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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, 2016 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 2015-16 financial statements of the TSB have not been audited.

The original version was signed by
Kathleen Fox
Chair


Gatineau, Canada
June 6, 2016

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


Gatineau, Canada
June 6, 2016

Statement of Financial Position (Unaudited)

As at March 31 (in thousands of dollars)
2016 2015
Liabilities  
Accounts payable and accrued liabilities (note 4) 2,959 2,791
Vacation pay and compensatory leave 1,140 1,197
Employee future benefits (note 5) 1,496 1,534
Total liabilities 5,595 5,522
Financial assets
Due from the Consolidated Revenue Fund 2,562 2,610
Accounts receivable and advances (note 6) 99 93
Total financial assets 2,661 2,703
Departmental net debt 2,934 2,819
Non-financial assets
Prepaid expenses 94 71
Inventory 88 91
Tangible capital assets (note 7) 5,173 6,112
Total non-financial assets 5,355 6,274
Departmental net financial position 2,421 3,455

Contractual obligations (note 8)

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

The original version was signed by
Kathleen Fox
Chair


Gatineau, Canada
June 6, 2016

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


Gatineau, Canada
June 6, 2016

Statement of Operations and Departmental Net Financial Position (Unaudited)

For the year ended March 31 (in thousands of dollars)
  2016
Planned Results
2016 2015
Expenses
Aviation Occurrence Investigations 14,921 15,278 15,889
Marine Occurrence Investigations 5,834 6,195 5,663
Rail Occurrence Investigations 6,346 6,810 6,795
Pipeline Occurrence Investigations 715 385 345
Internal services 7,566 6,427 6,172
Total expenses 35,382 35,095 34,864
Revenues
Miscellaneous revenues 35 37 33
Total revenues 35 37 33
Net cost of operations before government funding 35,347 35,058 34,831
Government funding and transfers
Net cash provided by Government   30,009 31,993
Change in due from Consolidated Revenue Fund   (48) (47)
Transfer of the transition payments for implementing salary payments in arrears (note 10)   (3) (726)
Services provided without charge by other government departments (note 9)   4,066 4,011
Total Government funding and transfers   34,024 35,231
Net cost of operations after government funding and transfers   1,034 (400)
Departmental net financial position - Beginning of year   3,455 3,055
Departmental net financial position - End of year   2,421 3,455

Segmented information (note 11)

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

Statement of Change in Departmental Net Debt (Unaudited)

For the year ended March 31 (in thousands of dollars)
  2016 2015
Net cost of operations after government funding 1,034 (400)
Change due to tangible capital assets
Acquisition of tangible capital assets 317 1,456
Amortization of tangible capital assets (1,244) (1,154)
Proceeds from disposal of tangible capital assets (10) (3)
Loss on disposal of tangible capital assets (2) -
Total change due to tangible capital assets (939) 299
Change due to prepaid expenses 23 36
Change due to inventory (3) (13)
Net increase (decrease) in departmental net debt 115 (78)
Departmental net debt - Beginning of year 2,819 2,897
Departmental net debt - End of year 2,934 2,819

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

Statement of Cash Flows (Unaudited)

For the year ended March 31 (in thousands of dollars)
Operating activities 2016 2015
Net cost of operations before government funding 35,058 34,831
Non-cash items
Amortization of tangible capital assets (1,244) (1,154)
Loss on disposal of tangible capital assets (2) -
Services provided without charge by other government departments (note 9) (4,066) (4,011)
Transfer of the transition payments for implementing salary payments in arrears (note 10) 3 726
Variations in Statement of Financial Position
Increase in accounts receivable and advances 6 18
Increase in prepaid expenses 23 36
Decrease in inventory (3) (13)
Increase in accounts payable and accrued liabilities (168) (346)
Decrease (increase) in vacation pay and compensatory leave 57 (42)
Decrease in employee future benefits 38 495
Cash used in operating activities 29,702 30,540
Capital investing activities
Acquisitions of tangible capital assets 317 1,456
Proceeds from disposal of tangible capital assets (10) (3)
Cash used in capital investing activities 307 1,453
Net cash provided by Government of Canada 30,009 31,993

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

Notes to the Financial Statements (Unaudited)

For the year ended March 31

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:

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:

(a) 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 “Expenses” and “Revenues” sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2015-16 Report on Plans and Priorities. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2015-16 Report on Plans and Priorities.

(b) Net cash provided by Government

The TSB operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General of 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.

(c) Due from the Consolidated Revenue Fund (CRF)

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.

(d) Revenues

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

(e) Expenses

Expenses are recorded on an accrual basis:

(f) Employee future benefits

(g) Accounts receivable and advances

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

(h) 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.

(i) 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.

(j) 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:

Capital assets 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.

(k) 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 used

(in thousands of dollars)
  2016 2015
Net cost of operations before government funding 35,058 34,831
Adjustments for items affecting net cost of operations but not affecting authorities
Services provided without charge by other government departments (4,066) (4,011)
Amortization of tangible capital assets (1,244) (1,154)
Gain (loss) on disposal of tangible capital assets (2) -
Decrease (increase) in vacation pay and compensatory leave 57 (42)
Decrease in employee future benefits 38 495
Accrual for unratified collective agreements (202) (108)
Refund of previous years' expenses 24 22
Revenues 37 33
Decrease (increase) in accrued liabilities not charged to authorities 2 (48)
  (5,356) (4,813)
Adjustments for items not affecting net cost of operations but affecting authorities
Acquisitions of tangible capital assets 317 1,456
Proceeds from disposal of tangible capital assets (10) (3)
Increase in prepaid expenses 23 36
Transfer of the transition payments for implementing salary payments in arrears (note 10) 3 726
Decrease in inventory (3) (13)
  330 2,202
Current year authorities used 30,032 32,220

(b) Authorities provided and used

(in thousands of dollars)
2016 2015
Authorities provided
Operating expenditures - Vote 1 26,290 26,058
Transfer from TB - Vote 15 - Compensation adjustments - 784
Transfer from TB - Vote 25 - Operating Budget Carry Forward 789 657
Transfer from TB- Vote 30 - Paylist requirements - 1,237
Statutory contributions to employee benefit plans 3,418 3,522
Statutory spending of proceeds from disposal of surplus Crown assets 13 17
Spending of revenues as per Financial Administration Act Section 29.1 36 29
Less
Authorities available for future years (9) (3)
Lapsed: Operating (505) (81)
Current year authorities used 30,032 32,220

4. Accounts payable and accrued liabilities

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

(in thousands of dollars)
  2016 2015
Accounts payable to other government departments and agencies 297 383
Accounts payable to external parties 549 667
Total accounts payable 846 1,050
Accrued liabilities 2,113 1,741
Total accounts payable and accrued liabilities 2,959 2,791

5. Employee future benefits

(a) 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 2015-2016 expense amounts to $2,356,297 ($2,407,376 in 2014-2015). For Group 1 members, the expense represents approximately 1.25 times (1.41 times in 2014-2015) the employee contributions and, for Group 2 members, approximately 1.24 times (1.39 times in 2014-2015) 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.

(b) 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:

(in thousands of dollars)
  2016 2015
Accrued benefit obligation, beginning of year 1,534 2,029
Expense for the year 259 404
Benefits paid during the year (297) (899)
Accrued benefit obligation, end of year 1,496 1,534

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:

(in thousands of dollars)
  2016 2015
Receivables from other government departments and agencies 68 37
Receivables from external parties 22 47
Employee advances 9 9
Total accounts receivable and advances 99 93

7. Tangible capital assets

(in thousands of dollars)
Cost Opening Balance Acquisitions Disposals and write-offs Adjustments Closing Balance
Building 2,133 - - - 2,133
Furniture 778 7 (176) - 609
Office equipment and tools 299 - - - 299
Laboratory equipment 3,185 7 - - 3,192
Informatics hardware 2,090 82 (120) - 2,052
Informatics software - Purchased 707 32 - - 739
Informatics software - In house developed 5,726 101 - - 5,827
Motor vehicles 603 28 (58) - 573
Other vehicles 87 - - - 87
Leasehold improvements 782 - - - 782
Betterments 1,121 20 - - 1,141
Assets under construction - 40 - - 40
Total 17,511 317 (354) - 17,474
(in thousands of dollars)
Accumulated amortization Opening Balance Amortization Disposals and write-offs Closing Balance 2016
Net book value
2015
Net book value
Building 2,049 10 - 2,059 74 84
Furniture 558 72 (176) 454 155 220
Office equipment and tools 212 37 - 249 50 87
Laboratory equipment 1,873 132 - 2,005 1,187 1,312
Informatics hardware 1,605 219 (120) 1,704 348 485
Informatics software - Purchased 589 40 - 629 110 118
Informatics software - In house developed 2,649 573 - 3,222 2,605 3,077
Motor vehicles 359 40 (46) 353 220 244
Other vehicles 72 6 - 78 9 15
Leasehold improvements 659 63 - 722 60 123
Betterments 774 52 - 826 315 347
Assets under construction         40 -
Total 11,399 1,244 (342) 12,301 5,173 6,112

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:

(in thousands of dollars)
  2016-17 2017-18 2018-19 2019-20 2020-2021 Total
Acquisition of goods and services 234 171 7 - - 412

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.

a) 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. These services without charge have been recognized in the TSB's Statement of Operations and Departmental Net Financial Position as follows:

(in thousands of dollars)
  2016 2015
Accommodation 2,160 2,152
Employer's contribution to the health and dental insurance plans 1,888 1,832
Workers' compensation 18 27
Total 4,066 4,011

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 Services and Procurement Canada, are not included as an expense in the TSB's Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties

(in thousands of dollars)
  2016 2015
Expenses - Other Government departments and agencies 4,971 5,061
Revenues - Other Government departments and agencies 9 8

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

10. Transfer of the transition payments for implementing salary payments in arrears

The Government of Canada implemented salary payments in arrears in 2014-15. As a result, a one-time payment was issued to employees and will be recovered from them in the future. Employees that were on leave without pay when the initial one-time transition payments were issued will receive the transition payment shortly after their return to work from their leave without pay. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the Department. However, it did result in the use of additional spending authorities by the Department. Prior to year end, the transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Services and Procurement Canada, who is responsible for the administration of the Government pay system.

11. 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:

(in thousands of dollars)
Aviation Marine Rail Pipeline Internal services 2016 2015
Operating Expenses
Salaries and employee benefits 11,643 4,979 5,495 282 4,583 26,982 26,999
Professional and special services 1,033 172 204 10 663 2,082 1,918
Accommodation 944 394 437 23 362 2,160 2,152
Transportation and communications 521 184 240 22 384 1,351 1,406
Amortization 601 292 230 37 84 1,244 1,154
Repairs and maintenance 239 53 74 5 20 391 386
Utilities, materials, supplies and equipment 134 34 55 3 52 278 284
Rentals 110 54 24 1 236 425 466
Information 53 32 50 2 13 150 99
Other - 1 1 - 30 32 -
Total Operating expenses 15,278 6,195 6,810 385 6,427 35,095 34,864
Revenues
Miscellaneous Revenues 16 5 6 - 10 37 33
Total revenues 16 5 6 - 10 37 33
Net cost of operations before governement funding 15,262 6,190 6,804 385 6,417 35,058 34,831

12. Comparative information

Certain 2015 comparative figures are reclassified to conform to the current year’s presentation.