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SECTION III: Supplementary Information

CRTC Organization Chart

CRTC Organization chart: Reporting to the Chairperson is the Vice-Chairperson Telecommunications, the Vice-Chairperson Broadcasting, the Commissioners, the Executive Director, Broadcasting and Telecommunications, the Senior General Counsel, the Secretary General and the Director General, Strategic Communications & Parliamentary Affairs. Reporting to the Executive Director, Broadcasting and Telecommunications is the Associate Executive Director, Broadcasting, the Associate Executive Director, Telecommunications, the Associate Executive Director, Policy Development and Research and the Director General Streamlining and Decisions. Reporting to the Senior General Counsel is the General Counsel, Broadcasting and the General Counsel, Telecommunications. Reporting to the Secretary General is the Director, Human Resources, the Director, Finance & Administrataive Services, the Director, Information Management and the Director, Planning & Process. Reporting the Director General, Strategic Communications & Parliamentary Affairs is the Director, Client Services and the Director, Public Affairs.

Table 1: Comparison of Planned to Actual Spending


($ millions) 2004-2005 2005-2006 2006-2007
Actual Actual Main
Estimates
Planned
Spending
Total
Authorities
Actual
Regulation of Communications in the Public Interest 44.0 46.5 45.6 45.6 48.0 47.6
Less: Respendable Revenue (note 1 & 2) 37.6 38.6 39.8 39.8 39.9 39.9
Net Expenditures 6.4 7.9 5.8 5.8 8.1 7.7
Adjustments:
Supplementary Estimate:
   Operating Budget Carry Forward
      1.9    
Total Net Expenditures 6.4 7.9 5.8 7.7 8.1 7.7
Less: Non-Respendable revenue (note 2) 118.1 123.1 - 135.5 135.9 135.9
Plus: Cost of services received without charge (note 3) 15.5 15.5 - 15.9 15.2 15.2
Net cost (note 4) (96.2) (99.7) 5.8 (111.9) (112.6) (113)

 


Full-Time Equivalents (note 5) 401 396 - 422 - 409

Note 1 The CRTC has vote-netting authority. Vote-netting is a means of funding selected government programs or activities whereby Parliament authorizes a department or agency to apply revenues towards costs directly incurred for specific activities. The Part I broadcasting licence fees and the telecommunications fees are used to finance the Commission’s operating budget.

Note 2 For more information on CRTC revenues refer to the section entitled "Explanation of Revenue".

Note 3 The costs of services provided by other departments (Table 4) includes: the regulation of the broadcasting Spectrum by Industry Canada; the accommodation provided by Public Works and Government Services Canada; the employer’s share of employees’ insurance premium and expenditures paid by Treasury Board Secretariat.

Note 4 Brackets indicate that the revenue received exceeds the gross costs of program

Note 5 Full time equivalents (FTEs) reflect the human resources that the CRTC uses to deliver its program and services. The number is based on a calculation that considers full-time, part-time, term and casual employment. The CRTC is no longer required to control the number of FTEs it may use. Rather, CRTC manages a personnel budget within its operating expenditures and has the latitude to manage as needed. This data is included for information purposes only.

Table 2: Resources by Program Activity


($ millions) 2006–2007
Program Activity Budgetary Plus: Non-budgetary Total
Operating Total: Gross Budgetary Expenditures Less:
Respendable
Revenue
Total: Net Budgetary
Expenditures
Loans, Invest. & Advances
Regulation & supervision of the Canadian broadcasting industry            
Main Estimates 23.4 23.4 20.4 3.0 - 3.0
Planned Spending 23.4 23.4 20.4 3.0 - 3.0
Total Authorities 24.4 24.4 20.5 3.9 - 3.9
Actual Spending 23.7 23.7 20.5 3.2 - 3.2
Regulation & monitoring of the Canadian telecommunications industry            
Main Estimates 22.2 22.2 19.4 2.8 - 2.8
Planned Spending 22.2 22.2 19.4 2.8 - 2.8
Total Authorities 23.6 23.6 19.4 4.2 - 4.2
Actual Spending 23.9 23.9 19.4 4.5 - 4.5

Table 3: Voted and Statutory Items

This table provides information regarding that portion of the Commission’s budget that is funded through appropriations.


($ millions)   2006-2007
Vote or
Statutory Item
Canadian Radio-television and Telecommunications Commission Main 
Estimates
Planned 
Spending
Total 
Authorities
Actual
45 Program expenditures - 1.9 2.7 2.3
(S) Contributions to employee benefit plans 5.8 5.8 5.4 5.4
  Total 5.8 7.7 8.1 7.7

Table 4: Services Received Without Charge


($ millions)

2006–2007
Actual Spending
Accommodation provided by Public Works and Government Services Canada 2.7
Contributions covering employers’ share of employees’ insurance premiums and expenditures paid by TBS 2.5
Worker’s compensation coverage provided by Human Resources and Social Development Canada (actual amount is $43K) -
Regulation of Broadcasting Spectrum - Industry Canada 10.0
Total 2006–2007 Services received without charge 15.2

Table 5: Sources of Respendable and Non-Respendable Revenue


($ millions) Actual
2004-2005
Actual
2005-2006
2006-2007
Main
Estimates
Planned
Revenue
Total
Authorities
Actual
Respendable Revenue (note 1)            
Regulation of Communications in the Public Interest            
Broadcasting Licence Fees Part I 19.8 20.0 20.4 20.4 20.5 20.5
Telecommunications Fees 17.8 18.6 19.4 19.4 19.4 19.4
Total Respendable Revenue 37.6 38.6 39.8 39.8 39.9 39.9


Non-Respendable Revenue (note 2)            
Broadcasting Licence Fees            
Part I 6.0 5.1 - 6.5 6.5 6.5
Part II 107.2 112.2 - 121.8 121.9 121.9
Telecommunications Fees 4.9 5.5 - 7.2 7.2 7.2
Other Revenue: (note 3) - 0.3 - - 0.3 0.3
Total Non-Respendable Revenue 118.1 123.1 - 135.5 135.9 135.9


Total Revenue (note 4) 155.7 161.7 39.8 175.3 175.8 175.8

Note 1 The CRTC retains respendable revenue to fund its operating budget (i.e. vote-netted revenue).

