Report on Plans and Priorities.
  2. (b) Net cash provided by Government – Transport Canada operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by Transport Canada is deposited to the CRF and all cash disbursements made by Transport Canada are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the Government.
  3. (c) Amounts due from or to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that Transport Canada is entitled to draw from the CRF without further authorities to discharge its liabilities.
  4. (d) Revenues:
    • Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
    • Funds received from external parties for specific purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.
    • Funds that have been received are recorded as deferred revenue, provided Transport Canada has an obligation to other parties for the provision of goods, services or the use of assets in the future.
    • Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.
    • Revenues that are non-respendable are not available to discharge the Transport Canada's liabilities. While the Deputy Head is expected to maintain accounting control, he or she has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented as a reduction of the entity's gross revenues.
  5. (e) Expenses – Expenses are recorded on the accrual basis:
    • Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements. Transfer payments that become repayable, as a result of conditions specified in the contribution agreement that have come into being, are recorded as a reduction to transfer payment expense and as a receivable.
    • Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
    • Services provided without charge by other government departments for accommodation, employer’s contribution to the health and dental insurance plans, legal services and workers’ compensation are recorded as operating expenses at their estimated cost.
  6. (f) Employee future benefits:
    • Pension benefits: Eligible employees participate in the Public Service Pension Plan (Plan), a multi-employer pension plan administered by the Government. Transport Canada’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Transport Canada'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.
    • Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as the 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.
  7. (g) Accounts and loans receivable are stated at the lower of cost and net recoverable value. However, when the terms of the loans are concessionary, such as those provided with a low or no interest clause, they are recorded at their estimated present value. A portion of the unamortized discount is recorded as revenue each year to reflect the change in the present value of the loans outstanding. Transfer payments that are unconditionally repayable are recognized as loans receivable. A valuation allowance is recorded for accounts and loans receivable where recovery is considered uncertain.
  8. (h) Contingent liabilities – Contingent liabilities are potential liabilities that 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. If the likelihood is not determinable or if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.
  9. (i) 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, Transport Canada 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 Transport Canada's best estimate of the amount required to remediate the sites to the current minimum standard for their 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, changes in management estimates and actual costs incurred.
    • If the likelihood of Transport Canada'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.
  10. (j) Inventory – Inventory consists of parts, materials and supplies held for future program delivery and not intended for resale. Inventory, other than serialized inventory items, is valued at cost using the average cost method. Serialized inventory items are valued on a specific cost basis. A serialized inventory item is consumable inventory, which has a serial number and is required to be tracked for airworthiness purposes. If there is no longer any service potential, inventory is valued at the lower of cost or net realizable value.
  11. (k) Foreign currency transactions – Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars using the rate of exchange in effect at year-end. Gains and losses resulting from foreign currency transactions are included in the Statement of Operations and Departmental Net Financial Position.
  12. (l) Tangible capital assets – All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Transport Canada does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian reserves and museum collections. Land has no minimum capitalization threshold.

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

    Asset Class Amortization Period
    Confederation Bridge Footnote * 100 years
    Buildings 20 to 40 years
    Works and infrastructure 10 to 60 years
    Machinery and equipment 5 to 30 years
    Computer hardware and software 3 to 5 years
    Ships and boats 10 to 35 years
    Aircrafts 6 to 20 years
    Motor vehicles 6 to 35 years
    Leasehold improvements Lesser of the remaining term of lease or useful life of the improvement

    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.

  13. (m) Measurement uncertainty – The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are allowance for doubtful accounts, contingent liabilities, environmental remediation liabilities, 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 financial statements in the year they become known.

    Environmental liabilities, as presented in Note 5, are subject to measurement uncertainty due to the evolving technologies used in the estimation of the costs for remediation of contaminated sites or asset retirements, the use of discounted present value of future estimated costs, and the fact that not all sites have had a complete assessment of the extent and nature of remediation or retirement. Changes to underlying assumptions, the timing of the expenditures, the technology employed, or the revisions to environmental standards or changes in regulatory requirements could result in significant changes to the environmental liabilities recorded.
3. Parliamentary authorities

Transport Canada receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, Transport Canada has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

(a) Reconciliation of net cost of operations to current year authorities used

(in thousands of dollars)


 
2017 2016
Restated
(Note 19)
Net cost of operations before government funding and transfers 1,215,443 1,566,705
Adjustments for items affecting net cost of operations but not affecting authorities:

Amortization of tangible capital assets (Note 12)

(145,439) (144,801)

Services provided without charge by other government departments (Note 16)

(90,421) (96,790)

Gain on disposal of tangible capital assets (Note 18)

4,831 737

Adjustments to assets under construction (Note 12(a))

546 (824)

Increase in vacation pay and compensatory leave

(710) (887)

Increase in environmental liabilities (Note 5)

(9,978) (41,826)

Decrease in employee future benefits (Note 8)

912 653

Decrease in contingent liabilities (Note 15)

