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ARCHIVED - Future-Oriented Financial Statements
Canada Border Services Agency (Agency Activities)
Year ended March 31, 2012

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Management Responsibility for Future-Oriented Financial Statements

Responsibility for the compilation, content, and presentation of the accompanying future-oriented financial information for the year ended March 31, 2012 rests with the management of the Canada Border Services Agency (CBSA).  The future-oriented financial information has been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector. The future-oriented financial information is submitted for Part III of Estimates (Report on Plans and Priorities), and will be used in the CBSA's Departmental Performance Report to compare with actual results.

Management is responsible for the integrity and objectivity of the information contained in the future-oriented financial information and for the process of developing assumptions. Assumptions and estimates are based upon the information readily available and known to management at the time of preparation, reflect current business and economic conditions, and assume a continuation of the current governmental priorities and consistency in the departmental mandate and strategic objectives. Much of the future-oriented financial information is based on these assumptions, best estimates, and judgment and gives due consideration to materiality. At the time of the preparation of these future oriented financial statements, management believes the estimates and assumptions to be reasonable.  However, as with all such assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

The actual results achieved for the fiscal years covered in the accompanying future-oriented financial information will vary from the information presented and the variations may be material.

Luc Portelance, President
Ottawa, Canada
Sylvain St-Laurent, Chief Financial Officer
Ottawa, Canada



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Future-oriented Statement of Operations

For the Year Ended March 31
(in thousands of dollars)

  Forecast
2012
Operating Expenses  
Salaries and employee benefits 1,341,017
Professional and special services 251,434
Amortization 77,904
Rental of land and buildings 59,715
Transportation and telecommunication 59,172
Consumable machinery and equipment (parts) 26,357
Repair and maintenance 23,316
Materials and supplies 20,982
Other 10,008
Bad debts 607
Total Expenses 1,870,512
   
Revenues  
Sale of goods and services 16,290
Forfeitures of cash bonds 1,374
Miscellaneous 1,790
Seized property 330
Interest, penalties and fines 145
Total Revenues 19,929
   
Net Cost of Operations 1,850,583

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

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Future-oriented Statement of Financial Position

As at March 31
(in thousands of dollars)

  Forecast
2012
ASSETS  
   
Financial assets  
Due from Consolidated Revenue Fund 22
Accounts receivable and advances (Note 6) 12,012
Total financial assets 12,034
   
Non-financial assets  
Prepaid expenses 113
Inventory 7,248
Tangible capital assets (Note 7) 544,808
Total non-financial assets 552,169
   
TOTAL 564,203
   
LIABILITIES AND EQUITY OF CANADA  
   
   
Liabilities  
Accounts payable and accrued liabilities (Note 8) 157,690
Deposit accounts (Note 9) 31,554
Employee severance benefits (Note 10) 233,751
Total 422,995
   
Equity of Canada 141,208
   
TOTAL 564,203

Contingent liabilities (Note 11)
The accompanying notes form an integral part of these future-oriented financial statements.

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Future-oriented Statement of Cash Flow

For the Year Ended March 31
(in thousands of dollars)

  Forecast
2012
Operating activities  
Net cost of operations 1,850,583
   
Non-cash items:  
Services provided without charge by other government departments (153,733)
Amortization of tangible capital assets (77,904)
   
Variations in Statement of Financial Position:  
(Increase) in accounts payable and accrued liabilities (3,000)
(Increase) in employee severance benefits (5,589)
   
Cash used by operating activities 1,610,357
   
Capital investment activities  
Acquisitions of tangible capital assets 137,990
Cash used by capital investment activities 137,990
   
Financing activities  
Net cash provided by the Government of Canada (1,748,347)

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

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Notes to the Future-oriented Financial Information

For the year ended March 31, 2012

1. Authority and Objectives

The Canada Border Services Agency (Agency Activities) is responsible for providing integrated border services that support national security and public safety priorities and facilitate the free flow of persons and goods. The Canada Border Services Agency Act received royal assent on November 3, 2005. The Agency is a departmental corporation named in Schedule II of the Financial Administration Act and reports to Parliament through the Minister of Public Safety. The Agency is funded through appropriations from the Government of Canada.

The Agency is responsible for the administration and enforcement of the following acts or portions of these acts: the Customs Act, the Customs Tariff, the Excise Act, the Excise Tax Act, the Citizenship Act, the Immigration and Refugee Protection Act, as well as other acts on behalf of other federal departments and provinces.

