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Section III – Supplementary Information

Portfolio Links to the Government of Canada Outcome Areas

2007-2008
($ millions)	Actual Spending 2007-08			Alignment to Government of Canada Outcome Area
	Budgetary	Non-budgetary	Total
Strategic Outcome #1: Eligible Veterans and other clients achieve their optimum level of well-being through programs and services that support their care, treatment, independence, and re-establishment.
Pensions, Awards, Allowances for Disability and Death; and Financial Support	2,067.9	-	2,067.9	Income Security and Employment for Canadians
Health Care and Re-establishment Benefits and Services	1,065.5	-	1,065.5	Healthy Canadians
Strategic Outcome #2: Canadians remember and demonstrate their recognition of all those who served in Canada's efforts during war, military conflict and peace.
Remembrance Programming	48.1	-	48.1	A Vibrant Canadian Culture and Heritage
Strategic Outcome #3: Fair and effective resolution of disability pension, disability award, and War Veterans Allowance appeals from Canada's war Veterans, eligible Canadian Forces Veterans and members, RCMP clients, qualified civilians and their families.
Veterans Review and Appeal Board redress process for disability pensions and awards	15.0	-	15.0	Income Security and Employment for Canadians

Table 1: Comparison of Planned to Actual Spending (including FTEs)

($ millions)	2005-2006 Actual	2006-2007 Actual	2007-2008
			Main1 Estimates	Planned Spending	Total2 Authorities	Actual
Pensions, Awards, Allowances for Disability and Death; and Financial Support		1,932.8	2,182.4	2,182.6	2,201.2	2,067.9
Health Care and Re-establishment Benefits and Services		1,021.5	1,128.5	1,128.7	1,169.9	1,065.5
Remembrance Programming		59.6	51.1	52.9	56.3	48.1
Veterans Review and Appeal Board redress process for disability pensions and awards		14.1	13.7	13.7	15.2	15.0
Total	2,881.4	3,028.0	3,375.7	3,377.9	3,442.6	3,196.5
Less: Non-respendable revenue3	32.6	29.8	31.5	31.5	31.5	30.0
Plus: Cost of Services received without charge	32.1	32.5	30.8	31.0	34.9	34.9
Total Portfolio Spending	2,880.9	3,030.7	3,375.0	3,377.4	3,446.0	3,201.4
Full-time Equivalents	3,676	3,695	3,696	3,696	3,859	3,859

Table 2: Voted and Statutory Items

($ millions)	2007-2008
Vote or Statutory Item	Truncated Vote or Statutory Wording	Main Estimates	Planned Spending	Total1 Authorities	Actual
1	Veterans Affairs - Operating expenditures	905.9	907.7	966.0	867.7
5	Veterans Affairs - Capital expenditures	22.8	23.2	26.6	26.3
10	Veterans Affairs - Grants and contributions	2,397.6	2,397.6	2,397.6	2,250.2
15	Veterans Affairs - Veterans Review and Appeal Board - Operating expenditures	9.5	9.5	10.3	10.2
(S)	Contributions to employee benefit plan	39.6	39.6	41.4	41.4
(S)	Minister of Veterans Affairs - Salary and motor car allowance	0.1	0.1	0.1	0.1
(S)	Veterans Insurance Actuarial Liability Adjustment	0.2	0.2	0.2	0.2
(S)	Refunds of amounts credited to revenue in previous years			0.2	0.2
(S)	Court awards			0.1	0.1
(S)	Spending of proceeds from the disposal of surplus Crown assets			0.1	0.1
(S)	Repayments under Section 15 of the War Service Grants Act of compensating adjustments made in accordance with the terms of the Veterans' Land Act
(S)	Returned Soldiers Insurance Actuarial Liability Adjustment
(S)	Re-Establishment Credits under Section 8 of the War Service Grants Act
	Total Portfolio	3,375.7	3,377.9	3,442.6	3,196.5

Vote 1 (Veterans Affairs - Operating expenditures) includes funds appropriated for the following items ($ millions)

Description	Total Authorities	Actual Expenditures
Administrative and overhead costs incurred to support the delivery of programs (i.e. salaries, travel, professional services, supplies, rentals, telecommunications, etc.)	299.4	288.0
Goods and services purchased on behalf of Veterans (i.e. prescription drugs, dental, audio and visual services, special equipment, long-term care in non-departmental hospitals, etc.)	648.6	561.9
Ex-gratia payments, primarily related to the testing of Agent Orange at CFB Gagetown	18.0	17.8
Total Vote 1	966.0	867.7

Table 3: Details on Project Spending

($ millions)	Current Estimated Total Cost	Actual 2005-2006	Actual 2006-2007	2007-2008
				Main Estimates	Planned Spending	Total Authorities	Actual
Ste. Anne's Hospital Renovation	114.3	17.2	11.9	23.2	23.2	26.5	26.4
European Monument Restoration	29.8	8.9	9.3		0.4	0.4	0.2
Total	144.1	26.1	21.2	23.2	23.6	26.9	26.6

Table 4: Details on Transfer Payments Programs (TPP)

Veterans Affairs Canada manages the following transfer payments programs in excess of $5 million:

($ millions)	2007-2008
Pensions, and Allowances for Disability and Death	1,737.8
Disability Awards and Allowances	157.0
War Veterans Allowance / Civilian War Allowance	16.4
Earnings Loss and Supplementary Retirement Benefit	11.7
Veterans Independence Program	303.2
Last Post Fund	9.6
Commonwealth War Graves Commission	9.2

Further information on the above-mentioned Transfer Payments Programs can be found at www.tbs-sct.gc.ca/rma/dpr-rmr/2007-2008/index-eng.asp

Table 5: Travel Policies

The Veterans Affairs Portfolio follows and uses TBS Travel policies parameters.

Table 6: Financial Statements of Departments and Agencies

Veterans Affairs Canada
Management Responsibility for Financial Statements

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2008 and all information contained in these statements rests with the management of Veterans Affairs Canada. These financial statements have been prepared by management in accordance with Treasury Board Accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

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 judgement and gives due consideration to materiality. To fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of Veterans Affairs' financial transactions. Financial information submitted to the Public Accounts of Canada and included in Veterans Affairs' Departmental Performance Report is consistent with these financial statements.

Management maintains a system of financial management and internal controls designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout Veterans Affairs.

Veterans Affairs Canada has a departmental audit committee whose roles are to oversee compliance with legal and regulatory requirements as well as the integrity of financial reporting, internal controls, disclosure controls and internal audit functions. In fulfilling its responsibilities, the audit committee provides advice to assist senior management in risk management and the operation of management control frameworks.

The financial statements of Veterans Affairs Canada have not been audited.

 

Veterans Affairs
Statement of Operations (unaudited)
For the year ended March 31

(in thousands of dollars)	2008	2007
Expenses (Note 4)
Pensions and allowances	2,077,499	1,946,695
Health care benefits	1,053,315	1,021,674
Canada Remembers	50,510	53,495
Veterans Review and Appeal Board	16,162	15,223
Total expenses	3,197,486	3,037,087
Revenues (Note 5)
Pensions and allowances	2,542	2,786
Health care benefits	18,821	18,879
Canada Remembers	47	16
Total revenues	21,410	21,681
Net cost of operations	3,176,076	3,015,406

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

Veterans Affairs
Statement of Financial Position (unaudited) at March 31

(in thousands of dollars)	2008	2007
Assets
Financial assets
Cash	642	0
Accounts receivable and advances (Note 6)	9,153	11,373
Non-financial assets
Prepaid expenses	105	95
Tangible capital assets (Note 7)	132,154	107,283
Total assets	142,054	118,751
Liabilities
Accounts payable and accrued liabilities	49,805	46,372
Vacation pay and compensatory leave	10,501	10,083
Deferred revenue	0	733
Other liabilities (Note 8)	12,404	13,623
Employee severance benefits (Note 9)	46,834	45,076
Total liabilities	119,544	115,887
Equity of Canada	22,510	2,864
Total	142,054	118,751
Contingent liabilities (Note 10)
Contractual obligations (Note 11)

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

Veterans Affairs
Statement of Equity of Canada (unaudited)
For the year ended March 31

(in thousands of dollars)	2008	2007
Equity of Canada, beginning of year	2,864	(14,753)
Net cost of operations	(3,176,076)	(3,015,406)
Current year appropriations used (Note 3)	3,196,454	3,027,967
Revenue not available for spending	(21,585)	(21,979)
Change in net position in the Consolidated Revenue Fund (Note 3)	(11,059)	(5,332)
Services received without charge from other government departments (Note 12)	31,912	32,367
Equity of Canada, end of year	22,510	2,864

The accompanying notes form an integral part of these financial statements

Veterans Affairs
Statement of Cash Flows (unaudited)
For the year ended March 31

(in thousands of dollars)	2008	2007
Operating activities
Net cost of operations	3,176,076	3,015,406
Non-cash items:
Amortization of tangible capital assets	(4,861)	(4,571)
Loss on disposal of tangible capital assets	(74)
Gain on disposal of tangible capital assets	16
Adjustments to tangible capital assets	1,071	590
Services provided without charge	(31,912)	(32,367)
Variations in Statement of Financial Position
Increase (decrease) in accounts receivable and advances	(2,220)	347
Increase (decrease) in prepaid expenses	10	73
(Increase) decrease in liabilities	(3,657)	(1,426)
Cash used for operating activities	3,134,449	2,978,052
Capital investment activities
Acquisitions of tangible capital assets	29,335	22,604
Proceeds from disposal of tangible capital assets	(616)
Cash used for capital investment activities	28,719	22,604
Financing activities
Net cash provided by Government of Canada	(3,163,810)	(3,000,656)
Net Cash Used	(642)	0
Cash, beginning of year	0	0
Cash, end of year	642	0

The accompanying notes form an integral part of these statements.

Veterans Affairs
Notes to Financial Statements (unaudited)

1. Authority and Objectives

The Department of Veterans Affairs was established by the Department of Veterans Affairs Act as a department under Schedule I to the Financial Administration Act.

The Veterans Affairs Portfolio consists of the Department of Veterans Affairs, which reports to the Minister of Veterans Affairs, and the Veterans Review and Appeal Board, which reports to Parliament through the Minister of Veterans Affairs.

Veterans Affairs Canada's objectives as stated in the Department of Veterans Affairs Act are the care, treatment or re-establishment in civil life of any person who served in the Canadian Forces or merchant navy or in the naval, army or air forces or merchant navies of Her Majesty, of any person who has otherwise engaged in pursuits relating to war, and of any other person designated by the Governor in Council, and the care of the dependants or survivors of any person previously referred to herein.

The Department meets its responsibilities through its various programs. The Canada Remembers program endeavours to keep alive the achievements and sacrifices made by those who have served Canada in times of war and peace. The Health Care Benefits program provides treatment and other health-related benefits to Veterans and other eligible persons. The Pensions and Allowances for Disability and Death, and Economic Support program provides pensions for disability or death and economic support in the form of allowances to Veterans and other eligible persons. The Veterans Review and Appeal Board program provides Canada's war Veterans, eligible Canadian Forces Veterans and still-serving members, RCMP clients, qualified civilians and their families with full opportunity to request review and appeal hearings to ensure a fair adjudicative process for disability pension, disability awards and War Veterans Allowance claims.

2. Summary of Significant Accounting Policies

These financial statements have 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

Veterans Affairs Canada is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to Veterans Affairs Canada 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 Statement of Operations and the Statement of Financial Position are not necessarily the same as those provided through appropriations from Parliament. Note 3 to these financial statements provides a high-level reconciliation between the bases of reporting.

(b) Net cash provided by Government

Veterans Affairs Canada operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by Veterans Affairs Canada is deposited to the CRF and all cash disbursements made by Veterans Affairs Canada 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 federal government.

(c) Change in net position in the Consolidated Revenue Fund (CRF) 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 Veterans Affairs Canada. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.

(d) Revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues. Revenues that have been received but not yet earned are recorded as deferred revenue on the Statement of Financial Position. This amount represents prepayments to Ste. Anne's Hospital for in-patient charges.

(e) Expenses are recorded on the accrual basis:

• Grants are recognized in the year in which the conditions for payment are met.
• Contributions are recognized in the year in which the recipient has fulfilled the terms of a contractual transfer agreement.
• Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
• Services provided without charge by other government departments for accommodations, the employer's contribution to the health and dental insurance plans, and legal services are recorded as operating expenses at their estimated cost.

(f) Benefit payments

The majority of the programs administered by Veterans Affairs Canada are meant to provide future benefits for members and Veterans of the Canadian Forces. As such, an actuarially determined liability and related disclosure for these future benefits are presented in the financial statements of the Government of Canada, the ultimate sponsor of these benefits. This differs from the accounting and disclosures of benefits presented in these financial statements as Veterans Affairs Canada expenses these benefits as they become due and records no accruals for future benefits. Payments of benefits made directly to beneficiaries, such as pensions and allowances for disability, death and economic support, are recorded as grants or contributions, while benefits delivered through service providers, such as certain health care benefits are recorded as operating expenses. This accounting treatment corresponds to the funding provided to the Department through Parliamentary appropriations.

(g) Employee future benefits

• Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer plan, administered by the Government of Canada. Veterans Affairs Canada's contributions to the Plan are charged to expense in the year incurred and represent the total departmental obligation to the plan. Current legislation does not require Veterans Affairs Canada to make contributions for any actuarial deficiencies of the Plan.
• Severance benefits: Employees are entitled to severance benefits, as provided for 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.

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

(i) Tangible capital assets

All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Veterans Affairs Canada does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.

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

Asset Class	Amortization Period
Buildings	25 years
Works and infrastructure	25 years
Machinery and equipment	5 to 15 years
Informatics	2 to 5 years
Motor vehicles	5 years
Leasehold improvements	Lesser of useful life or term of the lease
Assets under construction	Once in service, in accordance with asset type

(j) Foreign currency transactions

Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars using exchange rates in effect on March 31. Gain and losses resulting from foreign currency transactions are reported on the Statement of Operations according to the activities to which they relate.

(k) 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 financial statements.

(l) Environmental liabilities reflect the estimated costs related to the management and remediation of environmentally contaminated sites. Based on management's best estimates, a liability is accrued and an expense recorded when the contamination occurs or when Veterans Affairs Canada becomes aware of the contamination and is obligated, or is likely to be obligated to incur such costs. If the likelihood of the Department's obligation to incur these costs is not determinable, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in the notes to the financial statements.

(m) Measurement uncertainty

The preparation of these financial statements in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector, 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 contingent liabilities, the useful life of tangible capital assets and the liability for employee severance 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 Appropriations

Veterans Affairs Canada receives funding through annual Parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, Veterans Affairs Canada 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 appropriations used

(in thousands of dollars)	2008	2007
Net cost of operations	3,176,076	3,015,406
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (Less):
Services provided without charge	(31,912)	(32,367)
Revenue not available for spending	21,585	21,979
Refund of previous years' expenses	9,242	7,727
(Increase) in employee severance benefits	(1,758)	(2,792)
Amortization of tangible capital assets	(4,861)	(4,571)
Justice Canada fees		(1,545)
Bad debt expense	(1,248)	(2,697)
(Increase) decrease in vacation pay and compensatory leave	(418)	37
Loss on disposal of tangible capital assets	(74)
Other	398	4,113
	3,167,030	3,005,290
Adjustment for items not affecting net cost of operations but affecting appropriations:
Add(Less):
Acquisition of tangible capital assets	29,335	22,604
Prepaid expenses	89	73
	29,424	22,677
Current year appropriations used	3,196,454	3,027,967

(b) Appropriations provided and used

(in thousands of dollars)	Appropriations Provided
	2008	2007
Vote 1 - Operating expenditures	966,012	882,315
Vote 5 - Capital expenditures	26,552	23,075
Vote 10 - Grants and Contributions	2,397,619	2,343,715
Vote 15 - Program expenditures	10,336	10,017
Statutory amounts	42,089	39,565
	3,442,608	3,298,687
Less:
Lapsed appropriations	(246,154)	(270,720)
Current year appropriations used	3,196,454	3,027,967

(c) Reconciliation of net cash provided by Government to current year appropriations used

(in thousands of dollars)	2008	2007
Net cash provided by Government	3,163,810	3,000,656
Revenue not available for spending	21,585	21,979
Change in net position in the Consolidated Revenue Fund
Variation in accounts receivable and advances	2,220	(347)
Variation in accounts payable and accrued liabilities	3,433	(960)
Variations in deferred revenue	(733)	49
Other adjustments	6,139	6,590
	11,059	5,332
Current year appropriations used	3,196,454	3,027,967

4. Expenses

The following table presents details of expenses by category:

(in thousands of dollars)	2008	2007
Transfer payments
Individuals	2,222,672	2,098,279
Non-profit organizations	11,490	13,183
Other countries and international organizations	9,190	8,859
Other	157	15
Total transfer payments	2,243,509	2,120,336
Operating
Professional and special services	316,745	310,588
Salaries and employee benefits	304,837	291,708
Utilities, materials and supplies	213,784	217,658
Transportation and communications	39,808	39,353
Repairs and maintenance	20,911	20,003
Accommodations	14,100	14,700
Amortization	4,861	4,571
Loss on disposal of tangible capital assets	74
Bad debt expense	1,248	2,697
Employee severance benefits	1,758	2,792
Other	35,851	12,681
Total operating expenses	953,977	916,751
Total expenses	3,197,486	3,037,087

5. Revenues

The following table presents details of revenues by category:

(in thousands of dollars)	2008	2007
Hospital services	17,371	17,723
Meals	353	362
Sale of goods and information products	85	114
Gain on disposal of tangible capital assets	16
Other revenue	3,585	3,482
Total revenues	21,410	21,681

6. Accounts Receivable and Advances

The following table presents details of accounts receivable and advances:

(in thousands of dollars)	2008	2007
Receivables from external parties	19,052	18,232
Receivables from other Federal Government Departments and agencies	1,717	4,251
Advances	976	952
Sub-Total	21,745	23,435
Less: allowance for doubtful accounts on external receivables	(12,592)	(12,062)
Total	9,153	11,373

7. Tangible capital assets

The following tables present details of tangible capital assets:

Cost
(in thousands of dollars) Capital Asset Class	Opening balance	Acquisitions	Disposals and adjustments	Closing Balance
Land	612	4	(463)	153
Buildings	66,453	114	11,252	77,819
Works and infrastructure	4,417		128	4,545
Machinery and equipment	4,092	264	(5)	4,351
Informatics	10,793	1,489	(3,680)	8,602
Motor Vehicles	1,352	165	(182)	1,335
Leasehold Improvements	335	612	269	1,216
Assets under construction	81,292	26,687	(12,388)	95,591
Total	169,346	29,335	(5,069)	193,612

Accumulated Amortization
(in thousands of dollars) Capital Asset Class	Opening balance	Acquisitions	Disposals and adjustments	Closing Balance
Land
Buildings	46,246	3,361	(1,395)	48,212
Works and infrastructure	2,863	178	(106)	2,935
Machinery and equipment	2,404	392	(16)	2,780
Informatics	9,420	717	(3,709)	6,428
Motor Vehicles	929	158	(182)	905
Leasehold Improvements	201	55	(58)	198
Assets under construction
Total	62,063	4,861	(5,466)	61,458

Amortization expense for the year ended March 31, 2008 is $4,861 (2007 - $4,571)

Net Book Value
(in thousands of dollars)	2008	2007
Capital Asset Class	Net book value	Net book value
Land	153	613
Buildings	29,609	20,208
Works and infrastructure	1,610	1,554
Machinery and equipment	1,571	1,688
Informatics	2,173	1,372
Motor Vehicles	430	423
Leasehold Improvements	1,018	134
Assets under construction	95,590	81,291
Total	132,154	107,283

8. Other liabilities

Other liabilities represent funds received from parties which are to be disbursed for specified purposes. The following table presents the details of other liabilities:

(in thousands of dollars)	Balance April 1, 2007	Receipts and other credits	Payments and other charges	Balance March 31, 2008
Administered accounts	1,666	483	489	1,660
Estate fund	4,585	389	917	4,057
Veterans administration and welfare trust fund	830	214	118	926
Returned soldier's insurance fund	9	6	2	13
Veterans insurance fund	6,519	154	935	5,738
Other accounts	14	324	328	10
Total	13,623	1,570	2,789	12,404

(a) Administered accounts

Pursuant to section 41 of the Pension Act, section 15 of the War Veterans Allowance Act, section 55 of the Veterans Treatment Regulations and section 8 of the Guardianship of Veterans Property Regulations, moneys held in these accounts include: (a) pensions, war veterans allowances and treatment allowances placed under the administration of the Department of Veterans Affairs; and (b) benefits from other sources such as Old Age Security, Guaranteed Income Supplement or Canada Pension Plan, placed under administration with the consent of the client. These persons have demonstrated their inability to manage their own affairs. Payments are made out of the accounts, to provide food, shelter, clothing, comforts and other necessities to the client.

(b) Estates fund

This account was established to record the proceeds from the estates of those Veterans who died while receiving hospital treatment or institutional care, and for those Veterans whose funds had been administered by the Government, in accordance with sections 5, 6 and 7 of the Veterans' Estates Regulations. Individual accounts are maintained and payments are made to beneficiaries pursuant to the appropriate legislative authority.

(c) Veterans administration and welfare trust fund

This account was established to record donations, legacies, gifts, bequests, etc., received, to be disbursed for the benefit of Veterans or their dependents under certain conditions, and for the benefit of patients in institutions, in accordance with section 9 of the Guardianship of Veterans' Property Regulations.

(d) Returned soldiers' insurance fund

This fund was established by the Returned Soldiers' Insurance Act, to provide life insurance to contributing Veterans of the First World War. The account is credited with premiums and is charged with disbursements for death benefits and cash surrender values. The account is actuarially maintained and an actuarial adjustment as at March 31, 2007 of $6,268 was charged to the account during the year and was credited to revenues. The final date on which application for this insurance could have been received was August 31, 1933.

(e) Veterans insurance fund

This fund was established by the Veterans' Insurance Act, to provide life insurance to contributing Veterans of the Second World War. The account is credited with premiums and is charged with disbursements for death benefits and cash surrender values. The account is actuarially maintained and an actuarial liability adjustment as at March 31, 2007 of $150,570 was credited to the account during the year and was charged to expenditures. The final date on which application for this insurance could have been received was October 31, 1968.

(f) Other accounts – Shared-cost agreements

This account was established to record transactions relating to share of costs incurred under federal/provincial cost-sharing agreements and funding for research and other projects at Ste. Anne's Hospital.

9. Employee Benefits

(a) Pension benefits

Veterans Affairs Canada's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. Pension benefits accrue 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/Quebec Pension Plans benefits and they are indexed to inflation.

Both the employees and Veterans Affairs Canada contribute to the cost of the Plan. The 2007-08 expense amounts to $30,217,088 ($28,765,351 in 2006-07), which represents approximately 2.1 times (2.2 in 2006-07) the contributions by employees.

Veterans Affairs Canada's responsibility with regards 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

Veterans Affairs Canada 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:

(in thousands of dollars)	2008	2007
Accrued benefit obligation, beginning of year	45,076	42,284
Expenses for the year	6,137	7,334
Benefits paid during the year	(4,379)	(4,542)
Accrued benefit obligation, end of year	46,834	45,076

10. Contingent liabilities

(a) Contaminated sites

Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where the Department is obligated or likely to be obligated to incur such costs. Veterans Affairs Canada has identified approximately three sites (4 sites in 2007, one of which was sold in March 2008) where such action is thought to be possible. A liability has not been recorded as Veterans Affairs Canada is unlikely to incur remediation costs.

Veterans Affairs Canada'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 by the Department in the year in which they become known.

(b) Claims and litigation

Claims have been made against Veterans Affairs Canada in the normal course of operations. Legal proceedings for claims totalling approximately $428 million (unchanged from 2007) were still pending at March 31, 2008. Some of these potential liabilities 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 in the financial statements.

The Government was a defendant in a class action lawsuit which claimed damages from the alleged failure of the Crown to invest or provide a rate of return on monies administered for the benefits of Veterans. On April 14, 2008, the Supreme Court of Canada denied the Plaintiff's final motion for reconsideration in this case. This class action litigation has come to an end in the Courts and can now be considered closed.

11. Contractual Obligations

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

(in thousands of dollars)	2009	2010	2011	2012	2013 and thereafter	Total
Ste. Anne's Hospital Modernization Project	19,000	7,000				26,000
Total	19,000	7,000				26,000

12. Related party transactions

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

(a) Services provided without charge:

During the year Veterans Affairs Canada received without charge from other departments, accommodations, legal fees and the employer's contribution to health and dental insurance plans. These services without charge have been recognized on the Department's Statement of Operations as follows:

(in thousands of dollars)	2008	2007
Accommodations	14,100	14,700
Employer's contribution to the health and dental insurance plans	16,612	16,556
Legal services	1,200	1,111
Total	31,912	32,367

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 and audit services provided by the Office of the Auditor General are not included as an expense in Veterans Affairs' Statement of Operations.

(b) Payables outstanding at year-end with related parties:

(in thousands of dollars)	2008	2007
Accounts payable to other government departments and agencies	7,811	9,004

List of Electronic Tables

The following tables can be found on the Treasury Board of Canada Secretariat Web site at: www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Sources of Non-respendable revenue
Details on Transfer Payment Programs
Sustainable Development Strategy
Response to Parliamentary Committees and External Audits
Internal Audits
Evaluations

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