NPA Future-oriented Financial Statements

Statement of Management Responsibility

The Agency’s 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 February 29, 2012 and reflect the plans described in the Report on Plans and Priorities. 

These Future-oriented Financial Statements have not been audited.

 

 

Northern Pipeline Agency
Future-oriented Statement of Financial Position (Unaudited)
As at March 31
(in dollars) Estimated
Results
2012
Planned 
Results
2013
ASSETS
Financial assets
Due from (to) the Consolidated Revenue Fund $197,568 ($68,265)
Accounts receivable and advances (Note 6) 716,415 1,305,599
  913,983 1,237,334
Non-financial assets    
Tangible capital assets (Note7) 29,825 25,181
TOTAL ASSETS $943,808 $1,262,515
LIABILITIES
Accounts payable (Note 8) $316,492 $411,919
Deferred revenue (Note 9) 627,316 850,596
TOTAL LIABILITIES 943,808 1,262,515
Equity of Canada - -
TOTAL LIABILITIES AND EQUITY OF CANADA $943,808 $1,262,515

Contractual obligations (Note 10)

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to February 29, 2012.

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

Approved by:

 

 

Northern Pipeline Agency
Future-oriented Statement of Operations (Unaudited)
For the Year Ending March 31
 
(in dollars) Estimated
Results
2012
Planned
Results
2013
Expenses
Oversee the planning and construction of the Canadian          
portion of the Alaska Highway Gas Pipeline 2,499,489 3,229,964
Total Recoverable Expenses $2,499,489 $3,229,964
Revenue
Regulatory revenue $2,499,489 $3,229,964
Non-Recoverable Services Provided Without Charge
(Note 11) 54,100 66,900
Net Cost Of Operations $54,100 $66,900

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to February 29, 2012

Segmented information (Note 13)

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

Northern Pipeline Agency
Future-oriented Statement of Equity of Canada (Unaudited)
For the Year Ending March 31
 
(in dollars) Estimated Results
2012
Planned   Results
2013
Equity of Canada, beginning of the year  $ -  $ -
Net cost of operations (54,100) (66,900)
Change in due from Consolidated Revenue Fund (874,078) (265,833)
Non-recoverable services received without charge (Note 11) 54,100 66,900
Net cash provided by Government 874,078 265,833
Equity of Canada, end of the year  $ -  $ -

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to February 29, 2012

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

Northern Pipeline Agency
Future-oriented Statement of Cash Flow (Unaudited)
For the Year Ending March 31
(in dollars) Estimated
Results
2012
Planned
Results
2013
Operating Activities
Net cost of operations $54,100 $66,900
Adjustment for non-cash items
Services received without charge (Note 11) (54,100) (66,900)
Amortization of tangible capital assets (4,644) (4,644)
  ($4,644) ($4,644)
Variations in the Statement of Financial Position
Increase in accounts receivable and advances 341,141 589,184
(Increase) in accounts payable and accrued liabilities (231,156) (95,427)
(Increase)/Decrease in deferred revenue 768,737 (223,280)
Cash used by operating activities $874,078 $265,833
Investment Activities
Financing Activities
Net cash provided by Government of Canada ($874,078) ($265,833)

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to February 29, 2012.

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

1. Authority and Objectives

In 1978, Parliament enacted the Northern Pipeline Act to:

  • give effect to an Agreement on Principles Applicable to a Northern Natural Gas Pipeline (the Agreement) between the Governments of Canada and the United States of America;
  • establish the Northern Pipeline Agency (the Agency) to oversee the planning and construction of the Canadian portion of the project.

The Agency is designated as a department and named under Schedule I.1of the Financial Administration Act, reporting to Parliament through the Minister of Natural Resources.

The objectives of the Agency are to:

  1. carry out and give effect to the Agreement of September 20, 1977 between Canada and the United States underpinning the project;
     
  2. carry out, through the Agency, federal responsibilities in relation to the pipeline;
     
  3. facilitate the efficient and expeditious planning and construction of the pipeline, taking into account local and regional interests;
     
  4. facilitate consultation and coordination with the governments of the provinces and the territories traversed by the pipeline;
     
  5. maximize the social and economic benefits of the pipeline while minimizing any adverse social and environmental effects; and
     
  6. advance national economic and energy interests and to maximize related industrial benefits by ensuring the highest possible degree of Canadian participation.

In 1982, the sponsors of the Pipeline announced that the target date for completion had been set back until further notice and all parties scaled down their activities.  Work continues to prepare the Agency to meet commitments set out in the Northern Pipeline Act should Foothills Pipe Lines Ltd. decide to proceed with the second stage of the Alaskan Natural Gas Transportation System.

In accordance with Section 29 of the Northern Pipeline Act and with the National Energy Board Cost Recovery Regulations, the Agency is required to recover all of its annual operating costs from the companies holding certificates of public convenience and necessity issued by the Agency.  Currently, Foothills is the sole holder of such certificates.  The Government of Canada provides funds for working capital through an annual Parliamentary appropriation.

2. Significant Assumptions

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

The main assumptions are as follows:

  1. The Agency'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 available information as at February 29, 2012 and expert opinions of people with appropriate experience in the Agency’s activities. 
  3. Estimated year-end information for 2011-12 is used as the opening position for the 2012-13 forecasts.

These assumptions are adopted as at February 29, 2012.

By virtue of its mandate, the Agency must be ready, engaged and prepared to lead the review of the Alaskan Natural Gas Transportation System. Budget 2012 set aside financial authorities for the Agency to carry out federal regulatory responsibilities related to the project as it unfolds.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for the remainder of 2011-12 and for 2012-13, the actual results achieved for both years are likely to vary from the forecast information presented; this variation could be material.

In preparing these future-oriented financial statements, the 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 believed to be reasonable under the circumstances.

As the Agency regulates a single project, changes in the project proponent's plans and activities could lead to material differences between the future-oriented and the Agency’s audited financial statements.

Once the Report on Plans and Priorities is presented, the Agency 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.

These Future-oriented Financial Statements are based on spending authorities granted by Parliament and are consistent with the Main Estimates, Supplementary Estimates B and Operating Budget Carry Forward for the 2011-12 fiscal year.

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.  These accounting policies, stated below, are consistent with 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 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 are not necessarily the same as those provided through appropriations from Parliament.  (Note 5) provide a high-level reconciliation between the bases of reporting.

b) Net cash provided by Government:
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 provided by the Government is the difference between all cash receipts and all cash disbursements including transactions between the Agency and departments of the federal government.

c) Due from/to the Consolidated Revenue Fund (CRF):
Amounts due from/to the Consolidated Revenue Fund 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 the Agency is entitled to draw from the CRF without further Parliamentary expenditure authorities to discharge its liabilities.  Amounts due from CRF are reduced by the amounts due to CRF. Amounts due to CRF include the amounts which are recognized as revenue that has been credited to authorities used, but were not collected and deposited to the CRF at year-end.

d) Revenue/Deferred revenue is recognized on an accrual basis:
Revenues from regulatory fees recovered from Foothills are recognized in the year in which the expenses were incurred.

Revenues that have been received but not yet earned are recorded as deferred revenues.  Deferred revenues represent the accumulation of excess billings over the actual expenses.

e) Expenses:

Expenses are recorded on the accrual basis.
Contributions are recognized in the year in which the recipient meets the eligibility criteria or fulfills the terms of a contractual transfer agreement, provided that the transfer is authorized and a reasonable estimate can be made.
Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment. 

Services provided without charge from other government departments are recorded as operating expenses at their estimated cost and credited directly to equity.

f) Accounts receivable:

Receivables are stated at amounts expected to be ultimately realized.  A provision is made for receivables where recovery is considered uncertain.

g) Employee future benefits:

Future benefits for seconded employees, including pension benefits, providing services to the Agency are funded by the employee’s home-base department.  Estimated costs are included in the employee benefits charged to the Agency. 

h) Tangible capital assets:

All tangible capital assets and leasehold improvements having an initial cost of $1,000 or more are recorded at their acquisition cost.  Tangible capital assets owned by the Agency are valued at cost, net of accumulated amortization.  Amortization is calculated using the straight-line method, over the estimated useful life of the assets as follows:

Machinery and equipment                             10 years
Office furniture and equipment                      10 years
Informatics hardware                                     4 years

i) 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 differ significantly from those estimated.

5. Parliamentary Appropriations

The Government of Canada funds the expenses of the Agency through Parliamentary appropriations.  Items recognized in the Future-oriented Statement of Operations in one year may be funded through Parliamentary appropriations in prior, current or future years.  Accordingly, the Agency 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
 
(in dollars) Estimated
Results
2012
Planned
Results
2013
Vote 30 - Program expenditures $2,903,000 $3,103,000
Vote 25 - Transfer from - Vote 25 60,150 -
Statutory amounts 125,100 122,320
Forecast authorities available $3,088,250 $3,225,320

Forecast authorities requested for the year ending March 31, 2013 are the planned spending amounts presented in the 2011-12 Report on Plans and Priorities. Estimated authorities requested for the year ending March 31, 2012 include amounts presented in the 2011-12 Main Estimates and amounts allocated from Treasury Board.