In delivering efficient and effective border management that contributes to the security and prosperity of Canada, the Agency operates under the following program activities:

  1. The Risk Assessment Program activity pushes the border out by seeking to identify high-risk people and shipments as early as possible in the travel and trade continuum to prevent their departure to Canada.
  2. The Secure and Trusted Partnership Program activity works closely with clients, other government departments and international border management partners to enhance trade chain and traveler security while providing pre-approved, low-risk travelers and traders with streamlined and efficient border processes.
  3. The Admissibility Determination Program activity develops, maintains and administers the policies, regulations, procedures and partnerships that enable border services officers to intercept people and goods that are inadmissible to Canada and to process legitimate people and goods seeking entry into Canada within established service standards, and to administer and enforce the policies and guidelines that govern the reporting and verification of goods exported from Canada.
  4. The Criminal Investigations Program activity protects the integrity of border-related legislation and contributes to public safety and Canada's economic security by investigating and pursuing the travellers, importers, exporters and/or other persons who commit criminal offences in contravention of Canada's border-related legislation.
  5. The Immigration Enforcement Program activity determines whether foreign nationals and permanent residents who are or may be inadmissible to Canada are identified and investigated, detained, monitored and/or removed from Canada.
  6. The Recourse Program activity provides the business community and individuals with an accessible mechanism to seek and impartial review of service-related complaints, trade decisions and enforcement actions taken by the CBSA.
  7. The Revenue and Trade Management Program activity ensures that duties and taxes owed to the Government of Canada are collected in compliance with Canadian trade and imports reporting requirements.
  8. The Internal Services Program activity is a group of related activities and resources that are administered to support the needs of programs and other corporate obligations.
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2. Underlying Assumptions

These future-oriented statements have been prepared:

  • As at December 20, 2010
  • On the basis of government policies, government priorities, and external environment at the time the future-oriented financial information was finalized.
  • According to the requirements of Treasury Board Accounting Policies which are based on Canadian generally accepted accounting principles for the public sector.
  • On the basis that the resources provided will enable the CBSA to deliver the expected results specified in the Report on Plans and Priorities.
  • On the basis of historical costs for the fiscal years ended March 31, 2009 and March 31, 2010
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3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results from 2011-2012, actual results achieved are likely to vary from the forecast information presented, and this variation could be material.

Once the Report on Plans and Priorities is presented, the CBSA 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 CBSA's Departmental Performance Report.

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4. Summary of Significant Accounting Policies

The future-oriented financial information has been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

(a) Parliamentary appropriations

The Agency is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the Agency do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the future-oriented statement of operations and the and the future-oriented statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 5 provides a high-level reconciliation between the bases of reporting.

( b) Net Cash Provided by the Government of Canada

The Agency operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Agency is deposited to the CRF and all cash disbursements made by the Agency are paid from the CRF. The net cash forwarded to the Government of Canada is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.

(c) Change in net position in the Consolidated Revenue Fund

The change in net position in the Consolidated Revenue Fund is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non respendable revenue recorded by the Agency. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.

(d) Non-tax revenues

Non-tax revenues reported in this future oriented statement include revenues collected on behalf of the Government of Canada under the Immigration and Refugee Protection Act, the Agriculture and Agri-Food Administrative Monetary Penalties Act and other similar legislation.

Non-tax revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenue.

(e) Expenses

All expenses are recorded on an accrual basis:

  • Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment. The liability for vacation pay and compensatory leave is calculated at the salary levels in effect at the end of the year for all unused vacation pay and compensatory leave benefits accruing to employees.
  • Services provided without charge by other government departments for accommodation, workers' compensation benefits, the employer's contribution to the health and dental insurance plans and legal services are recorded as operating expenses at their estimated cost.

(f) Cash

Cash includes amounts received in Agency offices or by Agency agents as at March 31 but not yet deposited to the credit of the CRF of the Government of Canada.

(g) Accounts receivable and advances

Accounts receivable and advances are stated at amounts expected to be ultimately realized; a provision is made for doubtful accounts where recovery is considered uncertain based on the percentages of aging of receivables.  The percentages have been increased this year to reflect the increased rate of the aging of receivables.

(h) Inventory

Inventory consists of forms, publications and uniforms and is not intended for resale. Items in the inventory are valued at cost using the weighted average cost method. Items that are considered obsolete are written off. The cost of inventory is charged to operations in the period in which the items are used.

(i) Tangible capital assets

All tangible capital assets having an initial cost of $10,000 or more are recorded at their acquisition cost. Amortization of capital assets, except land, is performed on a straight-line basis over the estimated useful lives of the assets as follows:

Asset class Amortization period
Buildings 30 years
Works and infrastructure 40 years
Machinery and equipment 10 years
Information technology equipment 5 years
In-house-developed software 7 years
Purchased software 3 years
Vehicles 5 years to 10 years
Leasehold improvements Over the useful life of the improvement or the lease term, whichever is shorter.
Assets under construction Once in service, determined in accordance with asset type.