Note 2 Non-respendable revenue for Part I broadcasting licence fees and CRTC telecommunications fees recover the costs incurred by other federal government departments for services (excluding Industry Canada spectrum management) rendered without charge to the CRTC as well as the statutory costs of employee benefit plans. Part II broadcasting fees are also considered to be non-respendable revenue.

Note 3 Other revenue is comprised of adjustment to prior years payables and miscellaneous revenue such as interest on outstanding fees.

Note 4 All revenues are credited to the Consolidated Revenue Fund.

Explanation of Revenue

The CRTC collects fees under the authority of the Broadcasting Act and Telecommunications Act and the regulations made pursuant to these Acts, namely the Broadcasting Licence Fee Regulations, 1997 and the Telecommunications Fee Regulations, 1995. For fiscal year 2006-2007:

  • The Part I broadcasting licence fees total $27.0 million which include a $.2 million annual adjustment for the year 2004-2005. The $27.0 million is made up of $20.5 million respendable and $6.5 million non-respendable revenues.
  • Part II broadcasting licence fees total $121.9 million (non-respendable).
  • Telecommunications fees total $26.6 million which include a $1.2 million annual adjustment for the year 2005-06. The $26.6 million is made up of $19.4 million respendable and $7.2 million non-respendable revenues.

Broadcasting Licence Fees

Section 11 of the Broadcasting Act empowers the Commission to make regulations respecting licence fees. These regulations apply to all licensees other than those classes of undertakings specifically exempted under section 2 of the fee regulations. Every licensee subject to the regulations is required to pay a Part I and a Part II licence fee to the Commission annually. For 2006-2007 the CRTC collected a total of $148.9 million from broadcasting undertakings ($27.0 million in Part I fees and $121.9 million in Part II fees).

The Part I fee is based on the broadcasting regulatory costs incurred each year by the Commission and other federal departments or agencies, excluding Industry Canada spectrum management costs (which are recovered as a component of Part II licence fees) and is equal to the aggregate of:

  • the costs of the Commission’s broadcasting activity;
  • the share of the costs of the Commission’s administrative activities that is attributable to its broadcasting activity; and
  • the other costs included in the net cost of the Commission’s program attributable to its broadcasting activities, excluding the costs of regulating the broadcasting spectrum.

The estimated total broadcasting regulatory costs of the Commission are set out in the Commission’s Expenditure Plan published in Part III of the Estimates of the Government of Canada (i.e. Part III Report on Plans and Priorities). There is an annual adjustment amount to the Part I fee to adjust estimated costs to actual expenditures. Any excess fees or shortfalls are credited or charged to the licensee in a following year’s invoice.

The Part II fee is calculated at 1.365% of a licensee’s gross revenue derived from broadcasting activities in excess of an applicable exemption limit. The CRTC collects the Part II fees on behalf of the government, with all revenues collected being deposited to the Government of Canada’s Consolidated Revenue Fund (CRF). The rationale for assessing the Part II licence fee is three-fold:

  • to earn a fair return for the Canadian public for access to, or exploitation of, a publicly owned or controlled resource (i.e. broadcasters use of the broadcasting spectrum);
  • to recover Industry Canada costs associated with the management of the broadcasting spectrum; and
  • to represent the privilege of holding a broadcasting licence for commercial benefit.

Part II Fee and Legal Proceeding

Several legal proceedings have been filed in the Federal Court of Canada by broadcasters2 challenging the legality of the Part II Licence Fee. These claims also seek the return of fees paid pursuant to section 11 of the Broadcasting Licence Fee Regulations, 1997 (the Regulations) from 1998 to 2006, plus interest and costs.

On December 14, 2006, a decision was rendered by the Federal Court declaring that

  • Part II Licence Fees prescribed by section 11 of the Regulations are a tax;
  • Section 11 of the Regulations is ultra vires the authority conferred on the CRTC by Section 11 of the Broadcasting Act to establish a schedule of fees; and
  • The Plaintiffs are not entitled to the return of monies paid pursuant to section 11 of the Regulations for the years described in the Plaintiffs’ pleading.

Fees prescribed by Section 11 of the Regulations were suspended for a maximum of nine (9) months to allow the appropriate branch of the government to react and to put in effect this judgement.

In January 2007, the plaintiffs filed Notices of Appeal regarding the portion of the decision of the Federal Court refusing the request for repayment of Part II licence fees, and the Crown filed Notices of Cross-Appeal regarding the issue of fee versus tax.

Telecommunications Fees

Section 68 of the Telecommunications Act sets out the authority for collecting telecommunications fees from carriers that the Commission regulates. Each company that files tariffs must pay fees based on its operating revenue, as a percentage of the revenue of all the carriers that file tariffs. For 2006-2007, the CRTC collected $26.6 million in telecommunications fees.

The annual fees the CRTC collects is equal to the aggregate of:

  • the cost of the Commission’s telecommunications activity;
  • the share of the costs of the administrative activities that is attributable to its telecommunications activity; and
  • the other costs included in the net cost of the Commission’s program attributable to its telecommunications activity.

