2013–14 Future-oriented Financial Statements

Unaudited

For the Years Ended March 31

2013–14 Future-oriented Financial Statements (PDF version, 136 Kb)


Statement of Management Responsibility

Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) management is responsible for these future-oriented financial statements, including responsibility for the appropriateness of the assumptions on which these statements are prepared. These statements are based on the best information available and assumptions adopted as at January 17, 2013 and reflect the plans described in the Report on Plans and Priorities.

These future-oriented financial statements have not been audited.

____________________
Gérald Cossette
Director
FINTRAC
Ottawa, Canada
Date: February 15, 2013
____________________
Hélène Filion
Chief Financial Officer
FINTRAC
Ottawa, Canada
Date: February 15, 2013

FUTURE-ORIENTED STATEMENT OF FINANCIAL POSITION (Unaudited)
As at March 31
  Estimated Results 2013
(In thousands of dollars)
Planned Results 2014
(In thousands of dollars)
Liabilities
Accounts payable and accrued liabilities (Note 6) $5,038 $4,373
Vacation pay and compensatory leave $1,214 $1,214
Employee future benefits (Note 7) $1,626 $1,545
Total Liabilities $7,879 $7,133
Financial assets
Accounts receivable and advances (Note 8) $690 $695
Due from Consolidated Revenue Fund $4,297 $4,331
Total financial assets $4,987 $5,026
Financial assets held on behalf of Government
Accounts receivable and advances (Note 8) ($153) ($154)
Total financial assets held on behalf of Government ($153) ($154)
Total net financial assets $4,834 $4,872
Departmental net debt $3,045 $2,261
Non-financial assets
Prepaid expenses $717 $722
Tangible capital assets (Note 9) $8,676 $8,020
Total non-financial assets $9,394 $8,743
Departmental net financial position Total $6,348 $6,482

Contractual obligations (Note 10)

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

___________________
Gérald Cossette
Director
FINTRAC
Ottawa, Canada Date: February 15, 2013
___________________
Hélène Filion
Chief Financial Officer
FINTRAC
Ottawa, Canada
Date: February 15, 2013

FUTURE-ORIENTED STATEMENT OF OPERATIONS AND DEPARTMENTAL NET FINANCIAL POSITION (Unaudited)
For the Year Ending March 31
  Estimated Results 2013
(In thousands of dollars)
Planned Results 2014
(In thousands of dollars)
Expenses
Financial Intelligence Program $25,121 $27,099
Compliance Program $25,814 $27,099
Internal Services $10,441 $9,564
Total Expenses $61,376 $63,762
Revenues
Compliance Program $374
Revenues earned on behalf of Government ($374)
Total Revenues
Net cost of operations before government funding and transfers $61,376 $63,762
Government funding and transfers
Net cash provided by Government $57,101 $55,393
Change in due to/from the Consolidated Revenue Fund ($2,487) $35
Services received without charge from other government departments (Note 11) $8,656 $8,468
Net cost of operations after government funding and transfers ($1,893) ($134)
Departmental net financial position, beginning of year $4,455 $6,348
Departmental net financial position, end of year $6,348 $6,482

Segmented information (Note 12)

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

FUTURE-ORIENTED STATEMENT OF CHANGE IN DEPARTMENTAL NET DEBT (Unaudited)
For the Year Ending March 31
  Estimated Results 2013
(In thousands of dollars)
Planned Results 2014
(In thousands of dollars)
Net cost of operations after government funding and transfers ($1,893) ($134)
Change due to tangible capital assets:
Acquisition of tangible capital assets (Note 9) $3,747 $1,602
Amortization of tangible capital assets (Note 9) ($2,104) ($2,258)
Total change due to tangible capital assets $1,642 ($656)
Change due to prepaid expenses ($25) $5
Net decrease in departmental net debt ($276) ($784)
Departmental net debt, beginning of year $3,321 $3,045
Departmental net debt, end of year $3,045 $2,261

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

FUTURE-ORIENTED STATEMENT OF CASH FLOW (Unaudited)
For the Year Ending March 31
  Estimated Results 2013
(In thousands of dollars)
Planned Results 2014
(In thousands of dollars)
Operating activities
Net cost of operations $61,376 $63,762
Non-cash items:
Amortization of tangible capital assets (Note 9) ($2,104) ($2,258)
Services received without charge from other government departments (Note 11) ($8,656) ($8,468)
Variations in Statement of Financial Position:    
Increase (decrease) in accounts receivable and advances $177 $4
Increase (decrease) in prepaid expenses ($25) $5
Decrease (increase) in accounts payable and accrued liabilities $2,491 $665
Decrease (increase) in vacation pay and compensatory leave $1
Decrease (increase) in employee future benefits $94 $81
Cash used by operating activities $53,354 $53,791
Capital investment activities
Acquisitions of tangible capital assets (Note 9) $3,747 $1,602
Cash used by capital investing activities $3,747 $1,602
Net cash provided by Government of Canada $57,101 $55,393