2,000 49,425

Decrease (increase) in accrued liabilities not charged to authorities

6,596 (8,442)

Refund of prior years' expenditures

998 2,266

Adjustments of previous years accounts payable

1,090 896

Bad debt expense

(274) (89)

Other expenditures not affecting authorities

188 (857)

Total items affecting net cost of operations but not affecting authorities

(229,661) (240,539)
Adjustments for items not affecting net cost of operations but affecting authorities:

Acquisitions of tangible capital assets (Note 12)

180,772 222,935

Decrease in lease obligations for tangible capital assets (Note 7)

21,999 21,041

Transition payments for implementing salary payments in arrears

-Nil amount 97

Increase (Decrease) in inventory (Note 11)

14 (223)

Increase (Decrease) in prepaid expenses

1,972 (1,366)

Decrease in previous year accrued liabilities charged to authorities

-Nil amount 477

Other

620 -Nil amount

Total items not affecting net cost of operations but affecting authorities

205,377 242,961
Current year authorities used 1,191,159 1,569,127

(b) Authorities provided and used

(in thousands of dollars)


 
2017 2016
Authorities provided

Vote 1 – Operating expenditures

605,978 669,281

Vote 5 – Capital expenditures

151,178 170,866

Vote 10 – Transfer payments Footnote *

-Nil amount 755,366

Vote 10 – Grants and contributions – Gateways and corridors

257,904 -Nil amount

Vote 15 – Grants and contributions – Transportation infrastructure

195,547 -Nil amount

Vote 20 – Grants and contributions – Other

50,415 -Nil amount

Statutory amounts

190,705 208,987

Total authorities provided

1,451,727 1,804,500
Less:

Authorities available for future years

(3,015) (195)

Lapsed authorities: Operating expenditures

(71,042) (19,122)

Lapsed authorities: Capital expenditures

(61,640) (51,700)

Lapsed authorities: Transfer payments Footnote *

-Nil amount (164,356)

Lapsed authorities: Grants and contributions – Gateways and corridors

(100,729) -Nil amount

Lapsed authorities: Grants and contributions – Transportation infrastructure

(5,690) -Nil amount

Lapsed authorities: Grants and contributions – Other

(18,257) -Nil amount

Lapsed authorities: Other lapsed amounts

(195) -Nil amount
Current year authorities used 1,191,159 1,569,127
4. Accounts payable and accrued liabilities

The following table presents details of Transport Canada’s accounts payable and accrued liabilities:

(in thousands of dollars)


 
2017 2016
Accounts payable – Other government departments and agencies 62,169 12,442
Accounts payable – External parties 509,516 452,066
Total accounts payable 571,685 464,508
Accrued liabilities 69,222 77,436
Total accounts payable and accrued liabilities 640,907 541,944
5. Environmental liabilities

(a) 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 environment and human health.

Transport Canada has identified a total of 286 sites (291 sites in 2015-16) where contamination may exist and assessment, remediation and monitoring may be required. Of these, Transport Canada has assessed 109 sites (101 sites in 2015-16) where action is possible and for which a net liability of $178,627,473 ($170,447,302 in 2015-16) has been recorded. This liability estimate has been determined after the sites are assessed and is based on environmental experts contractors 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 70 unassessed sites (81 sites in 2015-16) where a liability estimate of $19,750,654 ($17,952,543 in 2015-16) has been recorded using this model.

These two estimates combined, totalling $198,378,127 ($188,399,845 in 2015-16) represent management’s best estimate of the costs required to remediate the sites to the current minimum standard for use prior to contamination, based on information available at the financial statement date.

Of the remaining 107 sites (109 sites in 2015-16), 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, Transport Canada 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.

During the fiscal year, 22 sites (45 sites in 2015-16) were closed, as they were either remediated or assessed and found not to be contaminated.

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 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 2 year term to 2.55% for a 25 or greater year term.

Transport Canada’s ongoing efforts to assess contaminated 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.

(in thousands of dollars, except for number of sites)

Nature & Source Number of Sites 2017 Estimated Liability 2017 Estimated Total Undiscounted Expenditures 2017 Estimated Recoveries 2017
Military & Former Military Sites Footnote (1) 1 143 145 -Nil amount
Fuel Related Practices Footnote (2) 31 28,700 30,210 -Nil amount
Landfill/Waste Sites Footnote (3) 14 38,495 40,338 -Nil amount
Engineered Asset/Air & Land Transportation Footnote (4) 51 28,631 29,705 -Nil amount
Marine Facilities/Aquatic Sites Footnote (5) 56 101,128 105,621 -Nil amount
Other Footnote (6) 26 1,281 1,426 -Nil amount
Total 179 198,378 207,445 -Nil amount

(in thousands of dollars, except for number of sites)