The estimated total telecommunications regulatory costs of the Commission are set out in the Commission’s Expenditure Plan published in Part III of the Estimates of the Government of Canada (i.e., Part III Report on Plans and Priorities). There is an annual adjustment amount to the telecommunications fees to adjust estimated costs to actual expenditures. Any excess fees or shortfalls are credited or charged to the carriers in a following year’s invoice.

Dispute Resolution – Fee Assessment

The CRTC’s dispute resolution process regarding the assessment of broadcasting licence fees and telecommunications fees is summarized as follows:

  • The first point of contact for fee payers concerning issues related to fee assessment or collection is the Commission’s Assistant Director, Financial Operations and Licence Fee Processing followed by the Director Finance and Administrative Services. Fee payers may raise their concerns either by telephone conversation, e-mail or letter. To date the CRTC notes that the majority of fee payers concerns have been resolved at the staff level.
  • Where an issue cannot be satisfactorily resolved at the staff level, fee payers are requested to document the nature of their concern in writing and submit it to the CRTC’s Secretary General for formal consideration. Responses to all such letters would be provided by CRTC.

User Fees

The only fee that the CRTC currently collects which is subject to the reporting requirements of the User Fees Act relates to the processing of access requests filed under the Access to Information Act.

Table 6: 2006-2007 User Fee – User Fees Act


Name of Fee Fee Type Fee Setting Authority Date Last Modified 2006-2007 Planning Years
Actual Revenue
($000)
Full Cost
($000)
Fiscal Year Forecast Revenue
($000)
Estimated Full Cost
($000)
Access to Information Fees Other Products and Services (O) Access to Information Act 1992 Note 1 $0.1M 2007-2008
2008-2009
2009-2010
Note 1
Note 1
Note 1
$0.1M
$0.1M
$0.1M
Performance Standards Requests are completed as per the standards indicated in the Access to Information Act. Section 7 of the Act states that access to a record requested under this Act shall, subject to sections 8, 9 and 11 be made available within thirty (30) days after the request is received
Performance Results During FY 2006-2007, 34 requests out of 36 were completed: 19 were completed within 30 days, 5 within 31 to 60 days and 10 within 61 to 120 days. Two requests are still pending at the end of FY 2006-2007

Note 1 The Access to Information revenue is negligible: $199.60 received in FY 2006-2007. The CRTC forecasts that the revenue associated with these fees and the full cost in future years will approximate those amounts reported for 2006-2007.

CRTC External Fees and Policy on Service Standard for External Fees

CRTC assesses fees pursuant to the Broadcasting Licence Fee Regulations 1997, and the Telecommunications Fee Regulations 1995. The CRTC has received a legal opinion indicating that the Part I broadcasting licence fees and telecommunications fees are considered to be external "regulatory fees" and not "user fees" as defined in the User Fees Act. Thus these fees, and the external reporting of any information related to these fees, are not subject to the provisions of the User Fees Act (UFA), but rather the Treasury Board Policy on Service Standards for External Fees. In order to be as comprehensive and transparent as possible with respect to CRTC external fees, information on broadcasting and telecommunications fees is being presented in the following table.

Table 7A: CRTC External Fees


Name of Fee Fee Type Fee Setting Authority Date Last Modified 2006-2007 Planning Years
Actual Revenue
($000)
Full Cost
($000)
Fiscal Year Forecast Revenue
($000)
Estimated Full Cost
($000)
Broadcasting Licence Fees

Part I

 

Part II (notes 1 & 2)


 

Regulatory (R)

 

Right & Privilege

Broadcasting Act
(Section 11)

Broadcasting Licence Fee Regulations 1997

1997
 

$27.0M

 

121.9M


 

$27.0M

 

$10.0M


 

2007-2008
2008-2009
2009-2010

2007-2008
2008-2009
2009-2010


 

$28.0M
$26.6M
$26.6M

$-
$-
$-


 

$28.0M
$26.6M
$26.6M

$10.0M
$10.0M
$10.0M

Telecommunications Fees Regulatory (R) Telecommunications Act (Section 68)

Telecommunications Fee Regulations 1995

1995

 


$26.6M

 


$26.6M

 


2007-2008
2008-2009
2009-2010

 


$26.5M
$25.4M
$25.4M

 


$26.5M
$25.4M
$25.4M

        $175.5M $63.6M 2007-2008
2008-2009
2009-2010
$54.5M
$52.0M
$52.0M
$64.5M
$62.0M
$62.0M

Note 1 The rationale for assessing Part II fee is three-fold:

  • To earn a fair return for the Canadian public for access to, or exploitation of, a publicly owned or controlled resource (i.e. broadcaster’s use of the broadcasting spectrum);
  • To recover Industry Canada costs associated with the management of the broadcasting spectrum (i.e. approximately $10 M per year); and
  • To represent the privilege of holding a broadcasting licence for commercial benefit.

Note 2 No revenues for Part II licence fees have been forecasted for these years. As indicated in a previous section entitled Part II Licence Fee and Legal Proceeding, a decision rendered by the Federal Court has declared the Section 11 of the Regulations ultra vires the authority conferred on the CRTC by Section11 of the Broadcasting Act to establish a schedule of fees. The amounts reflected in the estimated full cost column pertain to Industry Canada costs associated with broadcasting spectrum management.

