Northern Pipeline Agency Notes to the Future-Oriented Statement of Operations (unaudited)

Northern Pipeline Agency
Future-Oriented Statement of Operations (Unaudited)

For the year ending March 31
(in dollars)
  Estimated
Results
2014-15
Planned
Results
2015-16
Expenses
Salaries and employee benefits $297,628 $344,560
Professional and special services 160,295 298,215
Transportation and communications 6,103 30,000
Rentals 78,283 60,000
Small equipment - 1,000
Utilities, Materials and Supplies 370 5,000
Information - 1,000
Acquisition of machinery and equipment - 1,000
Amortization 3,381 3,095
Transfer payments - 10,000
Total Recoverable Expenses $546,060 $753,870
Services provided without charge by other
government departments
3,500 3,000
Revenues
Regulatory revenue 546,060 753,870
Revenues earned on behalf of Government   (546,060)   (753,870)
Total Revenues   0   0
Net cost of operations $549,560 $756,870

The accompanying notes form an integral part of the Future-Oriented Statement of Operations.

1. Methodology and Significant Assumptions

The future-oriented statement of operations has been prepared on the basis of government priorities and departmental plans as described in the Northern Pipeline Agency (NPA or the Agency) Report on Plans and Priorities.

The information in the estimated results for fiscal year 2014-15 is based on actual results as at December 31st, 2014 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2015-16 fiscal year.

The main assumptions underlying the forecasts are as follows:

  • The Agency’s activities will remain substantially the same as in the previous year and are reflected in the final 2014-15 authorities and the 2015-16 Main Estimates; and
  • 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.

These assumptions were adopted as at December 31st, 2014.

2. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2014-15 and for 2015-16, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.
In preparing this future-oriented statement of operations the Northern Pipeline Agency has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions 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 statement of operations and the historical statement of operations include the following:

  • The timing and amount of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense;
  • Implementation of new collective agreements;
  • 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, the Northern Pipeline Agency will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

3. Summary of Significant Accounting Policies

The future-oriented statement of operations has been prepared using the Government’s accounting policies that came into effect for the 2014-15 fiscal year, 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:

a) Expenses

Expenses are recorded on an accrual basis. Expenses for the Agency’s operations are recorded when goods are received or services are rendered, including services provided without charge for senior management services provided by Natural Resources Canada.

Transfer payments are recorded as expenses when the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement or, in the case of transactions that do not form part of an existing program, 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 statement. 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.

Expenses also include provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivable and advances or liabilities, including contingent liabilities and environmental liabilities to the extent the future event is likely to occur and a reasonable estimate can be made.

Expenses also include amortization of tangible capital assets, which are capitalized at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset.

b) Revenues

Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.

Funds that have been received are recorded as deferred revenue, provided the Agency 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 Agency’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 in reduction of the entity’s gross revenues.

4. Parliamentary Authorities

The Agency is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Agency do not parallel financial reporting according to generally accepted accounting principles because authorities are primarily based on cash flow requirements. Items recognized in the future-oriented statement of operations in one year may be funded through parliamentary authorities in prior, current, or future years. Accordingly, the Agency has different net cost 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 requested authorities (in dollars)
  Estimated
2014-15
Planned
2015-16
Net cost of operations $549,560 $756,870
Adjustments for items affecting net cost of 
operations but not affecting authorities:
Add (Less):
Services provided without charge by other government departments   (3,500) (3,000)
Amortization of tangible capital assets (3,381) (3,095)
Requested authorities $542,679 $750,775

 

(b) Authorities requested (in dollars)
  Estimated
2014-15
Planned
2015-16
Vote 30 – Program expenditures $701,325 $701,215
Statutory amounts 48,675 49,560
Less:
Lapsed – Operating
(207,321) -
Requested authorities $542,679 $750,775