Nature & Source Number of Sites 2016 Estimated Liability 2016 Estimated Total Undiscounted Expenditures 2016 Estimated Recoveries 2016
Military & Former Military Sites Footnote (1) 1 42 43 -Nil amount
Fuel Related Practices Footnote (2) 34 21,702 22,650 -Nil amount
Landfill/Waste Sites Footnote (3) 15 39,356 41,161 -Nil amount
Engineered Asset/Air & Land Transportation Footnote (4) 53 25,690 26,271 -Nil amount
Marine Facilities/Aquatic Sites Footnote (5) 53 99,987 104,391 -Nil amount
Other Footnote (6) 26 1,623 1,696 -Nil amount
Total 182 188,400 196,212 -Nil amount
6a. Deferred revenue

Deferred revenue represents the balance at year-end of unearned revenues, stemming from amounts received from external parties used to fund the expenditures related to specific research projects, as well as other amounts received for fees prior to services being performed. Revenue is recognized in the period in which these expenditures are incurred or in which the service is performed.

Details of the transactions related to this account are as follows:

(in thousands of dollars)


 
2017 2016
Shared-cost agreements – Transportation research and development Footnote *

Opening balance

712 1,255

Amounts received

702 793

Revenue recognized

(768) (1,336)

Closing balance

646 712
Other

Opening balance

3,286 3,546

Amounts received

2,573 2,707

Revenue recognized

(2,760) (2,967)

Closing balance

3,099 3,286
Net closing balance 3,745 3,998
6b. Other liabilities

Other liabilities represent amounts for shared cost environmental remediation projects. Funds are received by Transport Canada from external parties in order to cover future remediation expenditures related to these projects.
Details of the transactions related to this account are as follows:

(in thousands of dollars)


 
2017 2016
Shared-cost agreements – Remediation projects

Opening balance

5,740 24,789

Amount received

-Nil amount -Nil amount

Payments and other charges

(5,740) (19,049)
Net closing balance -Nil amount 5,740
7. Lease obligation for tangible capital assets

Under the Northumberland Strait Crossing Act, the Government of Canada entered into a long-term capital lease arrangement in 1992 and is obligated to pay an annual subsidy of $41,900,000 indexed to the annual inflation rate to the Strait Crossing Finance Inc., a wholly owned corporation of the Province of New Brunswick, for the construction of the Confederation Bridge.

The annual payments made by Transport Canada are due on April 1 and will be used to retire $661,542,613 of 4.5 per cent real rate bonds issued in October 1993 by Strait Crossing Finance Inc. to finance the construction of the bridge. Annual payments made by Transport Canada began in 1997 and will continue until 2033. At such time, the ownership of the bridge will be transferred to the Government of Canada.

On April 1, 2016, an annual payment in the amount of $63,588,278 ($62,334,630 in 2015-16) was made. This payment represents a payment of principal in the amount of $21,999,164 ($21,041,230 in 2015-16), interest of $23,174,676 ($24,132,610 in 2015-16), and an amount of $18,414,438 ($17,160,790 in 2015-16) representing the indexing of the payment to the annual inflation rate.

The interest expense and indexing adjustment accrued at March 31, 2017 amounts to $22,173,130 ($23,174,676 in 2015-16) and $19,768,646 ($18,414,438 in 2015-16), respectively.

Transport Canada has a capital lease obligation of $487,037,434 at March 31, 2017 ($509,036,598 in 2015-16), based on the present value for the future payments using an interest rate of 6.06% (6.06% in 2015-16).

The obligations related to the upcoming years include the following:

(in thousands of dollars)


 
2017 2016
2017 -Nil amount 61,061
2018 61,983 61,983
2019 62,920 62,920
2020 63,871 63,871
2021 64,836 64,836
2022 and thereafter 717,318 717,318
Total future minimum lease payments 970,928 1,031,989
Less: imputed interest (6.06%) (483,890) (522,952)
Balance of obligations under leased tangible capital assets 487,038 509,037
8. Employee future benefits

(a) Pension benefits

Transport Canada’s 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 percent 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 Transport Canada 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 2016-17 expense amounts to $56,968,307 ($63,681,704 in 2015-16). For Group 1 members, the expense represents approximately 1.12 times (1.25 times in 2015-16) the employee contributions and, for Group 2 members, approximately 1.08 times (1.24 times in 2015-16) the employee contributions.