Table 7B: Policy on Service Standards for External Fees

Service Standards

Broadcasting – Part I Licence Fees


Broadcasting Services Service Standards Stakeholders Method of annual consultation
1. Administrative Route Applications that do not require a public process, including transfer of ownership

80% in 2 months
90% in 3 months
1. Broadcasting Industry3

2. Canadian public

Public notice process (Note)
2. Public Notice Route (excluding licence renewals) Applications that do not give rise to opposing interventions or policy issues

80% in 6 months
90% in 8 months

Applications that give rise to opposing interventions, but do not raise policy issues

80% in 8 months
90% in 10 months

Applications that raise policy issues

The Commission will advise the applicant that its application raises policy issues within 30 days of this policy issue being identified by the Commission.

3. Licence renewals by public notice route Applications that do not raise policy issues

80% in 8 months
90% in 10 months

Note: In Call for comments on the Commission’s service standards, Broadcasting Public Notice CRTC 2006-16, 10 February 2006, the Commission proposed service standards for the issuance of decisions on broadcasting applications in a timely manner and according to a predictable schedule.

As set out in Introduction of service standards for certain broadcasting applications, Broadcasting Circular CRTC 2006-2 (Circular 2006-2), 5 April 2006, the comments received from the broadcasting industry supported the Commission’s commitment to ensure that decisions on broadcasting applications are issued in a timely fashion. According to the parties, improved efficiency and accountability in the Commission’s licensing activities would provide for greater certainty in a rapidly changing industry. Certain parties called for even more stringent service standards than those proposed and suggested that additional measures should be put in place by the Commission to streamline its procedures.

In Circular 2006-2, the Commission introduced new service standards for its processing of certain types of applications filed after 31 March 2006. These include applications for licence amendments and licence renewals currently processed using the public notice approach, as well as applications processed using the administrative approach that does not entail a public process.

Quarterly report on streamlined processes for
broadcasting amendment applications
1 April 2006 to 31 March 2007

The streamlining processes below are monitored pursuant to Streamlined processes for certain broadcasting applications, Broadcasting Circular CRTC 2006-1.

STREAMLINED PROCESSES - APPLICATIONS RECEIVED


Processing routes/
Measurable indicators
Q1 Q2 Q3 Q4 Year to date

1. Administrative route


 Received 42 25 53  38 158
 Returned (d) 6 7 6  4 23
Total to be processed 36 18 47  34 135
Incomplete at reception 10 6 35  25 76
Indicator
Letter of clarification sent within 15 business days (c)

8 of 10
(80%)

5 of 6
(83%)

31 of 35
(89%)

 21 of 25
(84%)

65 of 76
(86%)
Complete at reception 26 12 12 9 59
Indicator
Letter of Approval issued within 15 business days (b)

17 of 26
(65%)

10 of 12
(83%)

10 of 12
(83%)

8 of 9
(89%)

45 of 59
(76%)

2. Public notice route (excluding renewals/do not give rise to policy issues)


 Received 53 35 39  40 167
 Returned (d) 5 2 7 22
Total to be processed 48 33 32  32 145
Incomplete at reception 37 21 26  22 106
Indicator
Letter of clarification sent within 15 business days (c)

36 of 37
(97%)

20 of 21
 (95%)

23 of 26
(88%)

20 of 22
(91%) 

99 of 106
 (93%)
Complete at reception 11 12 6 10 39
Indicator
Public Notice issued within 15 business days (a)

11 of 11
(100%)

8 of 12
(67%)

5 of 6
(83%)

 9 of 10
(90%)

33 of 39
 (85%)

Only applications received after 31 March 2006 are considered in these reports.

Indicators: Under Broadcasting Circular CRTC 2006-1, the objective is to ensure that within 15 business days of receiving an application as described, the Commission will issue one of the following:
(a) a public notice announcing the application;
(b) a letter approving the application;
(c) a letter requesting clarification; or
(d) a letter returning an application that is deemed incomplete.

Quarterly report on service standards for processing
broadcasting amendment and licence renewal applications
1 April 2006 to 31 March 2007

The service standards below are monitored pursuant to Introduction of service standards for certain broadcasting applications, Broadcasting Circular CRTC 2006-2.

SERVICE STANDARDS – APPLICATIONS DECIDED


Processing routes/
Service standards
Q1 Q2 Q3 Q4 Year to date

1. Administrative route


Decided 27 24 44  25 120
Service standards
80% in 2 months

100%

83%

100%

92%

94%
90% in 3 months 100% 100% 100%  100% 100%

2. Public notice route (excluding renewals/do not give rise to policy issues)


Decided (Without opposing interventions)  

0

 

21

 

20

 

 29

 

70

Service standards
80% in 6 months

N/A

100%

90%

97% 

96%
90% in 8 months N/A 100% 100% 100%  100%


Decided (With opposing interventions)  

1

 

9

 

21

 

10

 

41

Service standards
80% in 8 months

100%

100%

100%

100% 

100%
90% in 10 months 100% 100% 100% 100%  100%

3. Licence renewals by public notice route


Decided 0 0 0 0
Service standards
80% in 8 months

N/A

N/A

N/A

N/A

N/A
90% in 10 months N/A N/A N/A N/A N/A

Only applications received after 31 March 2006 are considered in this report.
Q1 = 1 April 2006 to 30 June 2006
Q2 = 1 July 2006 to 30 September 2006
Q3 = 1 October 2006 to 31 December 2006
Q4 = 1 January 2007 to 31 March 2007

Service Standards: Under Broadcasting Circular CRTC 2006-2, the Commission has set service standards for the processing of these applications as described in the table above.

Quarterly report on service standards for
processing telecommunications retail tariff applications
1 April 2006 to 31 March 2007

Service Standards 1 and 2 below are monitored pursuant to Introduction of a streamlined process for retail tariff filings, Telecom Circular CRTC 2005-6 and confirmed in Finalization of the streamlined process for retail tariff filings, Telecom Circular CRTC 2005-9, while Service Standard 3 is monitored pursuant to the Telecommunications Act.


