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SECTION III — SUPPLEMENTARY INFORMATION

Departmental Links to Government of Canada Outcomes

The following table shows the Canada Border Services Agency’s (CBSA) actual spending for 2007–2008 and aligns the Agency’s program activities with Government of Canada outcome areas. As per Treasury Board of Canada Secretariat guidelines, performance reporting on the Corporate Management and Direction program activity is provided in Section IV.

Table 3.1: CBSA Links to Government of Canada Outcomes Areas


Strategic Outcome:  Efficient and effective border management that contributes to the security and prosperity of Canada.
 (Thousands of dollars)
 
Program Activity  Actual Spending 2007–2008 Alignment to Government of Canada Outcome Area
Budgetary Non-budgetary Total
         
Access 687,378 - 687,378
  • A strong and mutually beneficial North American partnership
Security 383,530 - 383,530
  • Safe and secure communities
Science- and Technology-based Innovation 377,799 - 377,799
  • A strong and mutually beneficial North American partnership
  • Safe and secure communities
Total 1,448,707 - 1,448,707  

Table 3.2 outlines the major contribution that the CBSA program activities make to Government of Canada outcome areas.

Table 3.2: CBSA Program Activity Contributions to Government of Canada Outcome Areas


Government of Canada Outcome Areas
 
Program Activity Policy Area Government of Canada Outcome Area
Access  International Affairs Through the work of the Access program activity, the CBSA ensures the lawful flow of people and goods while promoting compliance with border legislation and regulations.
Security  Social Affairs Through the work of the Security program activity, the CBSA ensures the safety and security of Canadians within the context of the Government of Canada’s security agenda and through effective and efficient border management.
Science- and Technology-based Innovation International Affairs/ Social Affairs Through the work of the Science- and Technology-based Innovation program activity, the CBSA uses its science and technology capacity to modernize border management and increase the effectiveness and efficiency of border operations.

Comparison of Planned to Actual Spending (Including Full-Time Equivalents)

Table 3.3: Comparison of the CBSA’s Planned Spending to Actual Spending


(Thousands of dollars)
Program Activity 2005–2006 Actual 2006–2007 Actual 2007–2008
Main Estimates Planned Spending Total Authorities Actual
Access 682,349 719,283 677,708 679,398 749,978 708,112
Less: Respendable revenue (15,327) (20,898) (17,710) (17,710) (20,734) (20,734)
Net - Access 667,022 698,395 659,998 661,688 729,244 687,378
Security 300,599 358,366 401,580 402,529 480,758 383,530
Science- and Technology-based Innovation 200,841 223,959 378,787 379,248 469,103 377,799
Total 1,168,462 1,280,710 1,440,365 1,443,465 1,679,105 1,448,707
Less: Non-respendable revenue (43,993) (54,654)   (42,219)   (62,627)
Plus: Cost of services received without charge 111,685 119,300   111,463 129,284 129,284
Total Agency Spending 1,236,154 1,345,356 1,440,365 1,512,709 1,808,389 1,515,364
Full-time Equivalents 12,077 12,383   13,023   13,802

Voted and Statutory Items

Table 3.4: The CBSA’s Voted and Statutory Items


(Thousands of dollars)
Vote or Statutory Item Truncated Vote or
Statutory Wording
2007–2008
Main Estimates Planned Spending Total Authorities Actual
           
10 Operating expenditures 1,242,329 1,245,151 1,429,161 1,263,345
15 Capital expenditures 52,819 52,819 99,364 34,903
(S) Contributions to employee benefit plans 145,217 145,495 149,791 149,791
(S) Spending of proceeds from the disposal of surplus Crown assets     262 141
(S) Refunds of amounts credited to revenues in previous years     519 519
(S) Collection agency fees     8 8
  Total 1,440,365 1,443,465 1,679,105 1,448,707

The $230 million difference between total authorities and actual is mainly the result of the following:

  • $166 million as a net operating lapse, mainly related to delays in the following:
    • the Security and Prosperity Partnership of North America ($90 million):
      • the implementation of the eManifest project, which received Treasury Board approval to start in fall 2008 ($84 million), and
      • the Passenger Name Record program ($6 million);
    • the arming of CBSA officers and efforts to address work-alone situations, specifically the staffing and procurement delays ($23 million);
    • the delayed installation of the Primary Automated Lookout System (PALS) hardware at ports of entry ($7 million);
    • the Container Security Initiative — Advance Interdepartmental Reporting (the agreements with participating nations were not consummated within originally planned time frames) ($10 million);
    • - the procurement of specialty equipment for purposes such as radiation detection (the procurement was extremely challenging due to the limited number of qualified suppliers) ($4 million);
    • the Container Security Initiative — Harmonized Risk Scoring and Advance Trade Data ($3 million);
    • the difficulties experienced in identifying accommodations needed to house CBSA staff in the National Capital Region ($3 million);
    • the contracting delays due to technology and equipment specifications ($3 million);
    • the Canada Post Corporation handling fee account (the resulting lapse is attributed to the reduced volume of items processed where duty applies) ($3 million);
    • the Electronic Primary Inspection Line booths at Vancouver International Airport (project approval was delayed until January 2008) ($2 million);
    • the Canadian Police Information Centre Web site ($2 million); and
    • government advertising programs ($2 million).
  • a $64 million lapse in capital expenditures, mainly related to delays in the following:
    • the arming of CBSA officers and efforts to address work-alone situations, specifically the construction delays at the Learning Centre in Rigaud, Que., and certain regions requiring facility upgrades to eliminate work-alone situations ($26 million);
    • the construction projects at ports of entry, such as St. Stephen, N.B., Douglas, B.C., and Lacolle, Que. ($17 million);
    • the delayed installation of PALS hardware at ports of entry ($8 million); and
    • the procurement of specialty equipment for purposes such as radiation detection (the procurement was challenging due to the limited number of qualified suppliers) ($7 million).

List of Electronic Tables

The following tables are available on the Treasury Board of Canada Secretariat’s Web site at http://www.tbs-sct.gc.ca.

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 financial statements for the year ended March 31, 2008 and all information contained in these statements rests with Canada Border Services Agency’s (Agency) 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 fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Agency’s financial transactions. Financial information submitted to the Public Accounts of Canada and included in the Agency’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 financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the Agency.

The financial statements of the Agency have not been audited.

The original version was signed by Stephen Rigby, President, Canada Border Services Agency, and Sylvain St-Laurent, Senior Financial Officer, Canada Border Services Agency, in Ottawa, Canada, on August 8, 2008.

Canada Border Services Agency
Statement of Operations (Unaudited)
For the Year Ended March 31

(in thousands of dollars)


  2008 2007
  Access Security "Science
& Technology"
Total Total
Revenues 
Tax revenues           
Excise taxes (Note 4) 19,586,767 0 0 19,586,767 21,370,613
Customs import duties 3,902,834 0 0 3,902,834 3,704,222
Excise duties 1,235,082 0 0 1,235,082 895,237
  24,724,683 0 0 24,724,683 25,970,072
           
Non-tax revenues          
Interest, penalties and fines 31,457 52 54 31,563 27,928
Seized property 22,135 0 0 22,135 15,727
Sale of goods and services 18,837 1,646 159 20,642 22,820
Forfeitures of cash bonds 0 2,050 0 2,050 2,057
Miscellaneous 604 341 355 1,300 1,828
Gain on sale of assets 64 36 38 138 214
Total 73,097 4,125 606 77,828 70,574
           