Transport Canada’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 the Department’s 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, 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:

(in thousands of dollars)


 
2017 2016
Accrued benefit obligation, beginning of year 24,974 25,627
Expense for the year 2,508 4,369
Benefits paid during the year (3,420) (5,022)
Accrued benefit obligation, end of year 24,062 24,974
9. Accounts receivable and advances

The following table presents details of Transport Canada’s accounts receivable and advances balances:

(in thousands of dollars)


 
2017 2016
Accounts receivable – Other government departments and agencies 13,906 47,436
Accounts receivable – External parties 11,859 21,045
Employee advances 807 281
Subtotal 26,572 68,762
Allowance for doubtful accounts on receivables from external parties (2,466) (2,425)
Gross accounts receivable and advances 24,106 66,337
Accounts receivable and advances held on behalf of Government (15,009) (48,793)
Net accounts receivable and advances 9,097 17,544
10. Loans receivable

The following table presents details of Transport Canada’s loans receivable:

(in thousands of dollars)


 
2017 2016
Loans receivable – Victoria Harbour 2,066 2,108
Loans receivable – St. Lawrence Seaway Management Corporation 174 174
Subtotal 2,240 2,282
Less: Unamortized discounts (271) (356)
Subtotal 1,969 1,926
Less: Allowance for uncollectibility (174) (174)
Gross loans receivable 1,795 1,752
Loans receivable held on behalf of Government (1,795) (1,752)
Net loans receivable -Nil amount -Nil amount

(a) Loans receivable – Victoria Harbour

The Victoria Harbour loan receivable relates to the sale of a parcel of Victoria Harbour land for $2,578,469. A discount of $271,039 is recorded to reflect the concessionary nature of the loan ($356,131 in 2015-16). A payment of $42,720 was received in fiscal year 2016-17 ($42,720 in 2015-16).

(b) Loans receivable – St. Lawrence Seaway Management Corporation

The St. Lawrence Seaway Management Corporation loan portfolio account was established by subsection 80(1) of the Canada Marine Act. The loan portfolio is managed in accordance with the Seaway Agreements between Transport Canada and the St. Lawrence Seaway Management Corporation. An allowance for uncollectibility has been recorded for the remaining amount of the loans receivable as there is uncertainty of recovering the monies owed.

11. Inventory

The following table presents the detail of the inventory, which is measured at cost using the average cost method for non-serialized inventory items parts, and on a specific cost basis for serialized inventory items parts:

(in thousands of dollars)


 
2017 2016
Consumable parts 12,314 12,300
Total inventory 12,314 12,300

The cost of consumed inventory recognized as an expense in the Statement of Operations and Departmental Net Financial Position is $1,474,289 ($1,244,877 in 2015-16).

12. Tangible capital assets

(in thousands of dollars)

Capital Asset Class Cost
Opening balance (Restated) Acquisitions Adjustments
(a)
Disposals and write-offs Closing balance
Land
Footnote (1)Footnote (6)
276,119 -Nil amount (64,294) (59) 211,766
Buildings
Footnote (2) Footnote (7)
856,073 4,798 544 -Nil amount 861,415
Works and infrastructure
Footnote (3) Footnote (8)
3,353,547 85,583 18,765 (2,379) 3,455,516
Machinery and equipment
Footnote (4) Footnote (9)
113,567 3,018 3,055 (1,944) 117,696
Computer hardware and software 131,160 -Nil amount 16,259 (2,038) 145,381
Ships and boats 132,723 -Nil amount 13,107 -Nil amount 145,830
Aircrafts 152,388 -Nil amount 3,266 (6,911) 148,743
Motor vehicles 466,509 4,143 204 (5,078) 465,778
Leasehold improvements
Footnote (5)
25,888 100 4,131 (261) 29,858
Assets under construction 67,966 83,130 (61,835) -Nil amount 89,261
Confederation Bridge 818,820 -Nil amount -Nil amount -Nil amount 818,820
Total 6,394,760 180,772 (66,798) (18,670) 6,490,064

(in thousands of dollars)

Capital Asset Class Accumulated Amortization
Opening balance (Restated) Amortization Adjustments
(a)
Disposals and write-offs Closing balance
Land
Footnote (1)Footnote (6)
-Nil amount -Nil amount -Nil amount -Nil amount -Nil amount
Buildings
Footnote (2) Footnote (7)
583,687 18,600 -Nil amount -Nil amount 602,287
Works and infrastructure
Footnote (3) Footnote (8)
2,087,228 83,232 -Nil amount (1,889) 2,168,571
Machinery and equipment
Footnote (4) Footnote (9)
73,995 6,347 (179) (1,888) 78,275
Computer hardware and software 99,305 10,328 -Nil amount (1,944) 107,689
Ships and boats 76,634 2,358 -Nil amount -Nil amount 78,992
Aircrafts 116,520 3,887 -Nil amount (5,849) 114,558
Motor vehicles 380,166 11,522 31 (4,289) 387,430
Leasehold improvements
Footnote (5)
15,792 977 -Nil amount (187) 16,582
Assets under construction -Nil amount -Nil amount -Nil amount -Nil amount -Nil amount
Confederation Bridge 154,211 8,188 -Nil amount -Nil amount 162,399
Total 3,587,538 145,439 (148) (16,046) 3,716,783

(in thousands of dollars)

Capital Asset Class Net book value
2017 2016
Restated
(Note 19)
Land Footnote (1)Footnote (6) 211,766 276,119
Buildings Footnote (2) Footnote (7) 259,128 272,386
Works and infrastructure Footnote (3) Footnote (8) 1,286,945 1,266,319
Machinery and equipment Footnote (4) Footnote (9) 39,421 39,572
Computer hardware and software 37,692 31,855
Ships and boats 66,838 56,089
Aircrafts 34,185 35,868
Motor vehicles 78,348 86,343
Leasehold improvements Footnote (5) 13,276 10,096
Assets under construction 89,261 67,966
Confederation Bridge 656,421 664,609
Total 2,773,281 2,807,222

(a) Adjustments

Adjustments include assets under construction of $61,547,301 that were transferred to the other asset categories upon completion as well as other adjustments to assets under construction of $546,019 ($286,928 that were expensed, offset by $832,947 in other adjustments).

