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Table 11: Financial Statements of Department of Industry

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 this report rests with departmental management. These statements have been prepared by management in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management’s best estimates and judgement and gives due consideration to materiality. To fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of 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 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 department.

Management is supported by the Departmental Audit Committee (DAC). This Committee approves the departmental audit and evaluation plan and oversees the internal audit and evaluation activities in the Department. It also reviews the results of audits and evaluations as well as management responses and action plans developed to address audit or evaluation recommendations.

The financial statements of the department have not been audited.


Industry Canada Statement of Operations (Unaudited) For the period ended March 31 (in thousands of dollars)
  2008 2007
  Marketplace Science,
technology &
innovation
Economic
development
Total Total
Expenses          
Transfer payments          
Industry 1 123,804 (962) 122,843 231,304
Other 7,779 270,898 208,311 486,988 496,789
Total Transfer Payments 7,780 394,702 207,349 609,831 728,093
Operating expenses
Salaries and employee benefits 267,093 105,842 127,712 500,647 515,195
Professional and special services 54,224 17,562 25,113 96,899 91,231
Accomodation 13,864 21,627 19,963 55,454 53,312
Travel 11,178 2,142 4,497 17,817 20,080
Amortization 9,156 4,723 1,561 15,440 18,244
Communication 7,001 1,529 4,509 13,039 18,216
Furniture and equipment 6,525 4,373 2,189 13,087 17,298
Equipment repair and maintenance 6,270 2,567 1,949 10,786 12,778
Rentals 9,024 443 1,044 10,511 10,974
Utilities, materials and supplies 3,288 4,227 2,406 9,921 9,794
Postage 1,290 237 375 1,902 2,887
Loss on disposal of capital assets 52 120 26 198 79
Other operating expenses 1,838 173 10,246 12,257 (1,849)
Total operating expense 390,803 165,565 201,590 757,958 768,239
Total expenses 398,583 560,267 408,939 1,367,789 1,496,332
Revenues    
Sales of services 608,960 12,714 59,241 680,915 664,624
Dividends 21,482 21,482 20,847
Revenue from fines 14,969 14,969 6,857
Amortization of discounts 1,293 2,017 5,320 8,630 4,472
Other revenue 339 556 309 1,204 3,248
Gains on disposal of assets 301 11 34 346 213
Total revenues 625,862 15,298 86,386 727,546 700,261
Net cost of operations (227,279) 544,969 322,553 640,243 796,071
The accompanying notes form an integral part of these financial statements.

 


Industry Canada Statement of Financial Position (Unaudited) At March 31 (in thousands of dollars)
  2008 2007
ASSETS    
Financial assets    
Accounts receivables and advances (Note 4) 207,628 215,227
Loans (Note 5) 360,473 280,303
Investments (Note 6) 1,066,400 1,066,400
Total financial assets 1,634,501 1,561,930
Non-financial assets
Prepayments 171 234
Tangible capital assets (Note 7) 111,115 107,674
Total non-financial assets 111,286 107,908
TOTAL 1,745,787 1,669,838
LIABILITIES
Accounts payable and accrued liabilities (Note 8) 855,754 627,073
Vacation and compensatory leave 22,816 24,149
Deferred revenue (Note 9) 958,159 1,125,237
Allowance for loan guarantee (Note 12) 301,751 409,828
Allowance for employee severance benefits (Note 11) 81,784 83,557
Other liabilities (Note 10) 27,743 25,163
  2,248,007 2,295,007
Equity of Canada (502,220) (625,169)
TOTAL 1,745,787 1,669,838
Contingent liabilities (Note 12)
Contractual obligations (Note 14)
The accompanying notes form an integral part of these financial statements.

 


Industry Canada Statement of Equity of Canada (Unaudited) At March 31 (in thousands of dollars)
  2008 2007
Equity of Canada, beginning of year (625,169) (714,151)
Net cost of operations (640,243) (796,071)
Current year appropriations used (Note 3) 1,363,914 1,189,667
Revenue not available for spending (521,541) (502,866)
Change in net position in the Consolidated Revenue Fund (Note 3) (163,633) 116,783
Services provided without charge by other government departments (Note 15) 84,452 84,829
Equity Adjustment (Note 13) (3,360)
Equity of Canada, end of year (502,220) (625,169)
The accompanying notes form an integral part of these financial statements.