(b) Reconciliation of net cost of operations to requested authorities
 
(in dollars) Estimated Results
2012
Planned Results
2013
Net cost of operations $54,100 $66,900
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (Less):
Services received without charge (54,100)      (66,900)
Amortization of tangible capital assets (4,644)        (4,644)
Revenue not available for spending 2,499,489   3,229,964
  2,494,845   3,225,320
Forecast current year lapse 593,405  
Forecast authorities available $3,088,250 $3,225,320

6. Accounts Receivable and Advances

The following table presents details of the Agency’s accounts receivable and advances balances.
 
(in dollars) Estimated
Results
2012
Planned
Results
2013
Receivables from other government departments and agencies $ - $ -
Receivables from external parties 716,015 1,305,199
Employee advances 400 400
Total $716,415   $1,305,599

7. Tangible Capital Assets

(in dollars) Planned Cost
2012-13
Planned
2012-13
Net Book Value
Asset Class Cost Accumulated
amortization
Estimated
Results
2012
Planned
Results
2013
Machinery and equipment $24,829 $4,980 $22,332 $19,849
Office furniture and equipment                         11,262 $6,847 5,541 4,415
Informatics hardware  9,301 $8,384 1,952 917
Total $45,392 $20,211 $29,825 $25,181

Amortization expense for the year ended March 31, 2012 and 2013 is $4,644.

8. Accounts payable

The following table presents details of the Agency’s accounts payable.
 
(in dollars) Estimated
Results
2012
Planned
Results
2013
Payable to other government department and agencies $140,919 $157,479
Payable to external parties 175,573 254,440
Total $316,492 $411,919

9. Deferred revenue

Deferred revenue consists of:
 
(in dollars) Estimated
Results
2012
Planned
Results
2013
Accumulated deferred revenue beginning balance $1,396,053 $627,316
Billing amount 1,730,752 3,453,244
Less: Recoverable expense in the current year (2,499,489) (3,229,964)
Accumulated deferred revenue ending balance $627,316 $850,596

In FY 2011-2012, additional contribution funding of $1,700,000, which NPA received through Supplementary Estimates B in late December 2011 was not billed to Foothill Ltd as part of the final billing notification as of March 31st 2011.  In accordance with National Energy Board Cost Recovery Regulations, billing will be done between fiscal year 2012-13 to 2013-2014.

10. Contractual Obligations

The nature of the Agency's activities can result in some large multi-year contracts and obligations whereby the Agency will be obligated to make future payments when the services/goods are received.  Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in dollars) 2012 2013 2014 2015 2016 and thereafter TOTAL
Operating leases 15,477 16,678 17,266 17,254 17,922 $84,597

11. Related party transactions

The Agency is related as a result 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 applicable to all individuals and enterprises except that certain services, as defined previously, are received without charge.

Common services received without charge by other government departments
These services received without charge have been recognized in the Agency's Future-oriented Statement of Operations as follows:

(in dollars) Estimated Results 2012 Planned Results 2013
 Audit services provided by the Office of the Auditor General of Canada $50,200 $63,000
 Management services provided by Natural Resources Canada 3,900 3,900
 Total $54,100 $66,900

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 are not included as an expense in the Agency’s Future-oriented Statement of Operations. 

12. Easement Fee

In 1983, the Government of Canada, pursuant to Subsection 37(3) of the Northern Pipeline Act, granted Foothills a twenty-five year easement upon and under lands in the Yukon Territory.  For the right of easement, Foothills is to pay the Agency an annual amount of $30,400; of this annual amount, $2,806 is collected on behalf of and forwarded directly to the Government of the Yukon Territory;  the balance of $27,594  is remitted to the Government of Canada by the Agency. 

13. Segmented Information

(in dollars) Estimated Results
2012
Planned Results
2013
Operating Expenses
Salaries and employee benefits 1,132,695 1,207,939
Professional and Special Services 236,546 170,858
Transportation and Communications 131,043 94,653
Rentals 45,794 33,077
Acquisition of machinery and equipment 1,556 1,124
Utilities, Materials and Supplies 9,868 7,128
Information 749 541
Transfer Payments 936,594 1,710,000
Amortization 4,644 4,644
Total Recoverable Expenses $2,499,489 $3,229,964
Revenue
Regulatory revenue $2,499,489 $3,229,964
Non-Recoverable Services Received Without Charge ( Note 11) 54,100 66,900
Net Cost of Operations $54,100 $66,900