Adjustments also include a net book value decrease of $67,195,773, for tangible capital assets transferred to or from other government departments and agencies as follows:

(in thousands of dollars)


 
2017 2016
Transfers of tangible capital assets from (to) other government departments
From Veterans Affairs Canada -Nil amount 1
From Public Services and Procurement Canada -Nil amount 3
To Infrastructure Canada (67,179) -
To Parks Canada (17) (5,365)
To Natural Resources Canada -Nil amount (7)
To Environment and Climate Change Canada -Nil amount (12)
Total transfers of tangible capital assets to other government departments (67,196) (5,380)

National Airport System assets

Land, buildings, works and infrastructures owned by Transport Canada related to the 23 Canadian airports comprising the National Airport System are included in the table above. Tangible capital assets owned by airport authorities are not reflected in these financial statements.

Transport Canada has leased all of these airports under long-term operating agreements with Canadian Airport Authorities and a municipal government. These agreements are in accordance with the federal National Airports Policy, the Public Accountability Principles for Canadian Airport Authorities and the Fundamental Principles for the Creation and Operations of Canadian Airport Authorities, which, in part, entail the transfer of the management, operations and maintenance of certain airports in Canada to Canadian Airport Authorities.

Transport Canada has the right to terminate the operating agreements and assume the responsibility for the management, operation and maintenance of the airport if the leased airports are not operated in accordance with the terms of the respective operating agreements and the Policies and Principles referred to above.

Values recorded for the National Airport System assets for 23 National Airports are:

St. Lawrence Seaway assets

Land, buildings, works and infrastructure, and machinery and equipment owned by Transport Canada related to the St. Lawrence Seaway (Seaway) are included in the table above. Ownership of these assets was transferred to Transport Canada effective October 1, 1998, when the St. Lawrence Seaway Management Corporation (SLSMC) was established. The original 20-year agreement with the federal government that was expected to end on March 31,2018 was extended in 2017 for a period of five years and will therefore be in force until March 31, 2023. The SLSMC is responsible for managing and operating the Seaway, as well as the maintenance, repairs, acquisition and replacement of government-owned Navigation Seaway Assets. Transport Canada is responsible for funding any SLSMC financial requirements net of revenues. In 2016-17 $90,113,340 of the annual funding provided was utilized to acquire tangible capital assets ($102,600,303 in 2015-16). Other amounts to fund minor maintenance and repairs are recorded as an operating expense in the statement of operations.

Values recorded for the Seaway assets are:

13. Departmental net financial position

A portion of Transport Canada’s net financial position is used for specific purposes and is restricted. Related revenues and expenses are included in the Statement of Operations and Departmental Net Financial Position. Transport Canada has three accounts which fall under this category:

(a) Ship-Source Oil Pollution Fund (SOPF)

The Ship-Source Oil Pollution Fund (Fund) was established pursuant to subsection 2001, c.6 of the Marine Liability Act (previously the Canada Shipping Act), to record levy tonnage payments for oil carried by ships in Canadian waters. Maritime pollution claims, the fee of the fund administrator, and related oil pollution control expenses, are financed out of the Fund. Additional information regarding the Ship-Source Oil Pollution Fund can be found on the Fund’s website.

(b) Fines for Transport of Dangerous Goods

The Fines for Transport of Dangerous Goods account was established pursuant to the Transportation of Dangerous Goods Act 1992 and related regulations to record fines levied by courts under the Act. The balance of the account is used for program funding.

(c) Fund for Railway Accidents Involving Designated Goods (FRAIDG)

The Fund for Railway Accidents Involving Designated Goods was established pursuant to the Safe and Accountable Rail Act to establish a compensation fund to cover the losses, damages, costs and expenses resulting from a railway accident involving crude oil or other designated goods that exceed the minimum liability insurance coverage. This account is financed by a levy on shipments of crude oil by rail.

