Financial statements

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, 2014 and all information contained in these statements rests with the management of the Transportation Safety Board of Canada (TSB). 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 the TSB's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada and included in the TSB'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 aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the TSB 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 on-going process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

The TSB is subject to periodic Core Control Audits performed by the Office of the Comptroller General and uses the results of such audits to ensure compliance with the Treasury Board Policy on Internal Control.

A Core Control Audit was performed in 2012-13 by the Office of the Comptroller General of Canada. The Audit Report and related Management Action Plan are posted on the departmental web site at http://www.tsb.gc.ca/eng/divulgation-disclosure/index.asp.

The 2013-14 financial statements of the TSB have not been audited.

The original version was signed by
Wendy A. Tadros
Chair


Date
Gatineau, Canada
July 10, 2014

The original version was signed by
Chantal Lemyre, CGA
Chief Financial Officer


Date
Gatineau, Canada
July 10, 2014

Transportation Safety Board of Canada Statement of financial position (unaudited)

Statement of financial position (unaudited)
As at March 31 (in thousands of dollars)
  2014   2013
Liabilities    
Accounts payable and accrued liabilities (note 4) $ 2,445   $ 1,993
Vacation pay and compensatory leave 1,155   1,063
Employee future benefits (note 5) 2,029   2,935
Total liabilities 5,629 5,991
       
Financial assets    
Due from Consolidated Revenue Fund 2,657   1,523
Accounts receivable and advances (note 6) 75   41
Total financial assets 2,732   1,564
 
Departmental net debt 2,897   4,427
       
Non-financial assets      
Prepaid expenses 35   54
Inventory 104   114
Tangible capital assets (note 7) 5,813   5,586
Total non-financial assets 5,952   5,754
       
Departmental net financial position $ 3,055 $ 1,327

Contractual obligations (note 8)

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

The original version was signed by
Wendy A. Tadros
Chair


Date
Gatineau, Canada
July 10, 2014

The original version was signed by
Chantal Lemyre, CGA
Chief Financial Officer


Date
Gatineau, Canada
July 10, 2014

Transportation Safety Board of Canada Statement of operations and departmental net financial position (unaudited)

Statement of operations and departmental net financial position (unaudited)
As at March 31 (in thousands of dollars)
  2014
Planned Results
  2014   2013
     
Expenses          
Air investigations $ 14,591   $ 15,370   $ 15,189
Marine investigations 5,407   5,928   5,832
Rail investigations 5,358   7,728   5,277
Pipeline investigations 514   425   535
Internal services 7,583   6,470   7,663
Total expenses 33,453   35,921   34,496
           
Revenues          
Air investigations 6   21   11
Marine investigations 2   8   4
Rail investigations 2   10   3
Pipeline investigations -   1   -
Internal services 34   25   35
Total revenues 44   65   53
           
Net cost of operations before government funding 33,409   35,856   34,443
           
Government funding          
Net cash provided by Government 30,187   32,367   31,434
Change in due from Consolidated Revenue Fund 248   1,134   47
Services provided without charge by other government
departments (note 9)
3,887   4,083   4,036
Net cost (surplus) of operations after government
funding
(913)   (1,728)   (1,074)
           
Departmental net financial position – Beginning of year 695   1,327   253
           
Departmental net financial position – End of year $ 1,608   $ 3,055   $ 1,327

Segmented information (note 10)
The accompanying notes form an integral part of these financial statements.

Transportation Safety Board of Canada Statement of change in departmental net debt (unaudited)

Statement of change in departmental net debt (unaudited)
As at March 31 (in thousands of dollars)
  2014
Planned Results
  2014   2013
     
Net cost (surplus) of operations after government
funding
$ (913)   $ (1,728)   $ (1,074)
           
Change due to tangible capital assets          
Acquisition of tangible capital assets 1,368   1,203   1,472
Amortization of tangible capital assets (947)   (955)   (1,040)
Proceeds from disposal of tangible capital assets (7)   (21)   (23)
Net (loss) or gain on disposal of tangible capital assets (18)   -   (9)
Total change due to tangible capital assets 396   227   400
           
Change due to prepaid expenses (6)   (19)   (27)
           
Change due to inventory (1)   (10)   (60)
           
Net increase (decrease) in departmental net debt (524)   (1,530)   (761)
           