Service Standards Measurable indicators Q1 Q2 Q3 Q4 Year to date
Retail tariff filings received subject to 10-business day reporting (191) (163) (195) (151) (700)
1. Ten business day initiative - inform applicant of status            
a) Interim decision issued 85% of interim decisions issued in 10 business days 100%
(132 of 132)
99%
(128 of 129)
99%
(127 of 128)
99%
(133 of 134)
99%
(520 of 523)
b) Issues identified (letter) 85% of letters issued in 10 business days 95%
(41 of 43)
95%
(20 of 21)
98%
(45 sur 46)
92%
(12 of 13)
96%
(118 of 123)
c) Interrogatories (letter) 85% of letters issued in 10 business days 100%
(9 of 9)
100%
(2 of 2)
100%
(3 sur 3)
100%
(2 of 2)
100%
(16 of 16)
d) Closed as deficient (letter) 85% of letters issued in 10 business days 100%
(7 of 7)
100%
(11 of 11)
94%
(17 sur 18)
100%
(2 of 2)
97%
(37 of 38)
2. Average processing time for initial disposition* of applications 30 business days 9.8 8.4 8.5 8.7 8.9
3. Initial dispositions issued 85% in 45 business days 100% 98.8% 100% 100% 99.9%

* Initial disposition would be the decision or the interim decision if one was issued, or a letter to the applicant indicating that the file is being closed as the application is deemed deficient.

(n) = Number of applications received from 1 April 2006. Only applications received after that date are considered in these service standards.

Q1 = 1 April 2006 to 30 June 2006
Q2 = 1 July 2006 to 30 September 2006
Q3 = 1 October 2006 to 31 December 2006
Q4 = 1 January 2007 to 31 March 2007

  1. Under Telecom Circulars CRTC 2005-6 and 2005-9, the CRTC is to inform the applicant(s) of the status of applications within 10 business days of receipt of a complete application. The CRTC is to issue one of the following:
    1. an order granting the application interim approval;
    2. a letter stating that it intended to dispose of the application within 45 business days of receipt of the application, setting out the reasons why interim approval was not granted;
    3. a letter either with interrogatories included or confirmation that interrogatories were to follow within 5 business days, and an indication that it still intended to dispose of the application within 45 business days; or
    4. a letter indicating that the file was being closed due to deficiencies in the application, identifying the specific deficiencies.

      Thus, Service Standard 1 measures the CRTC's ability to produce results within 10 business days. Results may be produced, but if they are not issued within 10 business days, then they are not counted as success in the report.
  2. Under the Telecommunications Act, the CRTC is required to issue, within 45 business days of receipt of a tariff application, a decision on the application, or if it cannot do that, a letter indicating when it would issue a decision.
  3. The Commission has made available on its website a service standards quarterly report on Tariff filings, for 1 April 2005 to 31 March 2006.

Canadian Radio-television and Telecommunications Commission
Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2007 and all information contained in these statements rests with departmental management. 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 judgment 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 the department's financial transactions.  Financial information submitted to the Public Accounts of Canada and included in the department's Departmental Performance Report is consistent with these financial statements.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that (a) financial information is reliable, (b) assets are safeguarded, (c) transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, are 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 the department.

The financial statements of the Commission have not been audited.


Konrad von Finckenstein, Q.C.
Chairman
Robert A Morin
Secretary General

Gatineau, Canada

Date: 7 August, 2007

Table 8: Financial Statements – Year ended March 31, 2007


Canadian Radio-television and Telecommunications Commission
Statement of Operations (unaudited)
For the Year Ended March 31, 2007
(in dollars)

  2006-07 2005-06
Broadcasting
(Note 1)
Telecommunications
(Note 1)
Total
Expenses
Salaries and employees benefits

19,513,169

20,018,244

40,531,413

40,954,992

Spectrum Management cost (Note 9(a))

10,000,000

-

10,000,000

10,000,000

Professional and special services

2,052,760

2,163,158

4,215,918

3,953,119

Accommodation

1,354,000

1,354,000

2,708,000

2,982,309

Information

1,429,381

239,405

1,668,786

1,927,567

Travel and relocation

869,792

730,157

1,599,949

1,690,123

Amortization expenses

354,353

354,353

708,706

542,614

Repair and maintenance

346,354

345,652

692,006

384,169

Materials and supplies

204,026

198,175

402,201

397,663

Furniture and equipment

169,900

175,830

345,730

228,365

Rentals

191,471

105,713

297,184

278,035

Other

6,072

6,082

12,154

4,694

Bad debt expenses (adjustment to Allowance for doubtful accounts)

(26,524)

(26,524)

(53,048)

328,016

Total expenses

36,464,754

26,664,245

63,128,999

63,671,666

 
Revenues
Rights and privileges

121,850,542

-

121,850,542

121,211,147

Regulatory fees

26,956,226

26,631,225

53,587,451

49,178,682

Other revenues

21,204

7,820

29,024

259,057

Total revenues

148,827,972

26,639,045

175,467,017

161,648,886

 
Net results of operations

(112,363,218

25,200

(112,338,018)

(97,977,220)

The accompanying notes form an integral part of these financial statements

 


Canadian Radio-television and Telecommunications Commission
Statement of Financial Position (Unaudited)
as at 31 March, 2007
(in dollars)

 

2006-2007

2005-2006

ASSETS
    Financial assets
    Accounts receivables and advances (Note 4)

738,052

575,134

        Total financial assets

738,052

575,134

 
    Non-financial assets    
    Tangible capital assets (Note 5)