Activities in the accounts are as follows:

(in thousands of dollars)


 
2017 2016
Restated
(Note 19)
Ship-Source Oil Pollution Fund – Restricted

Balance – Beginning of year – Restricted

411,288 409,760

Revenues

3,317 3,010

Expenses

(5,150) (1,482)

Balance – End of year – Restricted

409,455 411,288
Fines for Transport of Dangerous Goods – Restricted

Balance – Beginning of year – Restricted

514 514

Revenues

-Nil amount -Nil amount

Expenses

-Nil amount -Nil amount

Balance – End of year – Restricted

514 514
Fund for Railway Accidents Involving Designated Goods - Restricted

Balance – Beginning of year – Restricted

-Nil amount -Nil amount

Revenues

4,985 -Nil amount

Expenses

(72) -Nil amount

Balance – End of year – Restricted

4,913 -Nil amount
Total balance – End of year – Restricted 414,882 411,802
Unrestricted 1,515,714 1,528,185
Departmental net financial position – End of year 1,930,596 1,939,987
14. Contractual obligations

The nature of Transport Canada’s activities can result in some large multi-year contracts and obligations, whereby Transport Canada will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in thousands of dollars)


 
2018 2019 2020 2021 2022 and
thereafter
Total
Transfer payments 152,828 51,332 41,106 32,244 85,295 362,805
Other goods and services 47,113 27,105 30,271 28,917 54,210 187,616
Tangible capital assets 57,148 50,355 53,082 63,000 112,563 336,148
Total 257,089 128,792 124,459 124,161 252,068 886,569
15. Contingent Liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. They are grouped into two categories as follows:

(a) Environmental liabilities

Transport Canada has disclosed a contingent liability in the amount of $6,532,480 for 3 sites ($9,331,487 in 2015-16 for 4 sites) where Transport Canada has determined that it is not directly responsible, nor does it accept responsibility; however, there is uncertainty as to whether Transport Canada may be responsible.

(b) Claims and litigation

Claims have been made against Transport Canada 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. Transport Canada 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. An amount of $54,750,000 has been recorded in the financial statements as of March 31, 2017 ($56,750,000 in 2015-16). Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $9,611,234 as at March 31, 2017 ($6,645,454 in 2015-16).

16. Related party transactions

Transport Canada is related as a result of common ownership to all government departments, agencies, and Crown corporations. Transport Canada enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, Transport Canada received common services which were obtained without charge from other government departments as disclosed below. In addition, Transport Canada has entered into agreements to administer programs on behalf of Infrastructure Canada.

(a) Common services provided without charge by other government departments

During the year, Transport Canada received without charge from certain common service organizations, services related to accommodation, the employer’s contribution to the health and dental insurance plans, legal services, and workers' compensation coverage.

These services provided without charge have been recorded in Transport Canada’s Statement of Operations and Departmental Net Financial Position as follows:

(in thousands of dollars)


 
2017 2016
Accommodation 43,598 49,318
Employer’s contribution to the health and dental insurance plans 38,940 39,781
Workers' compensation 2,852 2,985
Legal services 5,031 4,706
Total 90,421 96,790

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and for 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 payroll and cheque issuance services provided by Public Services and Procurement Canada, information technology infrastructure services provided by Shared Services Canada and audit services provided by the Office of the Auditor General, are not included in the Statement of Operations and Departmental Net Financial Position of Transport Canada.

(b) Administration of programs on behalf of other government departments:

(i) Canada Strategic Infrastructure Fund (CSIF) and Border Infrastructure Fund (BIF)

Under a memorandum of understanding signed with Infrastructure Canada on January 31, 2003, Transport Canada administers the CSIF and the BIF. During the year, Transport Canada incurred expenses of $39,349,785 ($127,793,947 in 2015-16) related to the CSIF, and NIL ($17,699,761 in 2015-16) related to the BIF, on behalf of Infrastructure Canada. These expenses are reflected in the financial statements of Infrastructure Canada and are not recorded in these financial statements.

(ii) Building Canada Fund (BCF)

Under a memorandum of understanding signed with Infrastructure Canada on April 25, 2008, Transport Canada administers the BCF. During the year, Transport Canada incurred expenses of $425,938,252 ($506,398,615 in 2015-16) related to the BCF on behalf of Infrastructure Canada. These expenses are reflected in the financial statements of Infrastructure Canada and are not recorded in these financial statements.

(c) Other transactions with related parties

(in thousands of dollars)


 
2017 2016
Expenses – Other government departments and agencies 84,280 101,289
Revenues – Other government departments and agencies 31,872 37,947

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

17. Transfers to other government departments
  • During the year, tangible capital assets were transferred to other government departments. The transfers were measured at their net book value.