Departmental net debt – Beginning of year 5,054   4,427   5,188
           
Departmental net debt – End of year $ 4,530   $ 2,897   $ 4,427

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

Transportation Safety Board of Canada Statement of cash flows (unaudited)

Statement of cash flows (unaudited)
For the year ended March 31 (in thousands of dollars)
  2014   2013
Operating activities      
Net cost of operations before government funding $ 35,856   $ 34,443
Non-cash Items:      
Amortization of tangible capital assets (955)   (1,040)
Gain (loss) on disposal of tangible capital assets -   (9)
Services provided without charge by other government
departments (note 9)
(4,083)   (4,036)
       
Variations in Statement of Financial Position:      
Increase (decrease) in accounts receivable and advances 34   (186)
Increase (decrease) in prepaid expenses (19)   (27)
Increase (decrease) in inventory (10)   (60)
Decrease (increase) in accounts payable and accrued liabilities (452)   (8)
Decrease (increase) in vacation pay and compensatory leave (92)   82
Decrease (increase) in employee future benefits 906   826
Cash used for operating activities 31,185   29,985
       
Capital investing activities      
Acquisition of tangible capital assets 1,203   1,472
Proceeds from disposal of tangible capital assets (21)   (23)
Cash used for capital investing activities 1,182   1,449
       
Net cash provided by the Government of Canada $ 32,367   $ 31,434

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

Transportation Safety Board of Canada Notes to the financial statements (unaudited)

1. Authority and objectives

The Canadian Transportation Accident Investigation and Safety Board (CTAISB) was established in 1990 under the Canadian Transportation Accident Investigation and Safety Board Act and is a departmental corporation named in Schedule II to the Financial Administration Act. In its day-to-day activities the CTAISB is also known by the name Transportation Safety Board of Canada, or simply the TSB. The objective of the TSB is to advance transportation safety. It seeks to identify safety deficiencies in transportation occurrences and to make recommendations designed to eliminate or reduce any such safety deficiencies. In addition to investigations, including where necessary public inquiries into selected occurrences, the TSB may conduct studies into more general matters pertaining to transportation safety. The TSB has the exclusive authority to make findings as to causes and contributing factors when it investigates a transportation occurrence.

The TSB has four key programs, which are the conduct of safety investigations in the following four transportation sectors:

  • Air investigations
  • Marine investigations
  • Rail investigations
  • Pipeline investigations

Within each program, personnel conduct independent safety investigations into selected transportation occurrences. They identify causes and contributing factors, assess risks to the system, formulate recommendations to improve safety, publish investigation reports, communicate safety information to stakeholders, undertake outreach activities with key change agents, as well as assess and follow up on responses to recommendations. These activities are carried out by highly qualified investigators who are experts in the transportation operational sectors. They also work closely with personnel who are responsible for executing specialized work in the following fields: engineering and technical, macro-analysis, human performance and communications.

The Internal services program also contributes to the achievement of TSB’s strategic outcome. This program includes the functions and resources required to support the needs of the programs of the four transportation modes and to meet the department’s corporate obligations in areas such as human resources, finance, administration, communications, information management and information technology.

2. Summary of significant accounting policies

The 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. Parliamentary authorities

    The TSB is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the TSB does 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 Financial Position and the Statement of Operations and Departmental Net Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the two bases of reporting. The planned results amounts in the Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2013-2014 Report on Plans and Priorities.

  2. Net cash provided by the Government of Canada

    The TSB operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the TSB is deposited to the CRF and all cash disbursements made by the TSB 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. Due from the consolidated revenue fund

    Amounts due from 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 represents the net amount of cash that the TSB is entitled to draw from the CRF without further authorities to discharge its liabilities.

  4. Revenues

    Revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenue takes place.

  5. Expenses

    Expenses are recorded on an accrual basis:

    • Vacation pay and compensatory leave are accrued as the benefits accrue to employees under their respective terms of employment.
    • Services provided without charge by other government departments for accommodation, workers' compensation, the employer’s contribution to health and dental insurance plans, and external audit services are recorded as operating expenses at their estimated cost.
  6. Employee future benefits

    • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer pension plan administered by the Government. The TSB's contributions to the Plan are charged to expenses in the year incurred and represent the total TSB obligation to the Plan. The TSB’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 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. Accounts receivable and advances

    Accounts receivables and advances are stated at the lower of cost and net recoverable value.

  8. 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. Inventory

    Inventories consist of personal protective clothing, corporate communications clothing and supplies held for future program delivery and not intended for resale. Inventory is valued at cost using the average cost method. If there is no longer any service potential, inventory is valued at the lower of cost or net realizable value.

  10. Tangible capital assets

    All tangible capital assets having an initial cost of $2,000 or more are recorded at their acquisition cost. In addition, acquisitions of all general-purpose furniture and informatics hardware are recorded as tangible capital assets regardless of their acquisition cost.

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

    Amortization of tangible capital assets
    Tangible Capital Asset Class Amortization Period
    Building 40 years
    Furniture 10 years
    Office equipment and tools 5 years
    Laboratory equipment 15 years
    Informatics hardware 4 years
    Informatics software (purchased) 7 years
    Informatics software (in house developed) 10 years
    Motor vehicles 7 years
    Other vehicles 15 years
    Leasehold improvements

    Lesser of the remaining term of the lease or useful life of the improvement.

    Betterments

    Over the useful life of the asset to which the improvement was made or the useful life of the betterment if significantly shorter.

    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.

  11. 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 the useful life of tangible capital assets and the liability for employee future benefits. 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.

3. Parliamentary authorities

The TSB receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Financial Position and the Statement of Operations and Departmental Net Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the TSB 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 (in thousands of dollars)
  2014 2013
Net cost of operations before government funding 35,856 34,443
Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments (4,083) (4,036)
Amortization of tangible capital assets (955) (1,040)
Gain (loss) on disposal of tangible capital assets - (9)
Decrease (increase) in vacation pay and compensatory leave (92) 826
Decrease (increase) in employee future benefits 906 82
Refund of previous years' expenses 21 9
Revenues 65 53
Decrease (increase) in accrued liabilities not charged to authorities 411 (57)
Total items affecting net cost of operations but not affecting authorities (3,727) (4,172)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets 1,203 1,472
Increase (decrease) in prepaid expenses (19) (27)
Increase (decrease) in inventory (10) (60)
Total items not affecting net cost of operations but affecting authorities 1,174 1,385
Current year authorities used 33,303 31,656
b) Authorities provided and used (in thousands of dollars)
  2014 2013
Authorities provided:    
Operating expenditures - Vote 10(1) 26,926 26,479
Transfer from TB - Vote 15- Compensation adjustments 582 628
Transfer from TB - Vote 25- Operating Budget Carry Forward 804 1,334
Transfer from TB- Vote 30- Paylist requirements 1,310 1,041
Statutory contributions to employee benefit plans(1) 3,747 3,547
Statutory spending of proceeds from disposal of surplus Crown assets 53 54
Spending of revenues as per Financial Administration Act Section 29.1 61 37
  33,483 33,120
Less:
Authorities available for future years (14) (28)
Lapsed: Operating(2) (166) (1,436)
Current year authorities used 33,303 31,656
  1. In 2013-14 the TSB received $965,000 through Supplementary Estimates B ($887,000 for operating expenditures and $78,000 for employee benefit plans) for the purpose of investigating the rail accident in Lac-Mégantic, Quebec.
  2. The TSB's 2012-13 lapse incudes a frozen allotment of $619,000 established by Treasury Board to prohibit the spending of funds identified as savings measures in Budget 2012.

4. Accounts payable and accrued liabilities

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

Accounts payable and accrued liabilities (in thousands of dollars)
  2014 2013
Accounts payable to other government departments and agencies 130 152
Accounts payable to external parties 679 748
Total accounts payable 809 900
Accrued liabilities 1,636 1,093
Total accounts payable and accrued liabilities 2,445 1,993

5. Employee future benefits

  1. Pension benefits

    The TSB'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 the TSB 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 2013-2014 expense amounts to $2,634,578 ($2,532,456 in 2012-2013).  For Group 1 members, the expense represents approximately 1.6 times (1.7 times in 2012-2013) the employee contributions and, for Group 2 members, approximately 1.5 times (1.6 times in 2012-2013) the employee contributions.

    The TSB'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.

  2. Severance benefits

    The TSB 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:

    Severance benefits (in thousands of dollars)
      2014 2013
    Accrued benefit obligation, beginning of year 2,935 3,761
    Expense for the year 840 (59)
    Benefits paid during the year (1,746) (767)
    Accrued benefit obligation, end of year 2,029 2,935

    As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, commencing in 2012 the accumulation of severance benefits under the employee severance pay program ceased for these employees. 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.

6. Accounts receivable and advances

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

Accounts receivable and advances (in thousands of dollars)
  2014 2013
Receivables from other government departments and agencies 47 30
Receivables from external parties 19 2
Employee advances 9 9
Total accounts receivable and advances 75 41

7. Tangible capital assets

Tangible capital assets (in thousands of dollars)
  Cost Accumulated Amortization Net Book Value
Capital Asset Class Opening
balance
Acquisitions Disposals and
write-offs
Adjustments (1) Closing balance Opening balance Amortization Disposals and
write-offs
Closing balance 2014 2013
Building 2,133 - - 215 2,348 2,027 12 - 2,039 309 107
Furniture 917 26 167 - 776 574 76 167 483 293 342
Office equipment and tools 303 17 5 - 315 131 44 2 173 142 172
Laboratory equipment 2,588 - - - 2,588 1,702 89 - 1,791 797 886
Informatics hardware 2,084 181 32 - 2,233 1,465 258 32 1,691 542 619
Informatics software (purchased) 666 24 - - 690 520 33 - 553 137 146
Informatics software (in- house developed) 3,682 - - 885 4,567 1,868 319 - 2,187 2,380 1,814
Motor vehicles 638 21 56 - 603 303 52 45 310 293 335
Other vehicles 102 - 15 - 87 68 6 8 66 21 34
Leasehold improvements 622 160 - - 782 574 19 - 593 189 48
Betterments 906 - - - 906 677 47 - 724 182 229
Assets under construction 854 774 - (1,100) 528 - - - - 528 854
TOTAL 15,495 1,203 275 - 16,423 9,909 955 254 10,610 5,813 5,586

Adjustments to assets under construction reflect amounts that were transferred to other categories of assets upon completion.

8. Contractual obligations

The nature of the TSB's activities can result in some large multi-year contracts and obligations whereby the TSB 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:

Multi-year contracts and obligations (in thousands of dollars)
  2014-15 2015-16 2016-17 2017-18 2018-19 Total
Acquisition of goods and services 52 54 8 3 2 119

9. Related party transactions

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

  1. Common services provided without charge by other government departments:

    During the year, the TSB received without charge from other departments: accommodation, workers' compensation, the employer's contribution to health and dental insurance plans, and external audit services. These services without charge have been recognized in the TSB's Statement of Operations and Departmental Net Financial Position as follows:

    Services without charge (in thousands of dollars)
      2014 2013
    Accommodation 2,144 2,145
    Employer's contribution to health and dental insurance plans 1,914 1,821
    External audit services (1) 0 45
    Workers' compensation 25 25
    Total 4,083 4,036

    (1) Expenses for audit services recorded in 2012-13 relate to the audit by the Office of the Auditor General (OAG) of the TSB's 2011-12 financial statements. The OAG no longer audits the TSB's financial statements as a result of their Budget 2012 savings measures.

    The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public 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 Works and Government Services Canada, are not included as an expense in the TSB's Statement of Operations and Departmental Net Financial Position.

  2. Other transactions with related parties:

    Other transactions with related parties (in thousands of dollars)
      2014 2013
    Expenses – Other government departments and agencies 5,251 5,083
    Revenues – Other government departments and agencies 7 20
    Total 5,258 5,103

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

10. Segmented information

Presentation by segment is based on the TSB'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 expense and by major type of revenue. The segment results for the period are as follows:

Segmented information (in thousands of dollars)
  2014 2013
  Air Marine Rail Pipeline Internal Services Total Total
Operating expenses
Salaries and employee benefits 12,155 4,911 6,068 344 4,500 27,978 26,238
Professional and special services 848 148 390 7 622 2,015 2,042
Accommodation 857 375 363 23 526 2,144 2,145
Transportation and
communications
545 217 439 5 397 1,603 1,635
Amortization 450 176 209 38 82 955 1,040
Repairs and maintenance 254 28 78 3 40 403 408
Utilities, materials, supplies and equipment 147 32 71 3 67 320 466
Rentals 62 21 68 - 231 382 307
Information 52 20 42 2 5 121 206
Net loss on disposal and write-off of tangible capital assets - - - - - - 9
Total Expenses 15,370 5,928 7,728 425 6,470 35,921 34,496
Revenues              
Miscellaneous revenues 21 8 10 1 25 65 53
Total Revenues 21 8 10 1 25 65 53
Net cost before government funding 15,349 5,920 7,718 424 6,445 35,856 34,443