1,100,091

1,432,669

        Total non-financial assets

1,100,091

1,432,669

Total Assets

1,838,143

2,007,803

 
LIABILITIES    
    Accounts payable and accrued liabilities (Note 6)

3,184,068

3,153,107

    Deferred revenue

26,110

-

    Vacation pay and compensatory leave

2,114,470

1,929,813

    Accrued employee severance benefits (Note 7(b))

7,362,397

7,350,261

Total Liabilities

12,687,045

12,433,181

 
Equity of Canada

(10,848,902)

(10,425,378

 
Total liabilities and Equity of Canada

1,838,143

2,007,803

 
Contingent liabilities (Note 8)

The accompanying notes form an integral part of these financial statements


 


Canadian Radio-television and Telecommunications Commission
Statement of Equity of Canada (Unaudited)
as at 31 March, 2007
(in dollars)

  2006-07 2005-06
Equity of Canada, beginning of year (10,425,378) (7,015,628)
Net results of operations 112,338,018 97,977,220
Current year appropriations used (Notes 3) 7,712,095 7,897,487
Revenue not available for spending (Note 3) (135,601,317) (123,065,887)
Change in net position in the Consolidated Revenue Fund (Note 3) (79,130) (1,777,537)
Services received without charge from other government departments (Note 9(a)) 15,206,810 15,558,967
Equity of Canada, end of year (10,848,902) (10,425,378)
The accompanying notes form an integral part of these financial statements

 


Canadian Radio-television and Telecommunications Commission
Statement of Cash Flow (Unaudited)
For the Year Ended March 31, 2007
(in dollars)

 

2006-07

2005-06


Operating Activities
Net results of operations

(112,338,018)

(97,977,220)


Non-cash items
   

Services provided without charge by other government departments included in the Statement of Operations (Note 9 (a))

(15,206,810)

(15,558,967)

Amortization of tangible capital assets (Note 5)

(720,205)

(542,614)

(Gain) loss on disposal of capital assets (Note 5)

63,702

-

Variation in Statement of Financial Position

Increase (decrease) in accounts receivable and advances

162,918

(5,338,912)

(Increase) decrease in liabilities

(253,864)

1,955,440

Cash provided by operating activities

(128,292,277)

(117,462,273)


Capital investment activities

Acquisition of tangible capital assets (Note 5)

397,744

516,336

Proceeds from disposal of tangible capital assets (Note 5)

(73,819)

-

Cash used by capital investment activities

323,925

516,336

Financing activities

Net cash provided to Government of Canada

127,968,352

116,945,937

The accompanying notes form an integral part of these financial statements

Notes to the Financial Statements (unaudited)
Year ended March 31, 2007

1. Authority and Objectives

CRTC was created by Parliament in 1968 under the Canadian Radio-television and Telecommunications Commission Act. The CRTC reports to Parliament through the Minister of Canadian Heritage.

The CRTC is vested with the authority to regulate and supervise all aspects of the Canadian broadcasting system, as well as the telecommunications services providers and common carriers that come under federal jurisdiction. The CRTC’s powers in the area of broadcasting regulation derive from the Broadcasting Act. Its powers over telecommunications come from the Telecommunications Act and from various "special acts" of Parliament passed for specific telecommunications companies.

The following are the program activity descriptions for the CRTC:

Regulation and Supervision of the Canadian Broadcasting Industry (Broadcasting)

Supervise and regulate all aspects of the Canadian broadcasting system in order to implement the broadcasting policy set out in the Broadcasting Act.

Regulation and Monitoring of the Canadian Telecommunications Industry (Telecommunications)

Ensure the implementation of Canadian telecommunications objectives set out in the Telecommunications Act and to ensure that Canadian carriers provide telecommunications services and charge rates on terms that are just and reasonable, and do not unjustly discriminate or provide an unreasonable preference toward any person.

2. Summary of Significant Accounting Policies

The 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:

  1. Parliamentary appropriations and vote-netting - The CRTC is financed in part by the Government of Canada through Parliamentary Appropriations (e.g. Statutory Vote for Employee Benefits Plans (EBP)) and the balance by vote-netted fees it collects from the regulated industries. Vote-netting is a means of funding selected programs or activities wherein Parliament authorizes a department to apply revenues collected from fee payers towards costs directly incurred for specific activities. CRTC has the authority to use a portion of the Part I licence fees collected from broadcasters and a portion of the annual telecommunications fees collected from telecommunications carriers to finance the costs it incurs in regulating the broadcasting and telecommunications industries (i.e. respendable revenue). The balance of these two fees recovers the costs for items funded through appropriations (e.g. EBP) and costs incurred by other government departments on the CRTC’s behalf and are classified as non-respendable revenue.

    The accounting of fees collected and the charges to the appropriations in a given year does not parallel financial reporting according to generally accepted accounting principles since they 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 fee collection and the appropriation from Parliament. Note 3 to these financial statements provides information regarding the source and disposition of these authorities as well as a reconciliation between net cash provided to Government to current year appropriation used.
  2. Net cash provided to Government – The CRTC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the CRTC is deposited to the CRF and all cash disbursements made by the CRTC are paid from the CRF. The net cash provided to Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.
  3. Change in net position in the Consolidated Revenue Fund is the difference between the net cash provided to Government and appropriations used in a year, excluding the amount of non respendable revenue recorded by the CRTC. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.
  4. Revenues –The CRTC collects fees under the authority of the Broadcasting Act and Telecommunications Act and the regulations made pursuant to these Acts, namely the Broadcasting Licence Fee Regulations, 1997 and the Telecommunications Fee Regulations, 1995. These fees are accounted for in the period in which the underlying transaction or event occurs that give rise to the revenues. Revenues that have been received but not yet earned are disclosed in the Statement of Financial Position as deferred revenue.
  5. Expenses – Expenses are recorded on the accrual basis:
    • 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 accommodation, the employer’s contribution to the health and dental insurance plans, spectrum management, and worker’s compensation are recorded as operating expenses at their estimated cost.
  6. Employee future benefits :
    • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada. The CRTC’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 CRTC to make contributions for any actuarial deficiencies of the Plan.
    • 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.
  7. Accounts receivables are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.
  8. Contingent liabilities – Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. For matters that are within the normal course of operations, 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. Matters that are outside of the normal course of operations or for which the potential impact could be significant to the Government are disclosed in the notes to these financial statements, but they are recorded, if required, only at the Government of Canada level.
  9. Tangible capital assets – In the past, all tangible capital assets having an initial cost of $10,000 or more were recorded at their acquisition cost. CRTC changed its threshold for capitalization in 2006-07 to $5,000. The department does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value.