(in thousands of dollars)


 
2017 2016
Assets
Tangible capital assets transferred to other government departments (Note 12) (67,196) (5,380)
Adjustment to the departmental net financial position (67,196) (5,380)
  • As per the Order in Council P.C. 2015-1237, the Windsor-Detroit Bridge Authority was transferred from Transport Canada to Infrastructure Canada, as of November 4, 2015. Following a Memorandum of Understanding, it was agreed that Transport Canada would continue to assume stewardship of charges including assets and liabilities and present the financial information attached to the Windsor-Detroit Bridge Authority during this period of transition of November 4, 2015 to March 31, 2016. The land with a net book value of $67,179,354 was transferred through an interdepartmental transfer during the 2016-17 fiscal year, and is included in this amount.
18. Segmented information

Presentation by segment is based on Transport Canada's 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 for the main programs, by major object of expenses and by major type of revenues. The segmented results for the period are as follows:

(in thousands of dollars)


 
An Efficient Transportation System A Safe and Secure Transportation System Internal Services A Clean Transportation System SOPF, FRAIDG and other (Note 13) 2017
Total
2016
Total
Restated
(Note 19)
Transfer payments
Other levels of
government
within Canada
188,360 8,090 -Nil amount 1,078 -Nil amount 197,528 399,743
Industry 81,235 4,724 -Nil amount 4,741 -Nil amount 90,700 99,477
Non-profit
organizations
9,506 3,551 -Nil amount 9,452 -Nil amount 22,509 28,944
Individuals 250 5 -Nil amount -Nil amount -Nil amount 255 305
Other countries
and international
organizations
-Nil amount 185 -Nil amount 295 -Nil amount 480 470
Total transfer payments 279,351 16,555 -Nil amount 15,566 -Nil amount 311,472 528,939
Operating expenses
Salaries and
employee
benefits
42,519 344,313 109,004 26,916 -Nil amount 522,752 570,995
Professional and
special services
30,623 23,729 25,052 42,706 -Nil amount 122,110 170,998
Operating costs
in respect of
St. Lawrence
Seaway
Agreements
25,283 -Nil amount -Nil amount -Nil amount -Nil amount 25,283 29,979
Amortization of
tangible capital
assets (Note 12)
122,842 16,261 5,438 898 -Nil amount 145,439 144,801
Accommodation
(Note 16)
3,562 27,959 9,827 2,250 -Nil amount 43,598 49,318
Interest and inflation adjustment
on capital lease
payments (Note 7)
41,942 -Nil amount -Nil amount -Nil amount -Nil amount 41,942 41,589
Claims and
litigation (Note 15)
-Nil amount -Nil amount -Nil amount -Nil amount -Nil amount -Nil amount 27,000
Travel and
relocation
1,202 14,287 415 913 -Nil amount 16,817 26,248
Equipment repair
and maintenance
3,604 9,131 9,298 3,760 -Nil amount 25,793 26,128
Utilities, materials
and supplies
3,192 9,455 989 41 -Nil amount 13,677 12,724
Rentals 302 4,043 2,367 116 -Nil amount 6,828 7,700
Payments in
lieu of
property taxes
5,150 1,283 681 -Nil amount -Nil amount 7,114 6,273
Information
services –
communications
817 2,103 257 507 -Nil amount 3,684 3,206
Other 340 155 1,633 13 -Nil amount 2,141 2,653
Postage 101 1,209 356 9 -Nil amount 1,675 1,867
Ship-Source Oil
Pollution Fund,
Fines for Transport
of Dangerous
Goods and Fund
for Railway
Accidents Involving
Designated Goods
(Note 13)
-Nil amount -Nil amount -Nil amount -Nil amount 5,222 5,222 1,482
Telecommunications 111 818 558 5 -Nil amount 1,492 544
Damage and
other claims
against the Crown
75 745 -Nil amount 901 -Nil amount 1,721 271
Gain on
disposal of tangible
capital assets
(3,156) (1,258) (468) 51 -Nil amount (4,831) (737)
Expenses incurred
on behalf of
Government
-Nil amount -Nil amount -Nil amount -Nil amount (5,222) (5,222) (1,482)
Total operating expenses 278,509 454,233 165,407 79,086 -Nil amount 977,235 1,121,557
Total expenses 557,860 470,788 165,407 94,652 -Nil amount 1,288,707 1,650,496
Revenues
Airport rent 348,892 -Nil amount -Nil amount -Nil amount -Nil amount 348,892 324,129
Monitoring and
enforcement
revenues
23,124 25,136 613 -Nil amount -Nil amount 48,873 46,721
Rentals and
concessions
13,423 583 12,002 -Nil amount -Nil amount 26,008 26,161
Aircraft
maintenance
and flying
services
-Nil amount 25,442 -Nil amount -Nil amount -Nil amount 25,442 25,257
Transport facilities
user fees
11,659 650 -Nil amount -Nil amount -Nil amount 12,309 14,245
Other 887 1,886 249 -Nil amount -Nil amount 3,022 10,463
Ship-Source Oil
Pollution Fund,
Fines for Transport
of Dangerous
Goods and Fund
for Railway
Accidents Involving
Designated Goods
(Note 13)
-Nil amount -Nil amount -Nil amount -Nil amount 8,302 8,302 3,010
Revenues earned
on behalf of
Government
(377,883) (1,128) (12,271) -Nil amount (8,302) (399,584) (366,195)
Total revenues 20,102 52,569 593 -Nil amount -Nil amount 73,264 83,791
Net cost from continuing operations 537,758 418,219 164,814 94,652 -Nil amount 1,215,443 1,566,705
19. Restatement of previous year’s results

During the year, Transport Canada undertook an analysis of transactions incurred under a multi-year agreement with the St. Lawrence Seaway Management Corporation (SLSMC). The agreement dates back to October 1, 1998 when Transport Canada obtained ownership of these assets. Under the agreement, SLSMC is responsible for managing and operating the St. Lawrence Seaway, as well as the maintenance, repairs, acquisition and replacement of government-owned Navigation Seaway Assets. Transport Canada is responsible for funding any SLSMC financial requirements net of revenues.