(j) Employee future benefits

  1. Pension benefits: Eligible employees participate in the Public Service Superannuation Plan, a multi-employer plan administered by the Government of Canada. The Agency's contributions to the Plan are charged to expense in the year incurred and represent the Agency's total obligation to the Plan. Current legislation does not require the Agency to make contributions for any actuarial deficiencies of the Plan.
  2. Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. 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. 

(k) 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 information.

(l) Environmental liabilities

Environmental liabilities reflect the estimated costs related to the management and remediation of contaminated sites. Based on management's best estimates, a liability is accrued and an expense recorded when the contamination occurs or when the Agency becomes aware of the contamination and is obligated or is likely to be obligated to incur remedial costs. If the likelihood of the Agency's obligation to incur these costs is either not determinable or unlikely, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in the notes to the future-oriented financial information.

(m) Measurement uncertainty

The preparation of these future-oriented financial information 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. Assumptions are based upon information available and known to management at the time of preparation, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in departmental mandate and strategic objectives.  At the time of preparation of these future-oriented statements, management believes the estimates and assumptions to be reasonable. Nonetheless, as with all such estimates and assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

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5. Parliamentary Appropriations

The Agency receives most of its funding through Parliamentary appropriations. Items recognized in the future-oriented statement of operations and the future-oriented statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the Agency has different net results for the year on a government funding basis than on an accrual accounting basis.

These differences are reconciled below:

(a) Reconciliation of net cost to current year appropriations forecasted to be used

  Forecast
2012
(in thousands of dollars)
Net cost of operations 1,850,583
   
Adjustments for items affecting net results
but not affecting appropriations
 
   
Add (Less):  
Revenue not available for spending 5,478
Services provided without charge (153,733)
Bad Debt (607)
Amortization of tangible capital assets (77,904)
Employee severance benefits 5,589
Vacation pay and compensatory leave (3,000)
Adjustment to prior year's expenditures 909
Total (223,268)
   
Adjustments for items not affecting net results but affecting appropriations  
   
Add (Less):  
Acquisition of tangible capital assets 137,990
Total 137,990
   
Current year appropriations forecasted to be used 1,765,305

(b) Appropriations forecasted to be provided and used

  Forecast
2012
(in thousands of dollars)
Parliamentary appropriations  
Vote 10 – Operating expenditures 1,561,342
Vote 15 – Capital expenditures 113,930
Total 1,675,272
   
Statutory amounts  
Contributions to employee benefit plans 171,594
Refunds of amounts credited to revenues from previous years 50
Total 171,644
   
Available for use in subsequent years  
Vote 10 – Operating expenditures (37,611)
Vote 15 – Capital expenditures (44,000)
Total (81,611)
   
   
Current year appropriations forecasted to be used 1,765,305
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6. Accounts Receivable and Advances

The following table presents details of the accounts receivable and advances:

  Forecast
2012
(in thousands of dollars)
Receivables from other Federal Government departments and agencies 7,104
Receivables from external parties 4,732
Employee advances and other receivables 1,637
Total 13,473
Less: allowance for doubtful accounts on external receivables (1,461)
   
Total 12,012
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7. Tangible Capital Assets

(in thousands of dollars)

The following table presents details of the tangible capital assets:

  Cost Accumulated amortization 2012 2011
Capital asset class Opening
balance
Acquisi-
tions
Transfers, disposals, write-offs Closing
balance
Opening balance Amorti-zation Transfers, disposals,
write-offs
Closing
balance
Net book
value
Net book
value
Land 4,525 0 0 4,525 0 0 0 0 4,525 4,525
Buildings 210,007 68,630 -29,664 308,301 69,510 8,638 0 78,148 230,153 140,497
Leasehold Improvements 17,311 0 0 17,311 12,465 4,846 0 17,311 0 4,846
Works and
infrastructure
1,152 0 0 1,152 428 29 0 457 695 724
Machinery and
equipment
85,607 891 0 86,498 50,973 8,605 0 59,578 26,920 34,634
Information technology equipment,
in-house-developed
and purchased software
246,828 32,746 0 279,574 146,835 52,640 0 199,475 80,099 99,993
Vehicles 30,511 1,900 0 32,411 24,666 3,146 0 27,812 4,599 5,845
Assets under
construction
193,658 33,823 29,664 197,817 0 0 0 0 197,817 193,658
                     
Total 789,599 137,990 0 927,589 304,877 77,904 0 382,781 544,808 484,722
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8. Accounts Payable and Accrued Liabilities

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

  Forecast
2012
(in thousands of dollars)
Payables to external parties 44,511
Payables to other Federal Government departments and agencies 39,179
Accrued salary, vacation pay and compensatory leave 74,000
Total 157,690
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9. Deposit Accounts

The deposit accounts were established to record cash and securities required to guarantee payment of customs duties and excise taxes on imported goods pursuant to the Customs Act and the Excise Tax Act and to guarantee the compliance of transporters and individuals with the provisions of the Immigration and Refugee Protection Act.