Total Revenues  24,797,780 4,125 606 24,802,511 26,040,646
           
Operating Expenses 
Salaries and employee benefits 644,881 294,218 156,527 1,095,626 1,044,122
Professional and special services 79,708 83,766 97,052 260,526 197,890
Transportation and telecommunication 24,509 30,530 12,754 67,793 54,728
Rental of land and buildings 26,259 15,035 15,525 56,819 52,611
Amortization 12,788 12,131 7,459 32,378 28,431
Materials and supplies 12,796 8,091 5,213 26,100 19,017
Repair and maintenance 11,795 7,385 6,663 25,843 27,948
Consumable machinery and equipment (parts) 5,995 8,537 4,939 19,471 18,072
Other  3,591 3,733 1,059 8,383 5,646
Bad debts (Recovery)  (35,434) 0 0 (35,434) 50,996
Total Expenses 786,888 463,426 307,191 1,557,505 1,499,461
           
Net Results  24,010,892 (459,301) (306,585) 23,245,006 24,541,185

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

Canada Border Services Agency
Statement of Financial Position (Unaudited)
At March 31

(in thousands of dollars)


  2008 2007
Assets    
     
Financial assets    
Cash   1,271,299 2,066,739
Accounts receivable and advances (Note 5) 406,050 17,444
Taxes receivable (Note 6)   1,376,608 1,295,042
Total financial assets 3,053,957 3,379,225
     
     
Non-financial assets     
Prepaid expenses 266 159
Inventory 7,205 3,806
Tangible capital assets (Note 7) 334,580 312,329
Total non-financial assets 342,051 316,294
     
Total   3,396,008 3,695,519
     
Liabilities and Equity of Canada    
     
Liabilities    
Accounts payable and accrued liabilities (Note 8)   2,020,323 176,183
Payable to provinces (Note 9) 6,907 8,242
Taxes payable 22,570 23,666
Deposit accounts (Note 10) 39,547 40,823
Employee severance benefits (Note 11) 182,784 168,061
Total   2,272,131 416,975
     
Equity of Canada   1,123,877 3,278,544
     
Total 3,396,008 3,695,519

Contingent liabilities (Note 12)
Contractual obligations (Note 13)
The accompanying notes form an integral part of these financial statements.

Canada Border Services Agency
Statement of Equity of Canada (Unaudited)
For the Year Ended March 31
(in thousands of dollars)


  2008 2007
     
Equity of Canada, beginning of year 3,278,544 3,197,810
Net results   23,245,006 24,541,185
Current year appropriations used (Note 3) 1,448,707 1,281,100
Revenue not available for spending (24,803,029) (26,041,424)
Change in net position in the Consolidated Revenue Fund (Note 3) (2,174,632) 180,573
Services provided without charge from other government
departments (Note 14)
  129,281 119,300
Equity of Canada, end of year 1,123,877 3,278,544

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

Canada Border Services Agency
Statement of Cash Flow (Unaudited)
For the Year Ended March 31
(in thousands of dollars)


  2008 2007
Operating activities    
Net results 23,245,006 24,541,185
     
Non-cash items:    
Services provided without charge by other government departments 129,281 119,300
Amortization of tangible capital assets 32,378 28,431
Loss on disposals and adjustments to capital assets (6,118) (8,866)
Legal Services (Justice) expense 0   435
Bad debt expense   264   158
Contaminated sites expense (98) (59)
     
Variations in Statement of Financial Position:    
(Increase) in accounts receivable and advances (388,606) (9,364)
(Increase) in tax receivables (81,566) (123,583)
(Increase) in prepaid expenses (107) (159)
(Increase) Decrease in inventory (3,399) 552
Increase in accounts payable and accrued liabilities 1,844,140 16,279
(Decrease) Increase in payable to provinces (1,335) 673
(Decrease) Increase in deposit accounts (1,276) 1,153
(Decrease) in tax payables (1,096) (470)
Increase in employee severance benefits 14,723 49,773
     
Cash generated by operating activities 24,782,191 24,615,438
     
Capital investment activities    
Acquisitions of tangible capital assets (48,815) (40,210)
Proceeds from disposal of tangible capital assets 138 214
Cash used by capital investment activities (48,677) (39,996)
     
Financing activities    
Net cash forwarded to the Government of Canada (25,528,954) (24,579,751)
Net cash used (795,440) (4,309)
     
Cash, beginning of year 2,066,739 2,071,048
Cash, end of year 1,271,299 2,066,739

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

1. Authority and Objectives

The Canada Border Services Agency is responsible for providing integrated border services that support national security and public safety priorities and facilitate the free flow of persons and goods. The Canada Border Services Agency Act received royal assent on November 3, 2005. The Agency is a departmental corporation named in Schedule II of the Financial Administration Act and reports to Parliament through the Minister of Public Safety. The Agency is funded through appropriations from the Government of Canada.

The Agency is responsible for the administration and enforcement of the following acts or portions of these acts: the Customs Act, the Customs Tariff, the Excise Act, the Excise Tax Act, the Citizenship Act, the Immigration and Refugee Protection Act, as well as other acts on behalf of other federal departments and provinces.

In delivering efficient and effective border management that contributes to the security and prosperity of Canada, the Agency operates under the following program activities:

  1. The Access program activity ensures the lawful flow of people and goods while promoting compliance with border legislation/regulations.
  2. The Security program activity, within the context of the government’s security agenda, and through effective and efficient border management, ensures the safety and security of Canadians.
  3. The Science- and Technology-Based Innovation (“Science and Technology”) program activity utilizes the science and technology capacity of the Canada Border Services Agency to modernize border management and increase the effectiveness and efficiency of border operations.

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:

(a) Parliamentary appropriations

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

(b) Net Cash Forwarded to the Government of Canada

The Agency operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Agency is deposited to the CRF and all cash disbursements made by the Agency are paid from the CRF. The net cash forwarded to the Government of Canada is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.

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

The change in net position in the Consolidated Revenue Fund 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 the Agency. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.

(d) Tax revenues

Tax revenues reported in this statement include revenues assessed under the authority of the Customs Act, the Customs Tariff, the Excise Act and the Excise Tax Act. These taxes include: excise taxes, which consist of the goods and services tax (GST) and the harmonized sales tax (HST), excise duties and customs import duties. Domestic HST and GST, as well as the input tax credits accorded for GST/HST paid on importations and domestic transactions, are not reflected in these statements as the Canada Revenue Agency is responsible for their administration.

The determination of the Agency’s tax revenues is based on the taxes and duties assessed that relate to goods authorized by the Agency to enter into Canada during the fiscal year that ended March 31. These revenues are recognized at the time the goods are released.

The Canadian customs and tax systems are predicated on self-assessment where importers are expected to understand the laws and comply with them. This has an impact on the completeness of duty and tax revenues when importers fail to comply with laws, for example, if they do not declare or incorrectly declare goods imported. The Agency has implemented systems and controls in order to detect and correct situations where importers are not complying with the various acts it administers. These systems and controls include performing audits of importer records where determined necessary by the Agency. Such procedures cannot be expected to identify all undeclared or incorrectly declared importations or other cases of non-compliance. The Agency does not estimate the amount of unreported duties and taxes. However, such amounts are included in revenues when assessed.

(e) Non-tax revenues

Non-tax revenues reported in this statement include revenues collected on behalf of the Government of Canada under the Immigration and Refugee Protection Act, the Agriculture and Agri-Food Administrative Monetary Penalties Act and other similar legislation.

Non-tax revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenue.

(f) Expenses

All expenses are recorded on an accrual basis:

  • Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment. The liability for vacation pay and compensatory leave is calculated at the salary levels in effect at the end of the year for all unused vacation pay and compensatory leave benefits accruing to employees.
  • Services provided without charge by other government departments for accommodation, workers’ compensation benefits, the employer's contribution to the health and dental insurance plans and legal services are recorded as operating expenses at their estimated cost.
(g) Cash

Cash includes amounts received in Agency offices or by Agency agents as at March 31 but not yet deposited to the credit of the CRF of the Government of Canada.

(h) Accounts receivable and advances

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

(i) Taxes receivable

Taxes receivable represent duties and taxes and other revenues assessed or estimated by the Agency but not yet collected. All receivables are stated at amounts ultimately expected to be realized. A provision is made for doubtful accounts where recovery is considered uncertain. This allowance for doubtful accounts reflects management’s best estimate of the collectibility of amounts assessed but not yet paid.

(j) Inventory

Inventory consists of forms, publications and uniforms and is not intended for resale. Items in the inventory are valued at cost using the weighted average cost method. Items that are considered obsolete are written off. The cost of inventory is charged to operations in the period in which the items are used.

(k) Tangible capital assets

All tangible capital assets having an initial cost of $10,000 or more are recorded at their acquisition cost. Amortization of capital assets, except land, is performed on a straight-line basis over the estimated useful lives of the assets as follows:


Asset class Amortization period
Buildings 30 years
Works and infrastructure 40 years
Machinery and equipment 10 years
Information technology equipment 5 years
In-house-developed software 7 years
Purchased software 3 years
Vehicles 5 years
Assets under construction Once in service, determined in accordance with asset type

(l) Taxes payable

Taxes payable to importers represent refunds and related interest resulting from assessments completed after March 31 for excise duties, customs import duties and GST/HST for current or prior year imports.

(m) Employee future benefits

  1. Pension benefits: Eligible employees participate in the Public Service Superannuation Plan, a multi-employer plan administered by the Government of Canada. The Agency's contributions to the Plan are charged to expense in the year incurred and represent the Agency’s total obligation to the Plan. Current legislation does not require the Agency to make contributions for any actuarial deficiencies of the Plan.
  2. 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.

(n) 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 financial statements.

(o) Environmental liabilities

Environmental liabilities reflect the estimated costs related to the management and remediation of contaminated sites. Based on management’s best estimates, a liability is accrued and an expense recorded when the contamination occurs or when the Agency becomes aware of the contamination and is obligated or is likely to be obligated to incur remedial costs. If the likelihood of the Agency’s obligation to incur these costs is either not determinable or unlikely, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in the notes to the financial statements.
 
(p) 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, environmental liabilities, the liability for employee severance benefits, the allowances for doubtful accounts 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

The Agency receives most of its funding through Parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the Agency has different net results for the year on a government funding basis than on an accrual accounting basis.

These differences are reconciled below:

(a) Reconciliation of net results to current year appropriations used

  2008 2007
  (in thousands of dollars)
     
Net results (23,245,006) (24,541,185)
     
Adjustments for items affecting net results
but not affecting appropriations
   
     
Add (Less):    
Revenue not available for spending 24,803,029 26,041,424
Services provided without charge (129,281) (119,300)
Amortization of tangible capital assets (32,378) (28,431)
Employee severance benefits (14,723) (49,773)
Other  14,745 (61,845)
Total 24,641,392 25,782,075
     
Adjustments for items not affecting net results but affecting appropriations    
     
Add:    
Acquisition of tangible capital assets 48,815 40,210
Inventory purchased 3,399 0
Prepaid expenses 107 0
Total 52,321 40,210
     
Current year appropriations used 1,448,707 1,281,100

(b) Appropriations provided and used

  2008 2007
  (in thousands of dollars)
     
Parliamentary appropriations    
Vote 10 – Operating expenditures 1,429,161 1,264,927
Vote 15 – Capital expenditures 99,364 51,674
Total 1,528,525 1,316,601
     
Statutory amounts    
Contributions to employee benefit plans 149,791 136,844
Spending proceeds from disposal of surplus crown assets 262 365
Refunds of amounts credited to revenues from previous years 519 718
Collection agency fees 8 0
Total 150,580 137,927
     
Available for use in subsequent years    
Vote 10 – Operating expenditures  (165,816) (151,775)
Vote 15 – Capital expenditures (64,462) (21,529)
Total (230,278) (173,304)
     
Appropriations available for future years (120) (124)
     
Current year appropriations used  1,448,707 1,281,100

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

  2008 2007
  (in thousands of dollars)
     
Net cash provided by (deposited to) Government (25,528,954) (24,579,751)
     
Revenue not available for spending 24,803,029 26,041,424
     
Change in net position in the Consolidated Revenue Fund    
Variation in accounts receivable 325,268 (132,947)
Variation in accounts payable and accrued liabilities  1,840,433 7,455
Other adjustments 8,931 (55,081)
Total 2,174,632 (180,573)
     
Current year appropriations used  1,448,707 1,281,100

4. Excise Taxes

Effective January 1, 2008, the GST and HST rates applied against imported goods were reduced from 6% and 14% to 5% and 13% respectively. The excise tax revenue amount appearing in the statement of operations reflects the reduction in the rates. Revenues from excise taxes are remitted in monthly installments to the Department of Finance Canada on the basis of a remittance schedule set by that department. The amounts remitted represent the participating provinces’ share of the HST collected by the Agency under the terms of the Comprehensive Integrated Tax Coordination Agreement.

The following table presents details of the excise tax revenues:


  2008 2007
  (in thousands of dollars)
     
GST/HST (net) 19,448,447 21,290,302
Excise tax - gasoline 91,955 56,615
Other excise tax 46,365 23,696
     
Total excise taxes 19,586,767 21,370,613

5. Accounts Receivable and Advances

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


  2008 2007
  (in thousands of dollars)
     
Receivables from other Federal Government departments and agencies 400,581 12,905
Receivables from external parties 4,338 3,650
Employee advances and other receivables 1,832 1,510
  406,751 18,065
Less: allowance for doubtful accounts on external receivables (701) (621)
     
Total 406,050 17,444

6. Taxes Receivable

Taxes receivable represent the customs duties, excise taxes, GST and HST due to the Receiver General for Canada as a result of importations into Canada.

The following table presents details of taxes receivable:


  2008 2007
  (in thousands of dollars)
     
Taxes receivable 1,498,855 1,450,393
Less: allowance for doubtful accounts (122,247) (155,351)
     
Net taxes receivable 1,376,608 1,295,042

7. Tangible Capital Assets

(in thousands of dollars)


  Cost Accumulated amortization 2008 2007
Capital asset class Opening
balance
Acquisi-
tions
Transfers, disposals, write-offs Closing
balance
Opening balance Amorti-zation Transfers, disposals,
write-offs
Closing
balance


Net book
value


Net book
value
                     
Land 4,402 802 0 5,204 0 0 0 0 5,204 4,402
Buildings 142,232 5,327 0 147,559 45,574 4,873 0 50,447 97,112 96,658
Works and
infrastructure
1,124 0 0 1,124 335 21 0 356 768 789
Machinery and
equipment
63,832 1,422 (3,390) 61,864 27,262 5,777 (3,055) 29,984 31,880 36,570
Information technology equipment,
in-house-developed
and purchased software
122,788 837 8,915 132,540 49,019 19,173 (1,861) 66,331 66,209 73,769
Vehicles 24,348 3,224 (817) 26,755 18,360 2,534 (817) 20,077 6,678 5,988
Assets under
construction
94,153 37,203 (4,627) 126,729 0 0 0 0 126,729 94,153
                     
Total 452,879 48,815 81 501,775 140,550 32,378 (5,733) 167,195 334,580 312,329

8. Accounts Payable and Accrued Liabilities

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


  2008 2007
  (in thousands of dollars)
     
Payables to external parties 45,877 45,088
Payables to other Federal Government departments and agencies 1,876,369 48,948
Accrued salary, vacation pay and compensatory leave 98,077 82,147
Total  2,020,323 176,183

9. Payable to Provinces

The following table presents details on the memorandums of understanding (MOUs) that have been established between the provinces and the Agency, whereby the Agency collects provincial sales, alcohol and tobacco taxes on behalf of the provinces and remits these collections directly to the provinces. 


  2008 2007
  (in thousands of dollars)
     
Payable to provinces, beginning of year   8,242 7,569
Receipts from taxpayers   102,245 78,779
Refunds to taxpayers (1,249) (1,578)
Payments to provinces (102,331) (76,528)
Payable to provinces, end of year   6,907 8,242

10. Deposit Accounts

The deposit accounts were established to record cash and securities required to guarantee payment of customs duties and excise taxes on imported goods pursuant to the Customs Act and the Excise Tax Act and to guarantee the compliance of transporters and individuals with the provisions of the Immigration and Refugee Protection Act

The following table presents details on the deposit accounts:


  Opening
Balance
Receipts Payments Closing
Balance
  (in thousands of dollars)
Guarantee deposit accounts 36,248 12,432 (14,198) 34,482
Other deposit accounts 4,575 490 0 5,065
         
Total deposit accounts 40,823 12,922 (14,198)   39,547

11. Employee Severance Benefits

(a) Pension benefits

The Agency'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 two 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 Agency contribute to the cost of the Plan. The 2007-2008 expense amounts to $26,513,000 ($21,622,000 in 2006-2007), which represents approximately 2.6 times the contributions made by employees.

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

(b) Severance benefits

The Agency provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, is as follows:


  2008 2007
  (in thousands of dollars)
Accrued benefit obligation, beginning of year 168,061 118,288
Expense for the year 26,158   59,390
Benefits paid during the year (11,435) (9,617)
     
Accrued benefit obligation, end of year 182,784 168,061

12. Contingent Liabilities

(a) Contaminated sites

Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where the Agency is obligated or likely to be obligated to incur such costs. The Agency identified one additional site in 2008 (one additional site in 2007) where such action is possible and for which a liability of $770,000 ($870,000 in 2007) has been recorded. The Agency’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 in the year in which they become known.

(b) Claims and litigation

Claims have been made against the Agency in the normal course of operations. Legal proceedings for claims totalling approximately $121,000,000 ($191,000,000 in 2007) were still pending as at March 31, 2008. In addition, appeals for previously assessed customs duties, excise duties, GST and HST have been received in the amount of $89,000,000 ($76,000,000 in 2007).
 
Some of these claims and appeals 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 and expense are recorded in the financial statements. As at March 31, 2008, the Agency has recorded an estimated liability of $290,000 ($290,000 in 2007) in relation to claims and appeals.

13. Contractual Obligations

The nature of the Agency’s activities can result in large multi-year contracts and obligations whereby the Agency will be obligated to make future payments when the services are received.

The only significant contractual obligation that can be reasonably estimated relates to an immigration detention centre located in Toronto. Total contractual obligation for this centre amounts to $23,000,000 for the next fiscal year.

14. Related Party Transactions

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

(a) Services provided without charge:

During the year, the Agency received without charge from other departments, accommodation, legal services, workers’ compensation coverage and the employer’s contribution to the health and dental insurance plans. These services without charge have been recognized in the Agency’s statement of operations as follows:


  2008 2007
  (in thousands of dollars)
     
Accommodation 56,388 52,062
Employer’s contribution to the health and dental insurance plans 67,509 62,388
Workers' compensation coverage    523   452
Legal services 4,861 4,398
Total 129,281 119,300

The Government has structured some of its administrative activities for efficiency and cost-effectiveness such 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 are not included as an expense in the Agency’s statement of operations.

b) Administration of programs:

The Agency has arrangements with the Canada Revenue Agency for the provision of information technology services, which are paid for on a quarterly basis (total of $131,590,000 for 2008 and $97,406,000 in 2007).