 


Industry Canada Statement of Cash Flow (Unaudited) For the year ended March 31 (in thousands of dollars)
  2008 2007
Operating activities    
Net cost of operations 640,243 796,071
Non-cash items:    
Amortization of tangible capital assets (15,440) (18,244)
Gain on disposal and write-down of tangible capital assets 149 59
Loss on write-offs of tangible capital assets
Adjustment to tangible capital assets 1,005 (421)
Services provided without charge (Note 15) (84,452) (84,829)
Variations in Statement of Financial Position:    
Decrease in liabilities 47,000 43,198
Increase in financial asset 72,572 35,562
Increase (decrease) in prepaid expenses (63) 12
Change in equity (Note 13) 3,346
Cash used by operating activities 661,014 774,754
Capital investment activities    
Acquisitions of tangible capital assets 18,089 29,090
Proceeds from disposal of tangible capital assets (363) (260)
Cash used by capital investment activities 17,726 28,830
Net cash provided by Government of Canada 678,740 803,584
The accompanying notes form an integral part of these financial statements.

Industry Canada Notes to the Financial Statements (Unaudited)

  1. Authority and Objectives

    The authorities for the programs for which Industry Canada is responsible, are derived from the Department of Industry Act. Many other acts are under the responsibility of the Minister of Industry, and Treasury Board also defines other specific Industry authorities.

    Industry Canada aims to help Canadians contribute to the knowledge economy and improve productivity and innovation performance through its three strategic outcomes, which are mutually reinforcing. Sound marketplace frameworks help establish a business environment that supports innovation, investment and entrepreneurial activity. Fostering innovation in science and technology helps ensure that discoveries and breakthroughs happen here in Canada, and that the social and economic benefits of these innovations contribute to improving Canadians’ standard of living and quality of life. Encouraging investment in technology will help Canadian businesses to compete in the global marketplace and increase opportunities for trade. Successful businesses combined with a sound environment form the sustainable communities that attract investment. Taken together, the Department’s strategic outcomes support growth in employment, income and productivity, and promote sustainable development in Canada.

    Industry Canada’s activities are delivered at its headquarters in Ottawa as well as in the regions. There are six regional offices with service points located across Canada.

    Industry Canada has a number of transfer payment programs through which it provides grants and contributions to recipients in targeted groups and sectors. Each transfer payment program has specific objectives and expected results that support the achievement of Industry Canada’s strategic objectives.

  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 — Industry Canada is financed through Parliamentary appropriations. Appropriations provided to the department 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.
    2. Consolidation — The financial statements include the accounts of Industry Canada including the revolving fund Canadian Intellectual Property Office (CIPO) and special operating agencies Measurement Canada, Superintendent of Bankruptcy and Industrial Technologies Office. The accounts of these sub-entities have been consolidated with those of the department and all inter-organizational balances and transactions have been eliminated. The department’s investment in the Business Development Bank of Canada (BDC) is recorded at cost. The net results of the BDC are not consolidated in these financial statements as the department is not deemed to control the Crown corporation.
    3. Net cash provided by Government — Industry Canada operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by Industry Canada is deposited to the CRF and all cash disbursements made by the department 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.
    4. 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 the department. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.
    5. Revenues
      • Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
      • Funds received from external parties for specified purposes are recorded upon receipt as deferred revenues. These revenues are recognized in the period in which the related expenses are incurred.
      • Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
      • Revenues that have been received but not yet earned are recorded as deferred revenues.
    6. Expenses

      The following expenses are recorded on the accrual basis:

      • Grants are recognized in the year in which the conditions for 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 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.
      • 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 and worker’s compensation costs and legal services are recorded as operating expenses at their estimated cost.
    7. Employee future benefits
      1. 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 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.
    8. Receivables — Receivables are stated as amounts expected to be ultimately realized. A provision is made for receivables where recovery is considered uncertain.
    9. Loans — Loans are stated at the amounts realized. Loans are subject to payment in the event of the default of the debtor. An allowance is used to reduce the carrying value of the loans to amounts that approximate their net realizable value. Interest on loans receivable is applied in accordance with the policy that governs the loan. Interest revenue is recognized at the time it is applied to the account.
    10. Allowances for loan guarantees — An allowance for loan guarantees is recorded for potential losses on loan guarantees when it is likely that a payment will be made in the future to honour a guarantee and when the amount of the loss can be reasonably estimated.