The following table presents details on the deposit accounts:

  Forecast
2012
(in thousands of dollars)
Guarantee deposit accounts 26,540
Other deposit accounts 5,014
   
Total deposit accounts 31,554
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10. Employee Severance Benefits

(a) Pension benefits

The Agency'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
two percent per year of pensionable service, times the average of the best five consecutive years of earnings.  The benefits are integrated with Canada/Quebec pension plan benefits and they are indexed to inflation.  Both the employees and the Agency contribute to the cost of the Plan.

The Agency'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

The Agency provides severance benefits to its employees based on eligibility, years of service and final salary.  These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, is as follows:

  Forecast
2012
(in thousands of dollars)
Accrued benefit obligation, end of year 233,751
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11. Contingent Liabilities

(a) Contaminated sites

Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where the Agency is obligated or likely to be obligated to incur such costs.

The Agency's ongoing efforts to assess contaminated sites may result in additional environmental liabilities related to newly identified sites, or changes in the assessments or intended use of existing sites. These liabilities will be accrued in the year in which they become known.

(b) Claims and litigation

Claims have been made against the Agency in the normal course of operations. Legal proceedings for claims totaling approximately $1,786,000,000 were still pending as at December 20th, 2010.

Some of these claims and appeals 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 and expense are recorded in the financial statements.  No expense has been estimated for the purpose of the Agency's 2011-2012 future-oriented Statement of Operations.

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12. Related Party Transactions

The Agency is related in terms of common ownership to all Government of Canada departments, agencies and Crown corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms. Also during the year, the Agency received services, which were obtained without charge from other government departments as presented in part (a).

(a) Services provided without charge

During the year, the Agency received without charge from other departments, accommodation, legal services, workers' compensation coverage and the employer's contribution to the health and dental insurance plans.  These services without charge have been recognized in the Agency's statement of operations as follows:

  Forecast
2012
(in thousands of dollars)
Accommodation 59,482
Employer's contribution to the health and dental insurance plans 79,949
Workers' compensation coverage 369
Legal services 13,933
Total 153,733

The Government has structured some of its administrative activities for efficiency and cost-effectiveness such 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, are not included as an expense in the Agency's future oriented statement of operations.

(b) Administration of programs

The Agency has arrangements with the Canada Revenue Agency for the provision of information technology services, which are paid for on a quarterly basis for estimated to be a total of $140,000,000 in 2012.

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13. Segment information

(in thousands of dollars)

  Forecast 2012
  Risk Assessment Secure and Trusted Partnerships Admissibility Determination Criminal Investigations Immigration Enforcement Recourse Revenue and Trade Management Internal Services Total
Operating Expenses                  
Salaries and employee benefits 119,131 48,322 468,456 17,228 113,781 7,392 51,621 515,086 1,341,017
Professional and special services 22,337 9,060 87,833 3,230 21,333 1,386 9,679 96,576 251,434
Amortization 6,921 2,807 27,214 1,001 6,610 430 2,999 29,922 77,904
Rental of land and buildings 5,305 2,152 20,860 766 5,067 329 2,299 22,937 59,715
Transportation and telecommunication 5,257 2,132 20,670 760 5,021 326 2,278 22,728 59,172
Consumable machinery and equipment (parts) 2,341 950 9,207 339 2,236 145 1,015 10,124 26,357
Repair and maintenance 2,071 840 8,145 299 1,978 129 898 8,956 23,316
Materials and supplies 1,864 756 7,330 270 1,780 116 807 8,059 20,982
Other 889 361 3,496 129 849 55 385 3,844 10,008
Bad debts 54 22 212 8 52 3 23 233 607
Total Expenses 166,170 67,402 653,423 24,030 158,707 10,311 72,004 718,465 1,870,512
                   
Revenues                  
Sale of goods and services 0 0 0 0 0 0 16,290 0 16,290
Forfeitures of cash bonds 0 0 0 0 1,374 0 0 0 1,374
Miscellaneous 23 10 60 4 4 0 1,302 387 1,790
Seized property 0 0 330 0 0 0 0 0 330
Interest, penalties and fines 0 0 0 0 0 0 0 145 145
Total Revenues 23 10 390 4 1,378 0 17,592 532 19,929
                   
Net Cost of Operations 166,147 67,392 653,033 24,026 157,329 10,311 54,412 717,933 1,850,583