This analysis identified that Transport Canada acquired a number of tangible capital assets that had been previously expensed in the financial statements. The effect of the resulting retroactive adjustments is presented below:

(in thousands of dollars)


 
2016 as
previously
stated
Effect of
changes
2016
(Restated)
Statement of Financial Position

Tangible capital assets (Note 12)

2,224,663 582,559 2,807,222

Total non-financial assets

2,238,332 582,559 2,820,891

Departmental net financial position (Note 13)

1,357,428 582,559 1,939,987
Statement of Operations and Departmental Net Financial Position

An Efficient Transportation System

918,849 (85,171) 833,678

Total expenses

1,735,667 (85,171) 1,650,496

Net cost from continuing operations

1,651,876 (85,171) 1,566,705

Net cost of operations before government funding and transfers

1,651,876 (85,171) 1,566,705

Net cost of operations after government funding and transfers

(5,942) (85,171) (91,113)

Departmental net financial position – Beginning of year

1,351,486 497,388 1,848,874

Departmental net financial position – End of year

1,357,428 582,559 1,939,987
Statement of Change in Departmental Net Debt

Net cost of operations after government funding and transfers

(5,942) (85,171) (91,113)

Acquisition of tangible capital assets (Note 12)

120,335 102,600 222,935

Amortization of tangible capital assets (Note 12)

(127,372) (17,429) (144,801)

Total change due to tangible capital assets

(17,965) 85,171 (67,206)

Net decrease in departmental net debt

(25,496) -Nil amount (25,496)

Departmental net debt – beginning of year

906,400 -Nil amount 906,400

Departmental net debt – end of year

880,904 -Nil amount 880,904
Statement of Cash Flows

Net cost of operations before government funding and transfers

1,651,876 (85,171) 1,566,705

Amortization of tangible capital assets (Note 12)

(127,372) (17,429) (144,801)

Cash used in operating activities

1,926,963 (102,600) 1,824,363

Acquisitions of tangible capital assets (Note 12)

120,335 102,600 222,935

Cash used in capital investing activities

114,874 102,600 217,474

Net cash provided by Government of Canada

2,062,878 -Nil amount 2,062,878
Notes to the Financial Statements

Parliamentary Authorities (Note 3a)

     

Net cost of operations before government funding and transfers

1,651,876 (85,171) 1,566,705

Amortization of tangible capital assets (Note 12)

(127,372) (17,429) (144,801)

Total items affecting net cost of operations but not affecting authorities

(223,110) (17,429) (240,539)

Acquisitions of tangible capital assets (Note 12)

120,335 102,600 222,935

Total items not affecting net cost of operations but affecting authorities

140,361 102,600 242,961

Current year authorities used

1,569,127 -Nil amount 1,569,127

Tangible capital assets (Note 12)

     

Buildings (Cost-Closing balance)

829,962 26,111 856,073

Buildings (Accumulated Amortization-Closing balance)

579,037 4,650 583,687

Buildings (Net book value)

250,925 21,461 272,386

Works and infrastructure (Cost-Closing balance)

2,706,583 646,964 3,353,547

Works and infrastructure (Accumulated Amortization-Closing balance)

1,993,634 93,594 2,087,228

Works and infrastructure (Net book value)

712,949 553,370 1,266,319

Machinery and equipment (Cost-Closing balance)

93,490 20,077 113,567

Machinery and equipment (Accumulated Amortization-Closing balance)

61,646 12,349 73,995

Machinery and equipment (Net book value)

31,844 7,728 39,572

Total (Cost – Closing balance)

5,701,608 693,152 6,394,760

Total (Accumulated Amortization – Closing balance)

3,476,945 110,593 3,587,538

Total (Net book value)

2,224,663 582,559 2,807,222

Departmental net financial position (Note 13)

     

Unrestricted

945,626 582,559 1,528,185

Departmental net financial position – End of year

1,357,428 582,559 1,939,987

Segmented information (Note 18)

     

Operating costs in respect of St. Lawrence Seaway Agreements

132,579 (102,600) 29,979

Amortization of tangible capital assets (Note 12)

127,372 17,429 144,801

Total operating expenses

1,206,728 (85,171) 1,121,557

Total expenses

1,735,667 (85,171) 1,650,496

Net cost from continuing operations

1,651,876 (85,171) 1,566,705
20. Comparative information

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

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