      The allowance for losses on outstanding loan guarantees is based upon forecasting models developed by program areas.

    11. Repayable contributions — Repayable contributions are contributions the recipient is expected to repay. Depending on their nature, they are classified as either unconditionally repayable or conditionally repayable and are accounted for differently.
      1. Unconditionally repayable contributions are contributions that must be repaid without qualification. Normally, these contributions are provided with a low or no interest clause. They are recorded on the Statement of Financial Position as loans at their estimated present value, if they contain significant concessionary terms (defined to be when the grant portion is greater than 25% of the contribution). Otherwise, they are recorded at the face value of the loan. A portion of the unamortized discount is brought into income each year to reflect the change in the present value of the contributions outstanding. Appropriate allowances for uncollectible amounts are also established based on an individual appraisal of accounts.
      2. Conditionally repayable contributions are contributions that, all or a part of become repayable, if conditions specified in the contribution agreement come into effect. Accordingly, they are not recorded on the Statement of Financial Position until such time as the conditions specified in the agreement are satisfied, at which time they are then recorded as a receivable and a corresponding reduction in transfer payment expense.
    12. Prepaid expenses — Includes prepaid expenses, deferred charges, and payments where, pursuant to a contract or contribution agreement, a payment is made before the completion of the work, delivery of the goods or rendering of the service.
    13. 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.
    14. Environmental liabilities — Environmental liabilities reflect the estimated costs related to the management and remediation of environmentally contaminated sites. Based upon 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 financial statements.
    15. Foreign currency transactions — Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars using the rate of exchange in effect on March 31, 2008. Gains and losses resulting from foreign currency transactions are included in the “Other Revenue” line on the Statement of Operations.
    16. Tangible capital assets — All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The department does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.

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


      Asset class Amortization period
      Buildings 15 to 30 years
      Works and Infrastructure 30 years
      Machinery and equipment 3 to 10 years
      Vehicles 5 to 10 years
      Assets under construction Once in service, in accordance with asset type
      Leasehold improvements Lesser of the remaining term of the lease or useful life of the improvement

    17. 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 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

    Industry Canada receives most of its funding through annual Parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year, may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the Department 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:

    1. Reconciliation of net cost of operations to current year appropriations used:
        2008 2007
        (in thousands of dollars)
      Net cost of operations 640,243 796,071
      Adjustments for items affecting net cost of operations but not affecting appropriations:    
      Add (Less):    
         Revenue not available for spending 521,541 502,866
         Repayment of conditionally repayable contributions 180,015 127,356
         Services provided without charge (84,452) (84,829)
         Allowance for loan guarantees 108,755 58,709
         Bad debts/write-offs/write-downs (14,221) 3,261
         Amortization of tangible capital assets (15,440) (18,244)
         Employee severance benefits 1,773 (4,216)
         Adjustment of previous years expenditures 7,930 8,455
         Refund of previous years expenditures 3,861 9,343
         Transfer payment adjustments 8,746 3,120
         Justice Canada fees - (5,425)
         Allowance for accrued liabilities (12) 288
         Vacation pay and compensatory leave 903 1,387
         Loss on disposal and write-down of tangible capital
         assets
      (198) (154)
         Year-end accrual of transfer payments (107,757) (246,000)
         Other 935 (2,559)
        1,252,622 1,149,429
      Adjustments for items not affecting net cost of operations but affecting appropriations:    
      Add (Less):    
         Loans, Investments, and Advances 96,662 21,776
         Deferred revenue (3,889) (10,964)
         Acquisitions of tangible capital assets 18,089 29,090
         Allowance for Vacation Pay 430 336
        111,292 40,238
      Current Year Appropriation Used 1,363,914 1,189,667

    2. Appropriation provided and used
        2008 2007
        (in thousands of dollars)
      Vote 1 - Operating expenditures 427,254 436,697
      Vote 5 - Capital expenditures 18,232 32,265
      Vote 10 - Grants and contributions 760,840 682,194
      Statutory amounts 417,446 235,115
        1,623,772 1,386,271
      Less:    
      Appropriations available for future years (138,808) (117,434)
      Lapsed appropriations: Operating (121,050) (79,170)
      Current year appropriations used 1,363,914 1,189,667

    3. Reconciliation of net cash provided by Government to current year appropriations used
        2008 2007
        (in thousands of dollars)
      Net cash provided by Government of Canada 678,740 803,584
         Revenue not available for spending 521,541 502,866
        1,200,281 1,306,450
      Change in net position in the Consolidated Revenue Fund    
      Variations in Statement of Financial Position:    
         Variation in financial assets (72,572) (35,562)
         Variation in liabilities (47,000) (43,198)
         Variation in prepaid expenses 63 (12)
         Other:    
            Year-end accrual of transfer payments (107,757) (246,000)
            Repayment of conditionally repayable
            contributions
      180,015 127,356
            Allowance for loan guarantees 108,755 58,709
            Loans, Investments, and Advances 96,662 21,776
            Misc 5,467 148
      Total 163,633 (116,783)
      Current year appropriation used 1,363,914 1,189,667

  4. Accounts receivables and advances


      2008 2007
      (in thousands of dollars)
    External    
       Accounts receivable – other revenue 44,875 66,788
       Allowance for doubtful accounts (41,545) (31,442)
       Accrued receivables 21,699 21,720
       Employee advances 114 115
       Other 2 735
    Total external 25,145 57,916
    Receivables from other Federal Government departments and agencies 182,483 157,311
    Total accounts receivable and advances 207,628 215,227

  5. Loans


      2008 2007
      (in thousands of dollars)
    Atlantic Provinces Power Development Act 1,132 1,783
    Enterprise Development Loans 110,000 110,000
    Unamortized discount loans (31,124) (34,583)
      78,876 75,417
    Unconditionally repayable contributions 281,568 209,568
       Less: Unamortized discount (1,103) (6,275)
       Less: Allowance for doubtful loans and advances - (190)
    Net unconditionally repayable contributions 280,465 203,103
    Loans and advances on expired loan guarantees 216,354 84,454
       Less: Allowance for doubtful loans (216,354) (84,454)
    Net Loans on expired loan guarantees
    Total loans 360,473 280,303

    Atlantic Provinces Power Development Act
    Loans have been made to Atlantic Provinces, to assist in the generation of electrical energy by steam driven generators in the provinces, and in the control and transmission of electric energy. The loans bear interest at rates from 4.5% to 8.5% per annum, and are repayable in annual instalments over the next 6 years, with final instalments due March 31, 2014.

    Enterprise development loans
    These loans are made to industries engaged in manufacturing, processing or service industries in Canada in order to promote the establishment, improvement, growth, efficiency or international competitiveness of such industries, or to assist them in their financial restructuring. There is one interest-free loan outstanding which is repayable at maturity on April 1, 2017.

    Unconditionally repayable contributions
    The unamortized discount on unconditionally repayable contributions is calculated by applying the 25% rule on an individual loan basis.

    Loans and advances on expired loan guarantees
    The Department guarantees loans to small business enterprises under the Small Business Loans Act, the Canada Small Business Financing Act, the Capital Leasing Pilot Project and other loan guarantee payments net of recoveries.

  6. Investments


      2008 2007
      (in thousands of dollars)
    Business Development Bank of Canada 1,066,400 1,066,400
    Total investments 1,066,400 1,066,400

    Business Development Bank of Canada
    The Corporation is an agent of Her Majesty, reports through the Minister of Industry, and is listed in Part I of Schedule III of the Financial Administration Act. Included in the account are:

    • Common Shares — The Government’s investment in the common shares of the Corporation represents a book value of $808.4 million.
    • Preferred Shares — The outstanding book value of preferred shares purchased pursuant to Section 23 of the Business Development Bank of Canada Act as at March 31, 2004 is $230 million.
    • Contributed Capital — Contributed capital in the amount of $28 million was issued in 1999–2000 in counterpart of the transfer of the Cultural Industries Development Fund to the Corporation.

    For the period ending March 31, 2008, the department received $21,482,202 in dividend revenue from the BDBC ($20,847,118 in 2006–2007).

  7. Tangible capital assets


    (in thousands of dollars) Cost Accumulated amortization    
    Tangible capital asset class Opening balance Acquisitions Disposals/
    write-offs/
    adjustments*
    Closing
    balance
    Opening
    balance
    Amortization Disposals/
    write-offs/
    adjustments*
    Closing balance Current year
    net book value
    Previous year
    net book value
    Land 1,450 1,450 1,450 1,450
    Buildings 35,552 84 35,636 18,768 1,276 20,044 15,592 16,784
    Works and infrastructure 6,178 6,178 3,856 209 4,065 2,113 2,322
    Machinery and equipment 140,688 3,817 5,678 138,827 100,150 10,254 6,789 103,615 35,212 40,538
    Vehicles 12,367 1,254 1,261 12,360 8,645 1,104 1,249 8,500 3,860 3,722
    Assets under construction 30,475 11,469 307 41,637 41,637 30,475
    Leasehold improvements 20,610 1,465 22,075 8,227 2,597 10,824 11,251 12,383
    Total 247,320 18,089 7,246 258,163 139,646 15,440 8,038 147,048 111,115 107,674

    Amortization expense for the year ended March 31, 2008 is $15,440,097 (2006–2007 — $18,244,139).

    * Includes primarily disposals, write-offs, but also includes minor adjustments for transfers of capital assets between Industry Canada and other departments.

  8. Accounts payable and accrued liabilities


      2008 2007
      (in thousands of dollars)
    External    
       Accounts payable 476,384 362,025
       Accrued salaries & wages 12,771 10,158
       Accrued liabilities 345 332
       Transfer payments 353,757 246,000
       Other external payables 87 91
       Total external 843,344 618,606
    Other government departments 12,410 8,467
    Total accounts payable and accrued liabilities 855,754 627,073

  9. Deferred revenue

    The majority of the department's deferred revenues result from the auction of radio license frequencies. These revenues are recognized over a ten-year period. Another main source of deferred revenues comes from examination requests of intellectual property. These fees are charged in advance and recognized as revenue once the exam is completed.

    Prime Minister’s Awards were established to record amounts deposited by external parties to be used in support of the Prime Minister’s Awards for Teaching Excellence.


      2008 2007
      (in thousands of dollars)
    Opening balance 1,125,237 1,285,782
    Licence fees received 203,967 203,159
    Licence fees earned (375,409) (373,750)
      (171,442) (170,591)
    Fees for trademarks, patents and copyrights received 32,999 31,722
    Fees for trademarks, patents and copyrights earned (29,110) (21,540)
      3,889 10,182
    Other services of regulatory nature received 657 763
    Other services of regulatory nature earned (763) (767)
      (106) (4)
    Prime Minister awards received 150
    Prime Minister awards disbursed (125)
      150 (125)
    Customer deposits received 56,629 55,593
    Customer deposits disbursed (56,198) (55,600)
      431 (7)
    Deferred revenue, closing balance 958,159 1,125,237

  10. Other Liabilities

    Other liabilities represent funds received from third parties to be disbursed for a specified purpose. Activity during the year in these accounts is as follows:


      Opening
    balance
    Receipts Payments Closing
    balance
      (in thousards of dollars)
    Cost sharing projects 910 1,344 950 1,304
    Securities in Trust, Bankruptcy and Insolvency Act 83 83
       Contra — Securities in Trust, Bankruptcy and Insolvency Act (31) (31)
    Unclaimed Dividends and Undistributed Assets 15,109 3,440 1,222 17,327
    Petro Canada Enterprises unclaimed shares 961 271 690
    Canada Business Corporations Act (CBCA) 7,306 575 336 7,545
    Winding-up and Restructuring Act 727 727
    Canada/Provinces Business Service Centre 98 400 400 98
    Total other liabilities 25,163 5,759 3,179 27,743

    Cost sharing projects — Industry Canada partners with other governments and external organizations to deliver programs and services that contribute to an innovative economy. The account was established to record amounts deposited by these partners.

    Securities in trust and income from Securities in Trust, Bankruptcy and Insolvency Act — was established to record dividends paid on shares held by a bankrupt stockbroker on behalf of clients. As the shares were not registered in clients’ names, dividends are paid to the last registered owner, in this case, the stockbroker. These dividends are forwarded to the Superintendent of Bankruptcy until such time as rightful owners are identified.

    Unclaimed Dividends and Undistributed assets, Bankruptcy and Insolvency Act — This account represents amounts credited to the Receiver General in accordance with the provisions of the Act, pending distribution to creditors.

    Petro-Canada Enterprises Inc. — unclaimed shares — was established to record the liability to shareholders who have not presented their shares for payment in accordance with Section 227 of the Canada Business Corporations Act.

    Unclaimed Dividends and Undistributed Assets, Canada Business Corporations Act — was established for the purpose of recording liabilities to creditors and shareholders who have not been located. The account is charged when funds are paid to them.

    Winding-up and Restructuring Act — records deposits credited to the Receiver General as a result of the final winding-up of the operations of a company, in accordance with sections 138 and 139 of the Winding-up and Restructuring Act, pending distribution to the persons entitled thereto.

    Canada/Provinces Business Service Centre — was established to record monies received from provinces under cost-sharing agreements for the Canada-Ontario Business Service Centre.

  11. Employee benefits

    1. Pension benefits

      Industry Canada’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 department contribute to the cost of the Plan. The 2007–2008 expense amounts to $51,604,353 ($51,811,249 in 2006–2007), which represents approximately 2.1 times (2.2 in 2006–2007) the contributions by employees.

      The department'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 department provides severance benefits to its employees based on eligibility, years of service and finally 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 83,557 79,341
      Expense for the year 7,859 13,297
      Benefits paid during the year (9,632) (9,081)
      Accrued benefit obligation end of year 81,784 83,557

  12. Contingent liabilities

    1. Contaminated sites

      Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where the department is obligated or likely to be obligated to incur such costs. The department has identified 2 sites where such action is possible and for which a liability of $99,657 ($132,281 in 2006–2007) has been recorded. The department’s ongoing efforts to assess contaminated sites may result in additional environmental liabilities related to newly identified sites, or changes in the assessments or intended use of existing sites. These liabilities will be accrued by the department in the year in which they become known.

    2. Claims and litigation

      Claims have been made against the department in the normal course of operations. Legal proceedings for claims totalling approximately $245,207 ($200,000 in 2006–2007) were still pending at March 31, 2008. Some of these potential liabilities may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded in the financial statements.

    3. Loan guarantees

      The department has guaranteed the following debts:


      (in thousands of dollars) Authorized
      Limit
      Loan Guarantee
      Outstanding
      Balance
      Enterprise Development Program 1,200,000 212
      Small Business Loan Act Loan Guarantee Program (SBLA) 1,838,292 34,725
      Canadian Small Business Financing Act Loan Guarantee Program (SBFA) 1,290,263 741,037
      Capital Leasing Pilot Project 15,652 14,037
      Regional Aircraft Credit Facility 1,500,000 178,074

      An allowance of $301,751,409 has been recorded for estimated losses on outstanding loan guarantees ($409,828,101 in 2006–2007). The expenses related to loan guarantees are reported under other transfer payments in the Statement of Operations.

      Enterprise Development Program — Loans are made to Canadian manufacturers and members of the service industry for the purpose of promoting the establishment, growth, efficiency and international competitiveness of Canadian industry. These loans also foster the expansion of Canadian industry and of Canadian trade to a person engaged or about to engage in manufacturing, processing or other commercial activity.

      Small Business Loan Act (SBLA) Loan Guarantee Program and Canadian Small Business Financing Act (CSBFA) Loan Guarantee Program — Loans are made directly by approved lenders to small business enterprises, providing for sharing of each individual loan loss, if any, on the basis of 85% government, 15% lender, to an aggregate, per lending institution not exceeding the Minister’s contingent liability, as stated in Section 5 of the SBLA and Section 6(2) of the CSBFA.

      The authorized limit represents the Crown’s maximum liability incurred on the aggregate amount of loans made by the lender starting in April 1985 (SBLA) and April 1999 (CSBFA).

      The outstanding guarantee for loans made starting in April 1985 (SBLA) and April 1999 (CSBFA) is the lesser of the Crown’s net liability (authorized limit less claims paid by the Crown) or the outstanding loan amounts of the lenders.

      Capital Leasing Pilot Project (CLPP) — Capital leases are entered directly by approved lenders to small business enterprises, providing for sharing of each individual lease loss, if any, on the basis of 85% government, 15% lessor to an aggregate, per leasing institution, not exceeding the Minister’s contingent liability based upon the aggregate amount of leases registered per leasing institution, as stated in section 7 of the CLPP.

      The authorized limit represents the Crown’s maximum liability incurred on the aggregate amount of the capital leases having been entered or transferred since the period starting in April 2002.

      The outstanding guarantee for capital leases entered into in April 2002, is the lesser of the Crown’s net liability or the outstanding capital lease amount of the lessors.

      Regional Aircraft Credit Facility — The department has extended loan guarantees on several Air Canada regional jets. Provisioning from the Canada Account Loss Provisioning Pool has been set aside by Finance Canada, manager of the funds. The loan guarantees began in the summer of 2005 and have a life of 15 years.

  13. Equity Adjustment


      2008 2007
      (in thousands of dollars)
    Aboriginal Business Canada / First Nations SchoolNet 3,346
    Office of the Registrar of Lobbyists 14
      3,360

    Aboriginal Business Canada / First Nations SchoolNet — Pursuant to the Order in Council P.C. 2006-1351, an equity adjustment in the amount of $3,345,741 was processed to transfer out Aboriginal Business Canada and First Nations SchoolNet. The Order in Council transferred the control and supervision of Aboriginal Business Canada and First Nations SchoolNet from the Department of Industry to the Department of Indian Affairs and Northern Development (DIAND) effective December 1, 2006. The result was a mid-year transfer occurring the same date as the Order in Council, which included accounts receivable, capital assets and loan balances.

    Office of the Registrar of Lobbyists — An equity adjustment for $14,335 related to Order in Council P.C. 2006-49, which transferred the control and supervision of the Office of the Registrar of Lobbyists from the Minister of Industry to the President of the Treasury Board effective February 6, 2006. As of April 1, 2006, Office of the Registrar of Lobbyists was reported separately. The adjustment pertained to the transfer of a capital asset that is reported on the Office of the Registrar of Lobbyists’s financial statements.

  14. Contractual obligations

    The nature of the department’s activity results in some large multi-year contracts and obligations whereby the department will be committed to make future payments when the services/goods are rendered. Major commitments that can be reasonably estimated are as follows:


      2009 2010 2011 2012 Thereafter Total
      (in thousands of dollars)
    Transfer payments 598,085 426,470 300,659 210,629 177,673 1,713,516
    Other good and services 71,102 4,378 1,156 856 2,820 80,312
    Other 10,925 10,925
    Total 680,112 430,848 301,815 211,485 180,493 1,804,753

  15. Related party transactions

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

    Services provided without charge:

    During the year the department received without charge from other departments, accommodation, legal fees and the employer's contribution to the health and dental insurance plans. These services without charge have been recognized in the department's Statement of Operations as follows:


      2008 2007
      (in thousands of dollars)
    Accomodation provided by Public Works and Government Services Canada (PWGSC) 55,454 53,312
    Contributions covering employees' share of insurance premiums and expenditures paid by Treasury Board Secretariat 21,726 25,594
    Workman's compensation coverage provided by Human Resources Social Development Canada 454 627
    Salary and associated expenditures of legal services provided by Justice Canada 6,818 5,296
    Total services provided without charge 84,452 84,829

    The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General, are not included as an expense in the department's Statement of Operations.

  16. Comparative information

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