    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
    Informatics equipment 3 years
    Informatics software 5 years
    Vehicles 5 years
    Equipment 5 years

  10. 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 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 financial statements in the year they become known.

3. Parliamentary Appropriations

CRTC receives the major portion of its funding through fees assessed against the regulated industries, i.e. Broadcasting and Telecommunications, as well as a minor portion from Parliamentary appropriations. Since Parliamentary appropriations are not calculated on the accrual accounting basis, there is a difference between appropriations used and: (a) net results of operations; and (b) net cash provided to Government of Canada. The differences are reconciled in the following tables.


(a) Reconciliation of net results of operations to current year appropriations used
2006-07 2005-06

(in dollars)

Net results of operations (112,338,018) (97,977,220)
Adjustments for items affecting net results from operations but not affecting appropriations:
Add(Less):
Services provided without charge (15,206,810) (15,558,967)
Employee severance benefits (12,136) (1,056,203)
Amortization of tangible capital assets (708,707) (542,614)
Reversal of legal expenses charged to Justice appropriation (148,715) (203,166)
Bad debt expenses 53,049 (328,016)
Vacation pay and compensatory leave (184,656) (63,623)
Revenue not available for spending 135,601,317 123,065,887
Refund of prior years expenses and adjustment to payables at year end 280,642 45,073
(Loss) gain on disposal and write-down of tangible capital assets (10,116) -
Sub-total 119,663,868 105,358,371
Adjustments for items not affecting net results of operations but affecting appropriations
Add(less):
Acquisitions of tangible capital assets 386,245 516,336
Current year appropriations used 7,712,095 7,897,487
(b) Appropriations provided and used
Vote 45-Program expenditures and transfer from Treasury Board Vote 5 and 15 2,778,301 3,341,601
Statutory amounts 5,374,297 5,613,207
Total appropriation available 8,152,598 8,954,808
Appropriations available for future years (440,503) (1,057,321)
Current year appropriations used 7,712,095 7,897,487


(c) Reconciliation of net cash provided to Government to current year appropriations used
Net cash provided to Government (127,968,352) (116,945,937)
Revenue not available for spending 135,601,317 123,065,887
7,632,965 6,119,950
Change in net position in the Consolidated Revenue Fund
(Increase) decrease in accounts receivable and advances (109,869) 5,010,896
Increase (decrease) in accounts payable, accrued liabilities and deferred revenue 57,071 (3,075,266)
Refund of prior years expenses 280,643 45,073
Reversal of payments to Department of Justice (148,715) (203,166)
79,130 1,777,537
Current year appropriation used 7,712,095 7,897,487

4. Accounts Receivable and Advances


Accounts Receivable and Advances
2006-07 2005-06

(in dollars)

Receivables from other Federal Government departments and agencies (Note 9 (b)) 605,095 165,345
88,902 476,814
Other 57,390 4,497
751,387 646,656
Less:Allowances for doubtful accounts on external receivables (13,335) (71,522)
Total 738,052 575,134

5. Tangible Capital Assets
(in dollars)


  Cost
Capital asset class Opening balance Acquisi-tions Disposals and write-offs Closing balance
Equipment 80,082 48,696 - 128,778
Vehicles 45,406 - - 45,406
Informatics Equipment 584,954 152,906 49,432 688,428
Informatics Software 2,323,803 196,142 24,387 2,495,558
Total 3,034,245 397,744 73,819 3,358,170


  Accumulated amortization 2007 2006
Capital
asset class
Opening
balance
Amorti-
zation
Disposals and write-offs Closing
balance
Net book value Net book value
Equipment 24,025 16,016 - 40,041 88,737 56,057
Vehicles 30,148 8,733 - 38,881 6,525 15,258
Informatics Equipment 414,788 146,577 49,432 511,933 176,495 170,166
Informatics Software 1,132,615 548,879 14,270 1,667,224 828,334 1,191,188
Total 1,601,576 720,205 63,702 2,258,079 1,100,091 1,432,669

6. Accounts Payable and Accrued Liabilities


Accounts Payable and Accrued Liabilities

2006-07 2005-06

(in dollars)

Accounts payable-other Federal Government departments and agencies(Note 9(b)) 215,434 157,890
Accounts payable-external parties 1,301,177 1,197,368
Accruals-salaries 1,561,420 1,725,071
Accruals-operating and maintenance 106,037 72,778
Total Accounts Payable and Accrued Liabilities 3,184,068 3,153,107

7. Employee Benefits

  1. Pension benefits: The CRTC's 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/Québec Pension Plans benefits and they are indexed to inflation.

    Both the employees and the CRTC contribute to the cost of the Plan. The 2006-07 expense amounts to $4.0 million ($4.2 million in 2005-06), which represents approximately 2.2 times (2.6 times in 2005-06) the contributions by employees.

    The CRTC's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.
  2. Severance benefits: The CRTC 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, are indicated below.

Severance benefits
2006-07 2005-06

(in dollars)

Accrued severance liabilities, beginning of year 7,350,261 6,294,058
Expense for the year 979,600 1,724,604
Benefits paid during the year (967,464) (668,401)
Accrued severance liabilities, end of year 7,362,397 7,350,261

8. Contingent liabilities

As of 31 March 2007, the Government of Canada for matters involving the CRTC had one claim outstanding as a result of litigation which pertains to a challenge of the CRTC’s Part II broadcasting licence fees. In December 2006, the Federal Court declared ultra vires the regulation prescribing the Part II licence fees. This case has been appealed to the Federal Court of Appeal and the outcome is not known at this time. The financial impact of this litigation will be recorded in the financial statements of the CRTC if required once all legal proceedings are complete and the outcome of the litigation is known.

9 Related party transactions

As a result of common ownership, CRTC is related to all Govenment of Canada departments, agencies, and Crown corporations. CRTC enters into transactions with these entities in the normal course of business and on normal trade terms.

(a) Services provided without charge:

During the year, CRTC received services without charge from other departments for items such as accommodation, the employer's contribution to the health and dental insurance plans. The services without charge that have been recognized in the department's Statement of Operations are indicated below.


2006-07 2005-06

(in dollars)

Services provided without charge
Workmen's Compensation expenses (Human Resources and Social Development Canada) 42,810 42,005
Health & Dental expenses (Treasury Board Secretariat) 2,456,000 2,534,653
Accommodation expenses (Public Works and Government Services Canada) 2,708,000 2,982,309
Spectrum Management expenses (Industry Canada) 10,000,000 10,000,000
Total 15,206,810 15,558,967

Industry Canada is responsible for the management of the broadcasting spectrum. As part of this responsibility, Industry Canada conducts several activities including the issuance of technical certificates that accompany the broadcasting licences issued by the CRTC where the use of broadcasting spectrum is required, as well as monitoring for interference that could affect spectrum use. Total costs related to Industry Canada's broadcasting spectrum management are reported to the CRTC on an annual basis, as these costs are a component of the Part II broadcasting licence fees collected by the CRTC on behalf of the Government. Other services provided without charge to the CRTC as noted above are a component of the Part I broadcasting licence fee and the annual telecommunications fee collected by the CRTC.

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 of Canada, are not included as an expense in the CRTC's Statement of Operations, nor are they recovered as a component of the CRTC Part I broadcasting licence fee or annual telecommunications fee.

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


2006-07 2005-06

(in dollars)

Accounts receivable with other government departments and agencies 605,095 165,345
Accounts payable to other government departments and agencies 215,434 157,890

10. Comparative information

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

Table 9: Response to Parliamentary Committees, Audits and Evaluations


2005-11 OAG Chapter 5 - Support to Cultural Industries 2005-11 BVG Chapitre 5 - Le soutien accordé aux industries culturelles
5.99 Recommendation . The Canadian Radio-television and Telecommunications Commission should inform the Canadian Television Fund of the amount each cable or satellite distribution company should have paid it the previous year, and should require confirmation from the Canadian Television Fund that it received those amounts. 5.99 Recommandation. Le Conseil canadien de la radiodiffusion et des télécommunications devrait informer le Fonds canadien de télévision des sommes que les entreprises de distribution par câble et par satellite auraient dû lui verser durant la dernière année et exiger que le Fonds canadien de télévision lui confirme les sommes qu'il a reçues.
Entity(ies): Canadian Radio-Television and Telecommunications Commission Entité(s): Conseil de la radiodiffusion et des télécommunications canadiennes
Update N/A: Mise à jour N/A:
First evaluation year - No previous update / Première année d’évaluation - aucune mise à jour antérieure
OAG Assessment N/A:
First evaluation year - No previous assessment
Évaluation du BVG N/A:
Première année d’évaluation - aucune évaluation antérieure
Update 2007 : Mise à jour 2007 :
On 15 March 2007, the CRTC provided the Canadian Television Fund (CTF) with a document that details the amounts that the CTF should expect to have received for the 2005 Broadcast year. The information was made available on a licensee-specific basis. Upon confirmation by the CTF of the amounts it received, the CRTC will follow up as necessary with those distribution companies who have not contributed the expected amounts. Le 15 mars 2007, le CRTC a fournit un document détaillant les montants dont le Fonds des talents canadiens (FTC) devrait bénéficier pour l’année fiscale 2005. L’information a été rendue disponible d’après les spécifications individuelles des titulaires. Sur réception de la confirmation des montants reçus par le FTC, le CRTC effectuera les suivis nécessaires auprès des entreprises de distribution qui n’auront pas contribué les montants prévus.

Travel Policies

The CRTC follows and uses the Treasury Board Secretariat (TBS) travel policies. This includes the TBS Special Travel Authorities and the TBS Travel Directive, Rates and Allowances.

Financial Information & Summary Tables

A graphical representation of the accountability and activity structure, including resource levels, is noted below.

CRTC Accountability Activity Structure

Business Line - Regulation of Communications in the Public Interest: Planned spending = $45.6 million, Total authorities = $48.0 million, 2006-2007 Actual = $47.6 million. Accountability Structure: Chairperson, Commissioners. Organizationa; Activities: Reporting to the Chairperson is Broadcasting, Telecommunications, Communications, Legal, Policy Development and Research, Secretariat, Corporate Services.

Note: The CRTC reports to Parliament through the Minister of Canadian Heritage