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

NOTES TO THE FUTURE-ORIENTED FINANCIAL STATEMENTS
(Unaudited)

1. Authority and objectives

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is Canada's financial intelligence unit (FIU). The Centre exists to assist in the detection, prevention and deterrence of money laundering and the financing of terrorist activities. FINTRAC's ‘value-added' financial intelligence products and compliance functions are a unique contribution to the public safety of Canadians and to the protection of the integrity of Canada's financial system.

FINTRAC is an independent agency that operates at arm's length from the law enforcement agencies and other entities to which it is authorized to disclose financial intelligence. It reports to the Minister of Finance, who is in turn accountable to Parliament for the activities of the Centre. FINTRAC was established by, and operates within, the ambit of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its Regulations.

To effectively pursue its mandate, FINTRAC aims to achieve the following strategic outcome: A Canadian financial system resistant to money laundering and terrorist financing. This strategic outcome is organized into the following key areas of program activity:

(a) Financial Intelligence Program

FINTRAC's Financial Intelligence Program, mandated by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), is a component of the broader national security and anti-crime agenda. The program contributes to the public safety of Canadians and strives to disrupt the ability of criminals and terrorist groups that seek to abuse Canada's financial system while reducing the profit incentive of organized crime. The main methods of intervention used by the program include receiving and analyzing reported financial transactions and other information the Centre is authorized to collect under the PCMLTFA. The program produces trusted and valued financial intelligence products including tactical case disclosures on suspected money laundering, terrorist activity financing and other threats to the security of Canada, as well as strategic intelligence such as money laundering and terrorist financing trends reports, country and group based financial intelligence assessments, and vulnerability assessments of emerging financial technologies or services. The program's products are relied upon and sought after by Canadian law enforcement at the federal, provincial and municipal levels, by counterpart agencies and domestic and international intelligence bodies, and by policy and decision makers working to identify emerging issues and vulnerabilities in the Anti-Money Laundering and Anti-Terrorist Financing Regime.

(b) Compliance Program

FINTRAC's Compliance Program is responsible for ensuring compliance with Part 1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated regulations. The Compliance Program utilizes a risk based approach to deliver enforcement, relations and support activities that help ensure compliance with legislative and regulatory obligations that apply to individuals and entities operating in Canada's financial system.

(c) Internal Services

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; Acquisition Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

2. Significant assumptions

The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of FINTRAC as described in the Report on Plans and Priorities.

The main assumptions are as follows:

  1. The department's activities will remain substantially the same as for the previous year.
  2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
  3. Allowances for uncollectibility are based on historical experience. The general historical pattern is expected to continue.
  4. Estimated year end information for 2012–13 is used as the opening position for the 2013–14 forecasts.
These assumptions are adopted as at January 17, 2013.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for the remainder of 2012–13 and for 2013–14, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these future-oriented financial statements, FINTRAC has made estimates and assumptions concerning the future. These estimates and judgements may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the future-oriented financial statements and the historical financial statements include:

  1. The timing and amounts of acquisitions and disposals of property and equipment may affect gains/losses and amortization expense.
  2. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, FINTRAC will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of significant accounting policies

The future-oriented financial statements have been prepared in accordance with the Treasury Board accounting policies in effect for the 2011–12 fiscal year and subsequent years. These accounting policies are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

Significant accounting policies are as follows:

(a) Parliamentary authorities

FINTRAC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the department 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 Future-oriented Statement of Operations and Departmental Net Financial Position and the Future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a reconciliation between the bases of reporting.

(b) Net cash provided by government

FINTRAC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by FINTRAC is deposited to the CRF and all cash disbursements made by FINTRAC 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.

(c) Amounts due from/to CRF

Amounts due from/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 FINTRAC is entitled to draw from the CRF without further appropriations to discharge its liabilities.

(d) Revenues

Revenues are recorded on an accrual basis:

(e) Expenses

Expenses are recorded on an accrual basis:

(f) Employee future benefits

(g) Accounts receivables and advances

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

(h) Contingent liabilities

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

(i) Tangible capital assets

All tangible capital assets and leasehold improvements having an initial cost of $5,000 or more are recorded at their acquisition cost. FINTRAC 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.

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

Tangible capital assets
Asset Class Amortization Period
Machinery and equipment 5 years
Informatics hardware 5 years
Informatics software 5 years
Other equipment, including furniture    5 to 10 years
Leasehold improvements Lesser of remaining lease term and 10 years

(j) Measurement uncertainty

The preparation of these future-oriented financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the future-oriented financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Actual results could significantly differ from those estimated.

5. Parliamentary appropriations

FINTRAC receives most of its funding through expenditure authorities provided by Parliament. Items recognized in the Future-oriented Statement of Operations and Departmental Net Financial Position and the Future-oriented Statement of Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, FINTRAC 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) Authorities requested

Authorities requested
  Estimated
2013
(In thousands of dollars)
Planned
2014
(In thousands of dollars)
Authorities requested
Vote 30 – Program expenditures $51,102 $49,106
Statutory amounts $5,698 $5,659
Forecast authorities available $56,800 $54,765

Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in Estimates documents and, when reasonable estimates can be made, estimates of amounts to be allocated from Treasury Board central votes.

(b) Reconciliation of net cost of operations to requested authorities

Reconciliation of net cost of operations to requested authorities
  Estimated
2013
(In thousands of dollars)
Planned
2014

(In thousands of dollars)
Net cost of operations $61,376 $63,762
Adjustments for items affecting net cost of operations but not affecting authorities:
Add (Less):
 
Services provided without charge by other government departments (Note 11) ($8,656) ($8,468)
Amortization of tangible capital assets (Note 9) ($2,104) ($2,258)
Refund of previous year expenditures $40 $40
Decrease (increase) in vacation pay and compensatory leave $1 -
Decrease (increase) in employee future benefits $94 $81
Total ($10,625) ($10,604)
Adjustments for items not affecting net cost of operations but affecting authorities:
Add (Less):
 
Acquisitions of tangible capital assets (Note 9) $3,747 $1,602
Increase (decrease) in prepaid expenses ($25) $5
Total $3,722 $1,607
Forecast current year lapse $2,327 -
Forecast authorities available $56,800 $54,765

6. Accounts payable and accrued liabilities

The following table presents details of FINTRAC's accounts payable and accrued liabilities:

Accounts payable and accrued liabilities
  Estimated Results 2013
(In thousands of dollars)
Planned Results 2014
(In thousands of dollars)
Accounts payable to other government departments and agencies $987 $995
Accounts payable to external parties $1,958 $1,974
Accrued salaries and wages $1,145 $1,154
Accrued liabilities $948 $250
Total accounts payable and accrued liabilities $5,038 $4,373

7. Employee future benefits

(a) Pension benefits

FINTRAC's employees participate in the Public Service Pension 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 Plans benefits and they are indexed to inflation.

Both the employees and FINTRAC contribute to the cost of the Plan. The forecast expenses are $5,698,000 in 2012–13 and $5,659,000 in 2013–14, representing approximately 1.8 times the contributions by employees.

FINTRAC'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

FINTRAC 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 from future authorities. Information about the severance benefits, measured as at March 31, is as follows:

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 commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

Severance benefits
  Estimated Results 2013
(In thousands of dollars)
Planned Results 2014
(In thousands of dollars)
Accrued benefit obligation, beginning of year $1,720 $1,626
Expense for the year $78 $91
Expected benefits payments during the year ($172) ($172)
Accrued benefit obligation, end of year $1,626 $1,545

8. Accounts receivable and advances

The following table presents details of FINTRAC's accounts receivable and advances balances:

Accounts receivable and advances
  Estimated Results 2013
(In thousands of dollars)
Planned Results 2014
(In thousands of dollars)
Receivables from other federal government departments and agencies $513 $517
Receivables from external parties $172 $173
Employee advances $5 $5
Gross accounts receivable $690 $695
Accounts receivable held on behalf of Government ($153) ($154)
Net accounts receivable $537 $541

9. Tangible capital assets

COST (In thousands of dollars)
  Opening balance Aquisitions Disposals and write-offs Closing balance
Machinery and equipment $1,246 $57 - $1,304
Informatics hardware $7,008 $251 - $7,259
Informatics software $16,809 $601 - $17,410
Other equipment, including furniture $7,570 $459 - $8,029
Leasehold improvements $8,542 $234 - $8,776
Total $41,176 $1,602 - $42,778

ACCUMULATED AMORTIZATION (In thousands of dollars)
  Opening balance Amortization Disposals and write-offs Closing balance
Machinery and equipment ($838) ($49) - ($887)
Informatics hardware ($5,922) ($420) - ($6,342)
Informatics software ($14,649) ($587) - ($15,236)
Other equipment, including furniture ($4,861) ($587) - ($5,448)
Leasehold improvements ($6,230) ($614) - ($6,845)
Total ($32,500) ($2,258) - ($34,757)

NET BOOK VALUE (In thousands of dollars)
  2013 2014
Machinery and equipment $408 $417
Informatics hardware $1,087 $918
Informatics software $2,160 $2,174
Other equipment, including furniture $2,709 $2,581
Leasehold improvements $2,312 $1,931
Total $8,676 $8,020

10. Contractual obligations

The nature of FINTRAC’s activities can result in some large multi-year contracts and obligations whereby FINTRAC will be obligated to make future payments when the services/goods are received. The majority of these contracts relate to lease agreements with Public Works and Government Services Canada for office space in six locations across Canada. Significant contractual obligations that can be reasonably estimated are summarized as follows:

Contractual obligations
Fiscal Year (In thousands of dollars)
2013–14 $4,237
2014–15 $3,513
2015–16 $3,487
2016–17 $3,478
2017–18 and on-going $3,470
Total $18,185

11. Related party transactions

FINTRAC is related as a result of common ownership to all Government of Canada departments, agencies, and Crown Corporations. FINTRAC enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Department has an agreement with Shared Services Canada related to the provision of finance and administration services. During the year, FINTRAC received common services which were obtained without charge from other Government departments as disclosed below.

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

During the year, FINTRAC is forecasted to receive services without charge from certain common service organizations, related to employer's contribution to the health and dental insurance plans and information technology services. These services provided without charge have been recorded in FINTRAC’s Future-oriented Statement of Operations as follows:

Common services provided without charge by other government departments
  Estimated Results 2013
(In thousands of dollars)
Planned Results 2014
(In thousands of dollars)
Employer's contribution to the health and dental insurance plans $2,973 $2,785
Information technology services $5,683 $5,683
Total $8,656 $8,468

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General, are not included as an expense in the department's Statement of Operations.

(b) Other transactions with related parties

Other transactions with related parties
  Estimated Results 2013
(In thousands of dollars)
Planned Results 2014
(In thousands of dollars)
Accounts receivable with other government departments and agencies $513 $517
Accounts payable to other government departments and agencies $987 $995

(c) Administration of programs on behalf of other government departments

As of November 15, 2011, FINTRAC transferred its information technologies activities to Shared Services Canada (SSC). In fiscal year 2012–13, FINTRAC continued to administer programs on behalf of SSC, including pay and benefit administration services as well as distributed computing services and related IT support to SSC employees located at FINTRAC’s workplace. At the date of these future-oriented financial statements, the administered expenses are planned to amount to $1,921,000 for the 2012–13 fiscal year. Forecast and incurred expenses are reflected in the future-oriented financial statements of SSC and not those of FINTRAC.

12. Segmented information

Presentation by segment is based on FINTRAC’s program activity architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in Note 4. The following table presents the forecasted expenses incurred and forecasted revenues generated for the main program activities, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

Segmented information
  Estimated Results 2013
(In thousands of dollars)
Planned Results 2014
(In thousands of dollars)
  Total Financial Intelligence Compliance Internal Services Total
Operating Expenses
Salaries and employee benefits $39,769 $17,815 $17,815 $6,288 $41,918
Amortization of tangible capital assets $2,104 $959 $959 $339 $2,258
Accommodations $4,982 $1,588 $1,588 $560 $3,736
Professional and special services $4,496 $1,991 $1,991 $703 $4,684
Repairs and maintenance $5,368 $2,624 $2,624 $926 $6,173
Travel and relocation $1,160 $438 $438 $155 $1,030
Telecommunication services $2,179 $1,102 $1,102 $389 $2,593
Utilities, materials and supplies $510 $178 $178 $63 $420
Machinery and equipment $513 $293 $293 $103 $690
Communication services $208 $75 $75 $26 $175
Other expenditures $87 $36 $36 $13 $85
Total Operating Expenses $61,376 $27,099 $27,099 $9,564 $30,762
Revenues
Non-respendable revenue $374 - - - -
Revenues earned on behalf of Government ($374) - - - -
Total Revenues - - - - -
Net cost of operations before government funding and transfers $61,376 $27,099 $27,099 $9,564 $63,762
Date Modified: