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SUPPLEMENTARY INFORMATION

The vision of Public Works and Government Services Canada (PWGSC) is to excel in government operations. We strive to deliver quality services and programs that meet the needs of federal organizations and ensure sound stewardship on behalf of Canadians. This enables other government departments and agencies to offer their programs and services to Canadians. Our two strategic outcomes, quality services and sound stewardship, support the Government of Canada’s outcomes related to the economic, social, international, and government affairs spending areas. (See Canada’s Performance 2007-2008 at http://www.tbs-sct.gc.ca). Under the Treasury Board Secretariat’s whole-of-government framework, PWGSC contributes to all of the Government of Canada’s outcomes by providing services to government departments and agencies. Further information about our organization and services can be found in the following tables:

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

Table 2: Voted and Statutory Items

Table 3: Details on Transfer Payment Programs (TPPs)

Table 4: Loans, Investments, and Advances (Non-budgetary)*

Table 5: Sources of Respendable and Non-respendable Revenue*

Table 6: Revolving Funds*

Table 7: User Fees/External Fees*

Table 8: Details on Project Spending*

Table 9: Status Report on Major Crown Projects*

Table 10: Foundations (Conditional Grants)*

Table 11: Horizontal Initiatives*

Table 12: Sustainable Development Strategy*

Table 13: Response to Parliamentary Committees and External Audits*

Table 14: Internal Audits and Evaluations*

Table 15: Travel Policies*

Table 16: Financial Statements of Departments and Agencies (including Agents of Parliament) and Revolving Funds Financial Statements*

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

(in millions of dollars)


Historical Comparison of Total Planned Spending to Actual Spending     2007-2008
Actual
2005-2006
Actual
2006-2007
Main
Estimates
Planned
Spending
Total Authorities Actual
GOVERNMENT SERVICES PROGRAM            
Operating (including Special Purpose Allotments), Capital, Grants and Contributions and Statutory Votes            
Quality Services
Gross Expenditures 2,083.5 2,200.6 2,155.3 2,592.9 2,428.5 2,277.4
Less: Respendable Revenues 436.3 472.3 286.8 286.8 756.4 756.4
Federal Accommodation and Holdings  1,647.2  1,728.3  1,868.5  2,306.1  1,672.1  1,521.0
Gross Expenditures  912.3  984.8  892.3  892.3  892.3  1,035.7
Less: Respendable Revenues 912.3 984.8 892.3 892.3 892.3 1,036.2
Real Property Services Revolving Fund  -   -   -   -   -   (0.5)
Gross Expenditures  3.7  2.8  4.0  4.0  4.0  2.5
Less: Respendable Revenues 6.7 8.9 12.0 12.0 12.0 11.2
Real Property Disposition Revolving Fund  (3.0)  (6.1)  (8.0)  (8.0)  (8.0)  (8.7)
Gross Expenditures  235.4  230.0  191.7  193.4  244.0  247.1
Less: Respendable Revenues 55.2 60.5 42.4 42.4 82.4 82.4
Acquisition Services  180.2  169.5  149.3  151.0  161.6  164.7
Gross Expenditures  92.6  94.3  100.4  100.4  100.4  101.5
Less: Respendable Revenues 94.0 95.2 100.4 100.4 100.4 104.8
Optional Services Revolving Fund  (1.4)  (0.9)  -   -   -   (3.3)
Gross Expenditures  -   -   -   -   -   - 
Less: Respendable Revenues  -   -   -   -   -   - 
Defence Production Revolving Fund  -   -   -   -   -   - 
Gross Expenditures  501.1  455.1  348.9  394.5  466.7  464.4
Less: Respendable Revenues 219.0 196.0 212.5 212.5 249.6 249.6
IM/IT Services  282.1  259.0  136.4  182.0  217.1  214.7
Gross Expenditures  135.5  161.3  134.3  134.3  134.3  195.9
Less: Respendable Revenues 131.5 168.2 134.3 134.3 134.3 196.6
Telecommunications Services Revolving Fund  4.0  (6.8)  -   -   -   (0.7)
Gross Expenditures  11.9  10.7  10.8  10.9  11.0  10.2
Less: Respendable Revenues 4.8 3.4 2.2 2.2 2.4 2.4
Receiver General Services  7.1  7.3  8.6  8.7  8.6  7.8
Gross Expenditures  4.4  4.4  4.6  4.7  5.7  5.5
Less: Respendable Revenues 2.9 2.6 2.9 2.9 3.4 3.4
Public Service Compensation Services  1.5  1.9  1.7  1.8  2.3  2.1
Gross Expenditures  64.3  40.0  36.2  41.1  19.0  20.3
Less: Respendable Revenues  14.8  9.2  11.0  11.0  5.8  5.8
Government Information Services  49.5  30.8  25.2  30.1  13.2  14.5
Gross Expenditures  31.3  38.3  29.8  29.8  46.5  44.5
Less: Respendable Revenues 15.4 22.9 22.3 22.3 28.2 28.2
Business Integration Services  15.9  15.5  7.5  7.5  18.3  16.4
Gross Expenditures  103.2  71.4  53.7  53.7  53.7  35.3
Less: Respendable Revenues 103.6 71.9 53.7 53.7 53.7 35.3
Consulting and Audit Canada Revolving Fund  (0.4)  (0.5)  -   -   -   - 
Gross Expenditures  51.4  58.2  55.7  55.7  57.7  57.8
Less: Respendable Revenues  -   -   -   -   -   - 
Translation and Interpretation to Parliament, Conference Interpretation, Terminology  51.4  58.2  55.7  55.7  57.7  57.8
Gross Expenditures  195.7  211.7  214.9  214.9  221.1  218.6
Less: Respendable Revenues 204.9 207.1 214.9 214.9 214.9 215.3
Translation Bureau Revolving Fund  (9.2)  4.6  -   -   6.2  3.3
Gross Expenditures  -   -   -   -   10.6  10.2
Less: Respendable Revenues  -   -   -   -   -   - 
Greening Government Operations Services  -   -   -   -   10.6  10.2
Total Quality Services  2,224.9  2,260.8  2,244.9  2,734.9  2,159.7  1,999.3
Sound Stewardship            
Gross Expenditures  58.8  53.3  43.7  44.1  76.3  70.4
Less: Respendable Revenues  1.7  2.0  1.9  1.9  3.3  3.3
Real Property Stewardship  57.1  51.3  41.8  42.2  73.0  67.1
Gross Expenditures  59.8  68.1  36.7  65.7  67.5  52.1
Less: Respendable Revenues  7.4  3.7  8.5  8.5  4.7  4.7
Supply Operations Stewardship  52.4  64.4  28.2  57.2  62.8  47.4
Gross Expenditures  14.5  15.0  13.9  14.1  18.8  15.0
Less: Respendable Revenues  3.2  0.8  0.6  0.6  1.1  1.1
IM/IT Stewardship  11.3  14.2  13.3  13.5  17.7  13.9
Gross Expenditures  130.5  146.0  143.6  144.0  150.6  146.1
Less: Respendable Revenues  14.2  18.0  13.4  13.5  19.5  19.5
Receiver General Stewardship  116.3  128.0  130.3  130.5  131.1  126.6
Gross Expenditures  35.2  39.7  30.4  30.7  44.7  43.4
Less: Respendable Revenues  6.9  7.8  3.8  3.8  6.7  6.7
Public Service Pay Stewardship  28.3  31.9  26.6  26.9  38.0  36.7
Gross Expenditures  68.1  75.9  55.7  56.9  99.0  97.5
Less: Respendable Revenues  48.9  52.6  37.9  37.9  74.2  74.2
Public Service Pension Stewardship  19.2  23.3  17.8  19.0  24.8  23.3
Gross Expenditures  10.2  20.3  17.5  17.5  22.1  21.5
Less: Respendable Revenues  0.2  -   -   -   -   - 
Government Information Stewardship  10.0  20.3  17.5  17.5  22.1  21.5
Gross Expenditures  44.3  40.7  34.4  34.4  45.6  45.6
Less: Respendable Revenues  38.2  34.6  29.9  30.0  38.6  38.6
Business Integration Performance Management  6.1  6.1  4.5  4.4  7.0  7.0
Gross Expenditures  2.5  2.4  2.4  2.4  2.4  2.4
Less: Respendable Revenues  -   -   -   -   -   - 
Translation Stewardship  2.5  2.4  2.4  2.4  2.4  2.4
Gross Expenditures  -   6.2  11.1  10.5  5.0  4.8
Less: Respendable Revenues  -   5.4  4.7  4.8  2.0  2.0
Greening Government Operations Stewardship  -   0.7  6.4  5.7  3.0  2.7
Total Sound Stewardship  303.2  342.6  288.8  319.3  381.9  348.6
Gross Expenditures  4,850.2  5,031.2  4,622.3  5,142.9  5,227.5  5,225.7
Less: Respendable Revenues  2,322.1  2,427.9  2,088.6  2,088.7  2,685.9  2,877.7
DEPARTMENT TOTAL  2,528.1  2,603.4  2,533.7  3,054.2  2,541.7  2,347.9
Less: Non-Respendable revenues  67.4  63.8  20.9  20.9  1,417.3  1,417.3
Plus: Cost of services received without charge  53.5  60.2  38.3  38.3  53.8  53.8
NET COST OF DEPARTMENT  2,514.2  2,599.8  2,551.1  3,071.6  1,178.2  984.4
FULL-TIME EQUIVALENTS (FTEs)  12,483  12,338  12,718  11,870  12,581  12,764
Note 1: Totals may not add up due to rounding.

Table 2: Voted and Statutory Items

(in millions of dollars)


Vote or Statutory Item   2007-2008
Vote or Statutory Wording Total Main Estimates Total Planned Spending (Note1) Total Authorities (Note2) Actual
1 Gross Expenditures
 2,119.1
 2,349.2
 2,084.7
 1,937.9
5 Capital expenditures
 340.2
 630.6
 343.8
 304.8
(S) Minister of Public Works and Government Services - Salary and motor car allowance
 0.1
 0.1
 0.1
 0.1
(S) Contributions to employee benefit plans
 82.3
 82.3
 110.3
 110.3
(S) Real Property Services Revolving Fund
 - 
 - 
 - 
 (0.5)
(S) Real Property Disposition Revolving Fund
 (8.0)
 (8.0)
 (8.0)
 (8.7)
(S) Optional Services Revolving Fund
 - 
 - 
 - 
 (3.3)
(S) Telecommunications and Services Revolving Fund
 - 
 - 
 - 
 (0.7)
(S) Consulting and Audit Canada Revolving Fund
 - 
 - 
 - 
 - 
(S) Translation Bureau Revolving Fund
 - 
 - 
 6.2
 3.3
(S) Defence Production Revolving Fund
 - 
 - 
 - 
 - 
(S) Payment in lieu of taxes to municipalities and other taxing authorities
 - 
 - 
 1.6
 1.6
(S) Refunds of amounts credited to revenue in previous years
 - 
 - 
 2.7
 2.7
(S) Spending of proceeds from the disposal of surplus Crown assets  -   -   0.5  0.4
DEPARTMENT TOTAL  2,533.7  3,054.2  2,541.8  2,347.9
(S) = Statutory

Note 1: Total Planned Spending is the amount included in the Department's 2007-2008 Report on Plans and Priorities and indicates amounts planned at the beginning of the year.
Note 2: Total Authorities include the 2007-2008 Main Estimates plus Supplementary Estimates, transfers from Treasury Board Votes ( 5 - Government Contingencies: 10 - Government-Wide Initiatives: 15 - Compensation Adjustments: 22 - Operating Budget Carry Forward: 23 - Paylist requirements)
Note 3: Totals may not add up due to rounding.


Table 3: Details on Transfer Payment Programs (TPPs)

(in millions of dollars)


Details on Transfer Payment Programs       2007-2008
Actual 2005-2006 Actual 2006-2007 Planned Spending Total Authorities Actual
GOVERNMENT SERVICES
Federal Accommodation and Holdings
GRANTS
Municipalities and Other Taxing Authorities (Note 1) 1.16 (0.27) - 1.60 1.60
  1.16 (0.27) - 1.60 1.60
CONTRIBUTIONS
Argentia Management Authority (Note 2)
4.00
1.25
-
-
-
Divestiture of the Trois-Rivières harbourfront park (Note 2)
5.07
-
-
-
-
Divestiture of the 3 Dams (Laniel, Kipawa and Des Quinze)
-
44.12
-
-
-
Canadian Standards Association
-
0.01
-
-
-
 
9.07
45.38
-
-
-
TOTAL FEDERAL ACCOMMODATION AND HOLDINGS 10.23 45.11 - 1.60 1.60
Total Transfer Payments 10.23 45.11 - 1.60 1.60
Note 1: Funding for Payments to Municipalities and Other Taxing Authorities was devolved to the applicable custodial departments. The figures reported represent payments not recovered by year-end from custodial clients.
Note 2: The 2005-2006 Actual amount was adjusted to reflect the amount published in the 2005-2006 Public Accounts of Canada.
Note 3: Totals may not add up due to rounding.

On-line Information

Further information on the following tables 4 to 16, can be found at:
http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp
.

Table 4 – Loans, Investments, and Advances (Non-budgetary)

Table 5 – Sources of Respendable and Non-Respendable Revenue

Table 6 – Revolving Funds

Table 7 – User Fees/External Fees

  • Table 7–A: User Fees Act
  • Table 7–B: Policy on Service Standards for External Fees

Table 8 – Details on Project Spending

Table 9 – Status Report on Major Crown Projects

We are undertaking three Major Crown Projects to ensure quality services for Canadians and sound stewardship of public assets. Supplementary information can be found at: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp. However, a short description follows for:

A: Parliamentary Precinct Project

B: Pension Modernization Project

C: Shared Travel Services Initiative

A. Parliamentary Precinct Project

i. Long-Term Vision and Plan

Maintaining the Parliamentary Precinct for future generations is a vital service to Canadians. In order to fulfill this responsibility and further our goals of providing quality services and sound stewardship, we worked with the Senate, the House of Commons and the Library of Parliament to revise the Long-Term Vision and Plan (LTVP) for the Parliamentary Precinct. The revised LTVP is comprised of five-year program cycles that are more responsive to changing market and building conditions. The plan was approved by Cabinet in June 2007 and established a comprehensive approach to rehabilitate the heritage buildings, provide additional parliamentary accommodations and create a secure and welcoming environment for parliamentarians, staff, visitors and tourists.

ii. Parliamentary Precinct Project - West Block Renovation Program

The critical first step in the LTVP strategic direction is the full rehabilitation of the West Block. The West Block Renovation Program will transform the West Block and restore the elegance of this significant heritage building. It will pave the way for the Parliamentary Precinct to be used well into the future.

iii. Parliamentary Precinct Project - Wellington Building Renovation Project

The Wellington Building, located at 180 Wellington Street, Ottawa is a recognized federal heritage building and key Parliament Hill asset. Renovations of the building are required for health and safety reasons and involve extensive exterior and interior work. The building and life safety systems are more than 40 years old and have long surpassed their life expectancy. Renovations will include: removing asbestos; upgrading obsolete building systems; meeting new seismic and environmental standards; reinforcing the structure, restoring the stonework and renovating the interior space. The renovated Wellington Building will provide interim accommodations for parliamentarians, as well as committee rooms.

B. Pension Modernization Project

The Government of Canada Pension Modernization Project (GCPMP) is a major component of PWGSC's Transformation of Pension Administration agenda. The purpose of this project is to renew PWGSC's pension administration systems and services and transform its business processes. This will allow PWGSC to provide industry-standard pension administration services to employees, employers and pensioners. The GCPMP began its implementation phase following receipt of Effective Project Approval from Treasury Board in June 2007. The project team is currently completing the design for the first release of the new pension system in the fall of 2008. Preparations for the replacement of the current systems used for administering pension accounts for active members will be fully implemented in July 2010. The GCPMP will also replace the current systems used for administering pension accounts for retired members. The project is on time, under budget and the implementation of all new system releases and business processes is expected to be completed in early 2012.

C. Shared Travel Services Initiative

Our implementation of the Shared Travel Services Initiative (STSI) was a successful highlight of 2007-2008. This corporate travel management services initiative allows government employees to reduce their travel costs through bulk buying and tools such as on-line booking. Such investments in technology are critical to minimize costs of doing government business and return value to Canadian taxpayers. STSI offers fully functional, comprehensive and seamlessly integrated travel services to employees travelling on government business, and allows for better travel expense management. Travel services include the following: full-service travel call centre; on-line pre-trip approvals; on-line reservation service; travel expense claim service; business intelligence service; employee portal; employee traveler service network; and travel credit card.

Table 10 – Foundations (Conditional Grants)

Table 11 – Horizontal Initiatives  

PWGSC is carrying out two horizontal initiatives of great importance to Canadians: the Sydney Tar Ponds Remediation Project and the Government of Canada Marketplace. A short description of these initiatives follows, and supplementary information can be found at http://www.tbs-sct.gc.ca/rma/eppi-ibdrp/hrdb-rhbd/profil_e.asp.

The first initiative addresses the cleaning up the Sydney Tar Ponds and Coke Ovens through the remediation of federally and provincially owned lands that were contaminated as a result of a century of manufacturing steel. The sites are located in the centre of Sydney, Nova Scotia and are considered to be a stain on the area’s world-renowned reputation as a natural masterpiece. The project is in support of the federal government’s sustainable development initiative, recognizing the environmental, social and economic dimensions of the Sydney area. The project will have long-term benefits for all Canadians. The website for the provincial agency delivering the project (the Sydney Tar Pond Agency) is http://www.tarpondscleanup.ca. The website for the Canadian Environmental Assessment Agency is http://www.ceaa-acee.gc.ca/050/viewer_e.cfm?cear_id=8989#Documents.

Our second horizontal initiative, the Government of Canada Marketplace (GoCM), is an electronic catalogue that enables departments and agencies to search for goods and services available through PWGSC standing offers and supply arrangements and to generate order forms for the selected goods and services. E-tools, such as the GoCM, support the Government of Canada Procurement Renewal by automating and simplifying purchasing processes, facilitating standardized reporting on purchasing activities, and maintaining high levels of transparency and accountability. For more information on the GoCM see http://www.tpsgc-pwgsc.gc.ca/app-acq/cae-esc/mdgc-gocm-eng.html.

Table 12 – Sustainable Development Strategy

PWGSC is ensuring a better future for Canadians through greening initiatives. Due to our large and varied portfolio, we make a significant contribution to the development of and support for a more sustainable and healthy environment, while pursuing cost-saving opportunities. By improving resource efficiency, reducing waste, and cutting energy and emissions, we also produce cost savings for taxpayers. Through the commitments in our Sustainable Development Strategy (SDS), PWGSC leverages our expertise and experience to help make the Government of Canada's operations more environmentally, socially and economically sustainable. Specifically, PWGSC phased out 20 of the 47 chlorofluorocarbon (CFC)-containing heating, ventilation, and air-conditioning units. We have also implemented multi-material recycling in 284 of 292 (97%) of Crown-owned facilities, where the infrastructure exists and where recycling is economically feasible. Three new office construction projects are registered with the Canadian Green Building Council and have or are awaiting their LEED® Gold certification: the Greenstone Building in Yellowknife, the Normand Maurice Building in Montréal and the Jean Canfield Building in Charlottetown. More information on SDS 2007 is available at: http://www.tpsgc-pwgsc.gc.ca/sd-env/sds2007/strategy/sdd-sds2007-tc-e.html and http://www.pwgsc.gc.ca/sd-env/text/performance-report-e.html.

Table 13 – Response to Parliamentary Committees and External Audits

Table 14 – Internal Audits and Evaluations

Table 15 – Travel Policies

Table 16 - Financial Statements of Departments and Agencies (including Agents of Parliament and Revolving Funds Financial Statements)

STATEMENT OF MANAGEMENT RESPONSIBILITY

Responsibility for the integrity and objectivity of the accompanying consolidated financial statements for the year ended March 31, 2008 and all information contained in these statements rests with Public Works and Government Services Canada (PWGSC) management. These consolidated 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 consolidated financial statements. Some of the information in the consolidated 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 PWGSC financial transactions. Financial information submitted to the Public Accounts of Canada and included in PWGSC's Departmental Performance Report is consistent with these consolidated financial statements.

Management is supported by the Department's Audit and Evaluation Committee, which ensures that the Deputy Minister of Public Works and Government Services Canada has independent and objective advice, guidance, and assurance on the adequacy of the department's risk management, control, and governance processes. The Committee reinforces the independence of the internal audit and evaluation functions. The Committee's oversight responsibilities extend to other core areas of departmental control and accountability including values and ethics, risk management and management control framework.

Management maintains a system of financial management and internal control 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 consolidated 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 PWGSC.

The consolidated financial statements of PWGSC have not been audited.

François Guimont, Deputy Minister
Public Works and Government Services Canada
Gatineau, Canada

September 9, 2008

Mike Hawkes, Chief Financial Officer
Public Works and Government Services Canada
Gatineau, Canada

September 9, 2008

 

Consolidated Statement of Operations (Unaudited)

For the year ended March 31

(in thousands of dollars)


 
2008
2007

Expenses (Note 4)

  Restated
(Note 16)
Real Property
3,131,446
3,175,980
Information Technology
624,938
530,960
Acquisitions
372,152
377,654
Receiver General and Public Service Compensation
242,029
273,866
Translation Bureau
204,955
212,453
Audit Services Canada
74,810
58,739
Business Integration
38,715
39,692
Consulting, Information and Shared Services
37,709
68,314
Greening Government Operations
4,758
2,047
Total expenses
4,731,512
4,739,705

Revenues (Note 5)

   
Real Property
1,938,733
1,417,344
Information Technology
294,972
232,875
Acquisitions
193,826
166,837
Translation Bureau
143,173
132,456
Receiver General and Public Service Compensation
104,287
86,101
Audit Services Canada
24,611
60,054
Business Integration
22,865
18,882
Consulting, Information and Shared Services
5,290
9,390
Greening Government Operations
1,315
712
Total revenues 2,729,072 2,124,651
Net cost of operations 2,002,440 2,615,054
 
 
The accompanying notes form an integral part of these consolidated financial statements.

 

Consolidated Statement of Financial Position (Unaudited)

At March 31

(in thousands of dollars)


 
2008
2007

Assets

  Restated
(Note 16)
Financial assets
Accounts receivable and advances (Note 6)
434,111
407,655
Inventory held for resale
5,357
5,304
Seized Property Working Capital Account
16,520
17,461
 
455,988
430,420
Non-financial assets
Prepaid expenses
6,502
7,537
Tangible capital assets (Note 7)
4,567,966
4,356,929
 
4,574,468
4,364,466
 
Total assets
5,030,456
4,794,886

Liabilities and Equity of Canada

   
Liabilities
Accounts payable and accrued liabilities (Note 8)
516,801
615,804
Other liabilities (Note 9)
77,019
80,337
Lease obligation for tangible capital assets (Note 10)
2,497,179
1,258,966
Vacation pay and compensatory leave
52,029
46,420
Employee severance benefits (Note 11)
184,213
185,433
Contingent liabilities (Note 12)
319,023
324,155
Lease inducements
27,047
27,391
 
3,673,311
2,538,506
Equity of Canada (Note 15)
1,357,145
2,256,380
 
Total liabilities and equity of Canada
5,030,456
4,794,886
 
Contingent liabilities (disclosed, not accrued) (Note 12)
Contractual obligations (Note 13)
 
The accompanying notes form an integral part of these consolidated financial statements.

 

Consolidated Statement of Equity of Canada (Unaudited)

For the year ended March 31

(in thousands of dollars)


 
2008
2007
    Restated
(Note 16)
Equity of Canada, beginning of year - restated
2,256,380
2,202,701
Net cost of operations
(2,002,440)
(2,649,829)
Change in accounting policy (Note 16 a)
-
35,306
Restatement of tangible capital assets (Note 16 b)
-
(531)
Net cost of operations
(2,002,440)
(2,615,054)
Current year appropriations used (Note 3)
2,347,228
2,605,650
Revenue not available for spending (Note 3)
(63,504)
(49,162)
Proceeds on sale-leaseback transactions for capital leases (Note 7)
(1,353,316)
-
Transfer of activities
-
3,132
Change in net position in the Consolidated Revenue Fund (Note 3)
119,030
48,825
Services received without charge from other government departments (Note 14)
53,767
60,288
Equity of Canada, end of year (Note 15)
1,357,145
2,256,380
 
The accompanying notes form an integral part of these consolidated financial statements.

Consolidated Statement of Cash Flow (Unaudited)

For the year ended March 31

(in thousands of dollars)


 
2008
2007

Operating activities

Restated
(Note 16)
Net cost of operations
2,002,440
2,615,054
Non cash items:
Amortization of tangible capital assets (Note 7)
(382,103)
(371,520)
Gain or Loss on disposals / Adjustments of tangible capital assets
(154)
(73,218)
Services received without charge from other government departments (Note 14)
(53,767)
(60,288)
Transfer of activities
-
(3,132)
Economic gain on Sale-leaseback
163,662
-
Variations in Consolidated Statement of Financial Position:
Increase in financial assets
25,568
82,251
Increase (decrease) in prepaid expenses
(1,035)
1,301
(Increase) decrease in liabilities other than lease obligation for tangible capital assets
103,408
(32,860)
Cash used by operating activities
1,858,019
2,157,588

Capital investment activities

Acquisitions of tangible capital assets (Note 7)
430,406
361,665
Payments on lease obligation for tangible capital assets
114,496
86,201
Proceeds on disposal of tangible capital assets
(167)
(141)
Cash used by capital investment activities
544,735
447,725
 

Financing activities

Proceeds on sale-leaseback transactions for capital leases (Note 7)
(1,353,316)
-
Net cash provided by Government of Canada
(1,049,438)
(2,605,313)
Cash used by financing activities
(2,402,754)
(2,605,313)
 
The accompanying notes form an integral part of these consolidated financial statements.

 

Notes to the Consolidated Financial Statements (Unaudited)

For the year ended March 31

1. Authority and objectives

The department of Public Works and Government Services Canada (PWGSC) was established effective June 20, 1996, under the Department of Public Works and Government Services Act. This legislation specifies that PWGSC shall provide common, central and shared services to other government departments and agencies, thereby enabling them to provide programs and services to Canadians. These services are grouped into the following key areas:

  • Real Property provides accommodation to federal departments and agencies. It acquires, manages, operates, maintains, builds, repairs and disposes of federal real property in addition to providing professional advice on real property matters to other federal real property custodians;
  • Acquisitions offers client departments and agencies a broad base of procurement solutions, such as specialized contracts, standing offers, supply arrangements and electronic marketplaces as well as specialized services such as the management of seized property;
  • Information Technology provides a wide range of informatics and telecommunications services to federal departments and agencies, such as providing brokering, developing and/or managing voice and data networks, data centres, distributed computing, applications, Secure Channel and information management;
  • Receiver General and Public Service Compensation manages the operations of the federal treasury, including payment issue and revenue collection for all government departments, provides payroll, benefits and pension plan administration services for the Public Service of Canada and prepares the Public Accounts of Canada;
  • Consulting, Information and Shared Services provides services aimed at enhancing activities related to communication programs to the public, and provides government consulting services to public sector management. They also deliver corporate administrative services for small departments and agencies, as well as industrial security services for the safeguarding of controlled goods and classified government information and assets;
  • Greening Government Operations leads government departments in the greening of their operations by establishing government-wide priorities, accountabilities, and sets targets, timelines and reporting requirements;
  • Business Integration delivers directly, or facilitates the delivery of, integrated services to customer departments including: management and delivery of the personnel and facility security screening program and the controlled goods program; integration of the delivery of PWGSC's wide range of services when customer departments require an integrated solution for a complex project; management and delivery of marketing and multimedia services; and, identification and coordination of shared services opportunities;
  • Audit Services Canada provides auditing services to federal departments and agencies as well as to other governments and international organizations;
  • The Translation Bureau helps the government serve Canadians and communicate with them in the official language of their choice by standardizing terminology within the public service and providing translation, revision, interpretation, terminology and technolinguistic services for Parliament, the judiciary, and federal entities.

2. Summary of significant accounting policies

The consolidated 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

PWGSC is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to PWGSC do not parallel financial reporting according to Canadian generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the Consolidated Statement of Operations and the Consolidated Statement of Financial Position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high-level reconciliation between the bases of reporting.

(b) Consolidation

These consolidated financial statements include the accounts of seven revolving funds as listed below. Each revolving fund prepares a complete set of financial statements annually that are audited and published in the Public Accounts of Canada. The accounts of these revolving funds have been consolidated with those of PWGSC and inter-organizational balances and transactions have been eliminated.

The PWGSC revolving funds are as follows:

  • Consulting and Audit Canada Revolving Fund
  • Defence Production Revolving Fund
  • Optional Services Revolving Fund
  • Real Property Disposition Revolving Fund
  • Real Property Services Revolving Fund
  • Telecommunications and Informatics Common Services Revolving Fund
  • Translation Bureau Revolving Fund

(c) Net cash provided by Government

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

(d) Change in net position in the Consolidated Revenue Fund

This 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 PWGSC. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.

(e) Revenues

  • Revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenue.
  • Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
  • Economic gains resulting from sale-leaseback transactions involving leased tangible capital assets are recognized immediately in the Consolidated Statement of Operations so that the net effect on operating results reflects the benefit to the department of having to repay less than it was loaned.

(f) Expenses

Expenses are recorded on the accrual basis of accounting:

  • Services provided without charge by other government departments for the employer's contribution to the health and dental insurance plans, worker's compensation and legal services are recorded as operating expenses at their estimated cost.
  • Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
  • Grants are recognized in the year in which the conditions of payment are met. In the case of grants which do not form part of an existing program, the expense is recognized when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives Parliamentary approval prior to the completion of the consolidated financial statements.
  • Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement.

(g) Employee future benefits

(i) Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada. The department's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require the department to make contributions for actuarial deficiencies of the Plan.

(ii) Severance benefits: Employees are entitled to severance benefits 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 receivable and advances

Accounts receivable and advances are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.

(i) Lease inducements

Lease inducements represent incentives received by PWGSC to enter into a lease. Lease inducements include incentives such as: free rent, cash received to be applied to rent, lump sum cash, leasehold improvements and moving costs paid by lessor. The lease inducements are accounted for as follows:

  • Rent free periods or periods of significantly reduced rent are allocated over the term of the lease on a straight-line basis;
  • Cash payments from the lessor to the lessee are accounted for as reductions in rental expense over the term of the lease;
  • Leasehold improvements are amortized over the remaining life of the lease or the useful life of the improvement, whichever is shorter;
  • Moving costs absorbed by the lessor are amortized over the term of the lease.

(j) Contingent liabilities

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 consolidated financial statements.

(k) Environmental liabilities

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 the department 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 consolidated financial statements.

(l) Inventories

Inventories held for resale are physical items that will be sold in the future in the ordinary course of business to parties outside of the government reporting entity.

(m) Tangible capital assets

Betterments and leasehold improvements carried out on buildings and works and infrastructure having an initial cost of $25,000 or more are recorded at their acquisition cost. All other tangible capital assets having an initial cost of $10,000 or more are recorded at their acquisition cost.

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


Asset class Amortization period
Buildings 25 years
Works and infrastructure 40 years
Machinery and equipment 3 to 20 years
Informatics hardware and software 3 to 5 years
Vehicles 7 to 8 years
Leasehold improvements Lesser of the remaining term of the lease or useful life of the improvement
 
Assets under construction Once in service, in accordance with asset class
Leased tangible capital assets In accordance with asset class if ownership is likely to transfer to PWGSC; otherwise, over the lease term

(n) Measurement uncertainty

The preparation of these consolidated 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 consolidated financial statements. At the time of preparation of these consolidated statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are contingent liabilities, environmental liabilities, the liability for employee severance benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the consolidated financial statements in the year they become known.

(o) Seized Property Working Capital Account

This account was established by section 12 of the Seized Property Management Act. Expenses incurred, and advances made, to maintain and manage any seized or restrained property and other properties subject to a management order or forfeited to Her Majesty, are charged to this account. This account is credited when expenses and advances to third parties are repaid or recovered and when revenues from these properties or proceeds of their disposal are received and credited with seized cash upon forfeiture.

The total amount authorized to be outstanding in the Seized Property Working Capital Account at any time is $50,000,000.

Any shortfall between the proceeds from the disposition of any property forfeited to Her Majesty and the amounts that were charged to this account and that are still outstanding, is charged to a Seized Property Proceeds Account and credited to this account.

(p) Payments in lieu of taxes to municipalities and other taxing authorities

PWGSC administers the Payments in Lieu of Taxes Program on behalf of all federal departments and agencies under the authority of the Payments in Lieu of Taxes Act.

In accordance with the Constitution Act, the Government of Canada is exempt from property taxes. The Government of Canada voluntarily pays an appropriate share of the costs of local government to municipalities and other taxation authorities having jurisdiction to levy and collect real property tax in locations where federal lands and buildings are situated.

The payments are made to the taxing authorities by PWGSC and are then recovered from each participating federal department.

3. Parliamentary appropriations

PWGSC receives most of its funding through annual Parliamentary appropriations. Items recognized in the Consolidated Statement of Operations and the Consolidated Statement of Financial Position in one year may be funded through Parliamentary appropriations in prior, current or future years.

Accordingly, PWGSC 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
Restated
(Note 16)
Net cost of operations
2,002,440
2,615,054
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (less):
Amortization of tangible capital assets (Note 7)
(382,103)
(371,520)
Reclassification of assets under construction
(62,990)
(73,786)
Services received without charge from other government departments (Note 14)
(53,767)
(60,288)
Justice Canada legal services
-
(5,286)
Decrease (increase) in lease inducements
(2,567)
(2,306)
Revenue (expenses) from Seized Property Proceeds Account (Note 15)
794
(4,375)
Vacation pay and compensatory leave
5,609
(3,671)
Employee severance benefits
(1,220)
4,198
Revenue not available for spending
63,504
49,162
Refunds / Adjustments to previous years' expenses
19,314
7,998
Decrease (increase) in contingent liabilities
5,132
(4,106)
Economic gain on Sale-leaseback (Note 7)
163,662
-
Other
9,940
(4,971)
 
(234,692)
(468,951)
Adjustments for items not affecting net cost of operations but affecting appropriations:
Add:
Acquisitions of tangible capital assets (Note 7)
430,406
361,665
Acquisitions of assets under construction for capital leases (Note 7)
31,113
-
Payments on lease obligation for tangible capital assets
114,496
86,201
Other
3,465
11,681
579,480
459,547
Current year appropriations used
2,347,228
2,605,650
 
(b) Appropriations provided and used
(in thousands of dollars)
2008
2007
Vote 1 - Operating expenditures
2,084,705
2,365,357
Vote 5 - Capital expenditures
343,836
297,954
Vote 10 - Grants and contributions
-
45,402
Statutory items:
Revolving Funds
382,798
378,543
Other
115,274
110,090
Appropriations provided
2,926,613
3,197,346
Less:
Appropriations available for future years
(384,032)
(381,751)
Lapsed appropriations
(194,411)
(212,152)
Current year budgetary appropriations used
2,348,170
2,603,443
Seized Property Management Act
(942)
2,207
Current year appropriations used
2,347,228
2,605,650
 
(c) Reconciliation of net cash provided by Government to current year appropriations used
(in thousands of dollars) 2008 2007
Restated
(Note 16)
Net cash provided by Government
1,049,438
2,605,313
Revenue not available for spending
63,504
49,162
Proceeds on sale-leaseback transactions for capital leases (Note 7)
1,353,316
-
Change in net position in the Consolidated Revenue Fund
Change in financial assets
(25,568)
(82,251)
Change in prepaid expenses
1,035
(1,301)
Change in accounts payable and accrued liabilities
(99,003)
20,397
Change in other liabilities
(3,318)
7,156
Refunds / Adjustments to previous years' expenses
19,314
7,998
Other adjustments
(11,490)
(824)
(119,030)
(48,825)
Current year appropriations used
2,347,228
2,605,650

 

4. Expenses

The following table presents details of expenses by category:


(in thousands of dollars) 2008 2007
Restated
(Note 16)
Payments in lieu of taxes to municipalities and other taxing authorities 458,550 468,132
Recovery of Payments in lieu of taxes to municipalities and other taxing authorities (458,600) (468,073)
Other grants and contributions
-
45,385
 
Total grants and contributions (50) 45,444
Cost of goods sold for inventories 1,131,201 1,080,155
Salaries and employee benefits 1,100,005 1,098,379
Rentals 742,111 695,700
Professional and special services 450,006 435,380
Repair and maintenance 420,259 413,151
Amortization of tangible capital assets 382,103 371,520
Interest on capital lease payments and other 124,952 99,665
Utilities, material and supplies 92,015 96,942
Transportation and communications 77,981 78,522
Reclassification of assets under construction 62,990 73,786
Machinery and equipment 50,563 31,193
Other expenses 48,282 173,157
Expenses from Seized Property Proceeds Account (Note 15) 28,754 26,382
Information 15,543 15,020
Legal services 4,797 5,309
Total operating expenses 4,731,562 4,694,261
Total expenses 4,731,512 4,739,705

5. Revenues

The following table presents details of revenues by category:


(in thousands of dollars) 2008 2007
Services of a non-regulatory nature 1,073,788 766,470
Sales of goods and information products 885,423 818,287
Economic gain on Sale-leaseback (Note 7) 163,662
-
Rentals 423,666 390,111
Services of a regulatory nature 106,742 80,647
Other revenues 46,101 46,989
Revenue from Seized Property Proceeds Account (Note 15) 29,548 22,007
Gain on disposal of capital assets 142 140
Total revenues 2,729,072 2,124,651

Services of a non-regulatory nature are mainly comprised of special accommodation and real property services, real property project management services, information technology and telecommunication services, translation services, professional services for consulting and audit services as well as traffic management and central freight.

Services of a regulatory nature are mainly comprised of cost recovery for services provided to administer the Public Service Superannuation Act (PSSA) and for payment services for Receiver General functions.

6. Accounts receivable and advances

The following table presents details of accounts receivable and advances:


(in thousands of dollars) 2008 2007
Accounts receivable from other government departments and agencies 352,848 324,506
Accounts receivable from external parties 84,557 83,184
Other advances 617 617
  438,022 408,307
Less: Allowance for doubtful accounts on external receivables (3,911) (652)
Total 434,111 407,655

7. Tangible capital assets


  Cost
(in thousands of dollars) Opening balance
Restated
(Note 16)
Acquisitions Disposals, write-offs and other adjustments Closing balance
Tangible capital assets
Land 264,731
-
(67,113) 197,618
Buildings 3,440,162
-
(318,191) 3,121,971
Works and infrastructure 860,921
-
631 861,552
Machinery and equipment 5,956 117 (10) 6,063
Informatics hardware and software 190,247 4,549 2,222 197,018
Vehicles 9,605 999 (769) 9,835
Leasehold improvements 342,650 1,425 62,036 406,111
Assets under construction 956,235 423,316 (276,553) 1,102,998
  6,070,507 430,406 (597,747) 5,903,166
Leased tangible capital assets
Land 44,942
-
-
44,942
Buildings 1,630,902 165,700 261,150 2,057,752
Informatics equipment 13,093
-
(8,407) 4,686
Assets under construction
-
31,113 34,003 65,116
  1,688,937 196,813 286,746 2,172,496
Total 7,759,444 627,219 (311,001) 8,075,662


  Accumulated amortization Net Book Value
(in thousands of dollars) Opening balance Restated (Note 16) Amortization Disposals, write-offs and other adjustments Closing balance 2008 2007
Restated
(Note 16)
Tangible capital assets
Land
-
-
-
-
197,618 264,731
Buildings 2,126,513 160,982 (206,589) 2,080,906 1,041,065 1,313,649
Works and infrastructure 334,414 23,574 (17) 357,971 503,581 526,507
Machinery and equipment 3,515 406 (10) 3,911 2,152 2,441
Informatics hardware and software 140,719 21,087 909 162,715 34,303 49,528
Vehicles 4,991 926 (638) 5,279 4,556 4,614
Leasehold improvements 162,686 44,013 929 207,628 198,483 179,964
Assets under construction
-
-
-
-
1,102,998 956,235
  2,772,838 250,988 (205,416) 2,818,410 3,084,756 3,297,669
Leased tangible capital assets
Land
-
-
-
-
44,942 44,942
Buildings 624,413 129,036 (65,731) 687,718 1,370,034 1,006,489
Informatics equipment 5,264 2,079 (5,775) 1,568 3,118 7,829
Assets under construction
-
-
-
-
65,116
-
  629,677 131,115 (71,506) 689,286 1,483,210 1,059,260
Total 3,402,515 382,103 (276,922) 3,507,696 4,567,966 4,356,929

Amortization expense for the year ended March 31, 2008 is $382,102,872 ($371,519,675 in 2007).

On October 31, 2007, PWGSC entered into a sale-leaseback agreement for seven buildings resulting in gross proceeds of $1,353,315,920. The leases provide for the lessor to make certain capital improvements to the properties to the benefit of the lessee. These improvements will be recognized as lease inducements as they occur, resulting in a total sale price of $1,411,087,830. As a result of the transaction:

The buildings were treated as capital leases and reflected in the lease obligation for tangible capital assets (Note 10). The economic gain of $163,662,087 resulting from the transaction is presented in Revenues (Note 5).

8. Accounts payable and accrued liabilities

The following table presents details of accounts payable and accrued liabilities:


(in thousands of dollars) 2008 2007
Accounts payable and accrued liabilities 403,795 505,752
Accrued salaries and wages 41,450 38,033
Contractors' holdbacks and other 33,542 35,515
Accounts payable to other government departments and agencies 38,014 36,504
Total 516,801 615,804

9. Other liabilities

The following table presents details of other liabilities:


(in thousands of dollars) 2007
Receipts and credits
Payments and charges
2008
Seized property - cash 73,645 35,779 (40,235) 69,189
Deposits on disposals 262 10,068 (9,690) 640
Contractors' security deposits 5,400 6,507 (5,661) 6,246
Francophone summits 30
-
(11) 19
Credit card special project fund 1,000
-
(75) 925
Total 80,337 52,354 (55,672) 77,019

Seized property - cash

This account was established pursuant to the Seized Property Management Act, to record seized cash. These funds will be deposited to the Consolidated Revenue Fund and credited to the account until returned to the owner or forfeited.

Deposits on disposals

This account was established in accordance with the terms and conditions of the Real Property Disposition Revolving Fund to record receipts on future disposals of properties that are not closed at the end of the year.  

Contractors' security deposits

This account was established to record contractors' securities that are required for the satisfactory performance of work in accordance with the Government Contract Regulations.

Francophone summits

This account was established to record funding granted since 1994 by the Agence intergouvernementale de la Francophonie (Paris), which changed its name in 2006 to the Organisation internationale de la Francophonie, for projects involving the development of French and partner languages in order to express scientific and technical modernity.

Credit card - special project fund

This account was established to record funds received from American Express (AMEX) to improve the Travel Card Program.

10. Lease obligation for tangible capital assets

PWGSC has entered into agreements to rent buildings, land and information technology equipment under capital leases with a cost of $2,172,496,646 and accumulated amortization of $689,285,853 as at March 31, 2008 ($1,688,937,677 and $629,677,336 respectively as at March 31, 2007) (Note 7). The obligations for the upcoming years include the following:


(in thousands of dollars) 2008 2007
2008
-
201,698
2009 277,213 189,135
2010 273,295 184,252
2011 282,817 193,470
2012 254,524 165,142
2013 and thereafter 2,880,139 988,425
Total future minimum lease payments 3,967,988 1,922,122
Less: Imputed interest (weighted average implicit rate 6.942% (8.196% in 2007)) (1,470,809) (663,156)
Present value of obligation under leased tangible capital assets 2,497,179 1,258,966

On October 31, 2007 PWGSC entered into an agreement for the sale-leaseback of seven buildings for gross proceeds of $1,353,315,920. The buildings were treated as capital leases and are reflected in PWGSC's long-term capital lease obligations for a present value amount of $1,183,400,000 as at March 31, 2008. This amount is included in the present value of obligation under leased tangible capital asets of $2,497,179,000.

11. Employee benefits

(a) Pension benefits

PWGSC employees participate in the Public Service Pension 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/Quebec Pension Plan benefits and they are indexed to inflation.

Both the employees and the department contribute to the cost of the Plan. The 2007-2008 expense amounts to $108,548,526 ($109,043,987,in 2006-2007) which represents approximately 2.1 times (2.2 times in 2007) the contributions by employees.

PWGSC's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the consolidated financial statements of the Government of Canada, as the Plan's sponsor.

(b) Severance benefits

The department 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 and revolving funds. Information about the severance benefits, measured as at March 31 is as follows:


(in thousands of dollars) 2008 2007
Restated
(Note 16)
Accrued benefit obligation, beginning of year 185,433 181,235
Transfer of activities
-
(942)
Expense for the year 20,421 25,509
Benefits paid during the year (21,641) (20,369)
Accrued benefit obligation, end of year 184,213 185,433

12. Contingent liabilities

(a) Environmental liabilities - Contaminated sites

Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where PWGSC is obligated or likely to be obligated to incur such costs. The department has identified approximately  215 sites (209 in 2007) where such action is possible and for which a liability of $310,523,035 ($320,154,947 in 2007) has been recorded. Of this amount, $271,425,194,($280,817,000 in 2007) is related to environmental remediation activity for the Sydney Tar Ponds and Coke Ovens remediation project. PWGSC has estimated additional clean-up costs of $134,713,156 ($141,215,487 in 2007) that are not accrued, as these are not considered likely to be incurred at this time. PWGSC'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 PWGSC in the year in which they become known.

(b) Claims and litigation

Claims have been made against PWGSC in the normal course of operations. Legal proceedings for claims totalling approximately $632,600,683 ($342,989,424 in 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 consolidated financial statements. An amount of $8,500,000 ($4,000,000 in 2007) has been accrued in these statements.

13. Contractual obligations

The nature of PWGSC’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 contractual obligations ($10 million or more) that can be reasonably estimated are summarized as follows:


(in thousands of dollars) 2009 2010 2011 2012 2013 and thereafter Total
Capital assets 18,000 6,000 6,000
-
-
30,000
Operating leases 136,000 138,000 125,000 101,000 220,000 720,000
Purchases 547,000 322,000 28,000 14,000 17,000 928,000
Total 701,000 466,000 159,000 115,000 237,000 1,678,000

14. Related party transactions

PWGSC is related as a result of common ownership to all Government of Canada departments, agencies and Crown corporations. PWGSC enters into transactions with these entities in the normal course of business and on normal trade terms. As a service provider, PWGSC provided accommodation without charge to other government departments throughout the year. In addition, during the year the department received services without charge from other departments. These services received without charge have been recognized in PWGSC's Consolidated Statement of Operations as follows:


(in thousands of dollars) 2008 2007
Employer's contribution to the health and dental insurance plans (excluding Revolving Funds) paid by Treasury Board 46,557 52,330
Legal services provided by Justice Canada 4,797 5,309
Workers' compensation coverage provided by Human Resources and Social Development Canada 2,413 2,649
Total 53,767 60,288

15. Equity of Canada

A portion of PWGSC's Equity is restricted and earmarked for specific purpose. Transactions related to the Seized Property Proceeds Account are recorded in special categories of revenues, and payments and expenses are charged against such revenues.

The Seized Property Proceeds Account was established pursuant to section 13 of the Seized Property Management Act. The net proceeds received from the disposition of seized and forfeited properties to Her Majesty or fines imposed and also monies received from the government of foreign states pursuant to agreements for the purpose of the Act are to be earmarked for specified purposes. Under the Act, expenses to be charged against the revenues include: operating expenses incurred in carrying out the purpose of the Act, amounts paid as a result of claims and repayments of advances from the Minister of Finance, interest on drawdown from Seized Property Working Capital Account and distribution of the proceeds to other government departments and the Consolidated Revenue Fund.


(in thousands of dollars) 2008 2007
Restated
(Note 16)
Seized Property Proceeds Account - restricted    
Balance, beginning of year 28,470 32,845
Revenues 29,548 22,007
Expenses (28,754) (26,382)
  794 (4,375)
Balance, end of year 29,264 28,470
Unrestricted Equity of Canada, end of year 1,327,881 2,227,910
Total Equity of Canada, end of year 1,357,145 2,256,380

16. Restatement

(a) Change in accounting policy

The approach used in the evaluation of the severance benefits was changed in 2007-08 from a calculation based upon years of service and actual salary per employee, to an approach that uses an actuarial rate set by Treasury Board Secretariat. In addition, the termination benefits allowance for the Consulting and Audit Canada Revolving Fund was adjusted as the benefits ceased to be funded by Treasury Board.

(b) Restatement of Tangible capital assets

The Department has adjusted tangible capital assets to include assets identified as part of a divestiture strategy. These assets will remain under the Department's responsibility until they are fully divested to third parties.

Consequently, the comparative consolidated financial statements presented for the year ended March 31, 2007 have been restated. The effect of both changes is presented in the table below.


(in thousands of dollars) As previously stated Effect of the adjustment Revised amount
Consolidated Statement of Operations
Expenses
Real Property 3,188,860 (12,880) 3,175,980
Information Technology 539,184 (8,224) 530,960
Acquisitions 391,950 (14,296) 377,654
Receiver General and Public Service Compensation 282,235 (8,369) 273,866
Translation Bureau 203,561 8,892 212,453
Business Integration 39,970 (278) 39,692
Consulting, Information and Shared Services 68,520 (206) 68,314
Audit Services Canada 58,177 562 58,739
Greening Government Operations 2,023 24 2,047
Total expenses 4,774,480 (34,775) 4,739,705
Net cost of operations 2,649,829 (34,775) 2,615,054
 
Consolidated Statement of Financial Position
Assets
Tangible capital assets (Note 7) 4,344,749 12,180 4,356,929
Total Assets 4,782,706 12,180 4,794,886
Liabilities
Employee severance benefits (Note 11) 220,739 (35,306) 185,433
Equity of Canada 2,208,894 47,486 2,256,380
Total liabilities and equity of Canada 4,782,706 12,180 4,794,886

Consolidated Statement of Equity of Canada
Equity of Canada, beginning of year 2,189,990 12,711 2,202,701
Net cost of operations (2,649,829) 34,775 (2,615,054)
Equity of Canada, end of year 2,208,894 47,486 2,256,380

Consolidated Statement of Cash Flow
Net cost of operations 2,649,829 (34,775) 2,615,054
Amortization of tangible capital assets (370,989) (531) (371,520)
(Increase) decrease in liabilities other than lease obligation for tangible capital assets (68,166) 35,306 (32,860)

Note 3(a) Reconciliation of net cost of operations to current year appropriations used
Net cost of operations 2,649,829 (34,775) 2,615,054
Amortization of tangible capital assets (Note 7) (370,989) (531) (371,520)
Employee severance benefits (39,504) 35,306 (4,198)

Note 4 Expenses
Salaries and employee benefits 1,133,685 (35,306) 1,098,379
Amortization of tangible capital assets 370,989 531 371,520
Total expenses 4,774,480 (34,775) 4,739,705

Note 7 Tangible capital assets
Cost - Opening balance
Buildings 3,440,072 90 3,440,162
Works and infrastructure 839,841 21,080 860,921
Total Cost - Opening balance 7,738,274 21,170 7,759,444
Accumulated amortization - Opening balance
Buildings 2,126,433 80 2,126,513
Works and infrastructure 325,504 8,910 334,414
Total Accumulated amortization - Opening balance 3,393,525 8,990 3,402,515

Note 11 Employee benefits
(b) Severance benefits
Expense for the year 60,815 (35,306) 25,509
Accrued benefit obligation, end of year 220,739 (35,306) 185,433

Note 15 Equity of Canada
Unrestricted Equity of Canada, end of year 2,180,424 47,486 2,227,910
Total Equity of Canada, end of year 2,208,894 47,486 2,256,380

17. Comparative information

Comparative figures have been reclassified to conform to the current year's presentation.

* Information on these tables is available on-line at http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp