Copyright Board Canada
Canada

Copyright Board of Canada

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2017, and all information contained in these statements rests with the management of the Copyright Board of Canada (the Board). These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.

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 Board's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Board's Departmental Results Report, is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the Board and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

The Board is subject to periodic Core Control Audits performed by the Office of the Comptroller General and uses the results of such audits to adhere to the Treasury Board (TB) Policy on Internal Control.

A core Control Audit was performed in 2015-16 by the Office of the Comptroller General of Canada. The Audit Report and related Management Action Plan are posted on the departmental website at: https://cb-cda.gc.ca/about-apropos/20160607-audit-e.pdf.

The financial statements of the Board have not been audited.

 
The paper version was signed by  
Deputy Head Claude Majeau Ottawa, Ontario
Chief Financial Officer Gilles McDougall Ottawa, Ontario

Copyright Board of Canada
Statement of Financial Position (Unaudited)
As at March 31

(in dollars)    
  2017 2016
Liabilities    
Accounts payable and accrued liabilities (note 4) 188,764 258,045
Vacation pay and compensatory leave 154,837 132,422
Employee future benefits (note 5) 82,136 96,088
Total liabilities 425,737 486,555
Financial Assets    
Due from Consolidated Revenue Fund 121,809 172,709
Accounts receivable and advances (note 6) 70,123 85,337
Total gross financial assets 191,932 258,046
   
Financial assets held on behalf of Government    
Accounts receivable and advances (note 6) (70,123) (85,337)
Total financial assets held on behalf of Government (70,123) (85,337)
   
Total net financial assets 121,809 172,709
   
Departmental net debt 303,928 313,846
   
Non-financial assets    
Tangible capital assets (note 7) 140,674 -
Total non-financial assets 140,674 -
Departmental net financial position $ (163,254) $ (313,846)
 
Contractual Obligations (note 8)
The accompanying notes form an integral part of these financial statements.

Copyright Board of Canada
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31

(in dollars)
2017 2017 2016
Planned Results
Expenses
Copyright Tariff Setting and Issuance of Licences $ 2,870,668 $ 2,711,467 $ 2,595,878
Internal Services 673,368 671,090 622,244
Total expenses 3,544,036 3,382,557 3,218,122
Revenues
Sales of services - 205 15
Revenues earned on behalf of Government (205) (15)
Total revenues - - -
Net cost of operations before government funding and transfers 3,544,036 3,382,557 3,218,122
Government funding and transfers
Net cash provided by Government 3,150,517 2,961,519
Change in due from the Consolidated Revenue Fund (50,900) (216,184)
Services provided without charge by other government departments (note 9) 433,532 411,782
Net cost of operations after government funding and transfers (150,592) 61,005
Departmental net financial position - Beginning of year (313,846) (252,841)
Departmental net financial position - End of year $ (163,254) $ (313,846)
Segmented Information (note 10)
The accompanying notes form an integral part of these financial statements. Segmented Information (Note 9).

Copyright Board of Canada
Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31

(in dollars)
2017 2016
Net cost of operations after government funding and transfers $ (150,592) $ 61,005
Change due to tangible capital assets
Acquisition of tangible capital assets 150,722 -
Amortization of tangible capital assets (10,048) -
Total change due to tangible capital assets 140,674 -
Net increase (decrease) in departmental net debt (9,918) 61,005
Departmental net debt - Beginning of year 313,846 252,841
Departmental net debt - End of year $ 303,928 $ 313,846
The accompanying notes form an integral part of these financial statements.

Copyright Board of Canada
Statement of Cash Flows (Unaudited)
For the Year Ended March 31

(in dollars)
2017 2016
Operating activities
Net cost of operations before government funding and transfers $ 3,382,557 $ 3,218,123
Non-cash items:
Amortization of tangible capital assets (10,048) -
Services provided without charge by other government departments (note 9) (433,532) (411,782)
Variations in Statement of Financial Position:
Decrease in accounts payable and accrued liabilities 69,281 161,972
Increase in vacation pay and compensatory leave (22,415) (26,049)
Decrease in future employee benefits 13,952 19,255
Cash used in operating activities 2,999,795 2,961,519
Investing Activities
Acquisition of Tangible Capital Assets 150,722 -
Net cash provided by Government of Canada $ 3,150,517 $ 2,961,519
The accompanying notes form an integral part of these financial statements.

1.a Authority and Objectives          

The Board is an independent administrative agency which has been conferred department status for purposes of the Financial Administration Act. Its mandate stems from the Copyright Act.

The Board's principal mandate is to set royalties which are fair and equitable for both copyright owners and users of copyright-protected works, as well as issuing non-exclusive licences authorizing the use of works when the copyright owner cannot be located.

The Board has two program activities:

  • Copyright tariff setting and issues of licences; and
  • Internal services

The Act requires that the Board certify tariffs in the following fields: the public performance or communication of musical works and of sound recordings of musical works, the retransmission of distant television and radio signals, the reproduction of television and radio programs by educational institutions and private copying. In other fields where rights are administered collectively, the Board can be asked by a collective society to set a tariff; if not, the Board can act as an arbitrator if the collective society and a user cannot agree on the terms and conditions of a licence.

The Board reports annually to Parliament through the Minister of Innovation, Science and Economic Development Canada.

2. Summary of Significant Accounting Policies

These financial statements have been prepared using the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

  • Parliamentary authorities - The Board is financed by the Government of Canada (GC) through Parliamentary authorities. Financial reporting of authorities provided to the Board do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the "Expenses" sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2016-17 Report on Plans and Priorities. Planned results are not presented in the "Government funding and transfers" section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2016-17 Report on Plans and Priorities.
  • Net cash provided by Government - The Board operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Board is deposited to the CRF, and all cash disbursements made by the Board 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 Government.
  • Amounts due from or to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the Board is entitled to draw from the CRF without further authorities to discharge its liabilities.
  • Revenues:

    Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

    Revenues that are non-respendable are not available to discharge the Board's liabilities. While the Deputy Head is expected to maintain accounting control, he or she has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the GC and are therefore presented in reduction of the entity's gross revenues.

  • Expenses – Expenses are recorded on the accrual basis:
    • vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment; and
    • services provided without charge by other government departments for accommodation, and the employer's contribution to the health and dental insurance plans are recorded as operating expenses at their estimated cost.
  • Employee future benefits
    • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government. The Board's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Board's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the GC, as the Plan's sponsor.
    • Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. 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.
  • Accounts receivable are stated at the lower cost and net recoverable value. A valuation allowance is recorded for accounts receivable where recovery is considered uncertain.
  • Tangible capital assets - All tangible capital assets having an initial cost of $10,000 or more are recorded at their acquisition cost. The Board 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 assets as follows:

    Asset Class Amortization period
    Machinery and Equipment 10 years
    Computer Hardware 3 to 5 years
    Leasehold Improvements 10 years


  • Measurement uncertainty - The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities 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 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 Authorities

The Board receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the Board has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables.

(a) Reconciliation of net cost of operations to current year authorities used

2017 2016
(in dollars)
Net cost of operations before government funding and transfers $ 3,382,557 $ 3,218,122
Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments (433,532) (411,782)
Amortization of tangible capital assets (10,048) -
Decrease in employee future benefits 13,952 19,255
Adjustment of previous year's Accounts Payable 8,823 29,158
Increase in vacation pay and compensatory leave (22,415) (26,049)
Other 5,669 -
Total items affecting net cost of operations but not affecting authorities (437,551) (389,418)
Adjustments for items not affecting net cost of operations but affecting authorities
Acquisitions of Tangible Capital Assets 150,772 -
Current year authorities used $ 3,095,728 $ 2,828,704

(b) Authorities provided and used

2017 2016
(in dollars)
Authorities Provided:
Vote 45 - Operating expenditures $ 2,954,587 $ 2,962,198
Statutory amounts 241,204 255,214
3,195,791 3,217,412
Less:
Less:
Authorities available for future years
Lapsed authorities: Operating expenditures (100,063) (388,707)
Current year authorities used $ 3,095,728 $ 2,828,704

4. Accounts payable and accrued liabilities

The following table presents details of the Board's accounts payable and accrued liabilities.

2017 2016
(in dollars)
Accounts payable to external parties 94,159 170,895
Accrued salaries and wages 89,152 81,239
Accounts payable to other government departments and agencies 5,453 5,911
Total accounts payable $ 188,764 $ 258,045

5. Employee future benefits

  1. Pension benefits

    The Board's employees participate in the Public Service Pension Plan (the "Plan"), which is sponsored and administered by the GC. 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/Québec Pension Plan benefits and they are indexed to inflation.

    Both the employees and the Board contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups - Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

    The 2016-17 expense amounts to $215,082 ($226,375 in 2015-16). For Group 1 members, the expense represents approximately 1.12 times (1.25 times in 2015-16) the employee contributions and, for Group 2 members, approximately 1.08 times (1.24 times in 2015-16) the employee contributions.

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

  2. Severance benefits

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

    As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

    2017 2016
    (in dollars)
    Accrued benefit obligation - Beginning of year $ 96,088 $ 115,343
    Expense for the year (13,952) (19,255)
    Accrued benefit obligation - End of year $ 82,136 $ 96,088

6. Accounts Receivable and Advances

2017 2016
(in dollars)
Receivables from other government departments and agencies $ 56,879 $ 67,000
Employee Advances and Overpayments 5,669 -
Other Receivables 7,575 18,337
Gross accounts receivables and advances 70,123 85,337
Accounts receivable held on behalf of Government (70,123) (85,337)
Net accounts receivable and advances $ - $ -

7. Tangible Capital Assets

(in dollars)

Cost
Capital asset class Opening balance Acquisitions Closing balance
Machinery and equipment 43,536 - 43,536
Computer hardware 115,291 - 115,291
Leasehold Improvements - 150,722 150,722
Total 158,827 150,722 309,549
Accumulated Amortization
Capital asset class Opening balance Amortization Closing Balance
Machinery and equipment 43,536 43,536
Computer hardware 115,291 115,291
Leasehold Improvements - 10,048 10,048
Total 158,827 10,048 168,875
Net Book Value
Capital asset class 2017 2016
Machinery and equipment - -
Computer hardware - -
Leasehold Improvements 140,674 -
Total 140,674 -

8. Contractual Obligations

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

2018 2019 2020 2021 Total
(in dollars)
Other goods and services 303,728 - - - 303,728
Other 704,727 45,800 46,709 280 797,516
$ 1,008,455 $ 45,800 $ 46,709 $ 280 $ 1,101,244

9. Related party transactions

The Board is related as a result of common ownership to all government departments, agencies, and Crown corporations. The Board enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the Board received common services which were obtained without charge from other Government departments as disclosed below.

(a) Common services provided without charge by other government departments

During the year, the Board received without charge from certain common service organizations, related to accommodation and the employer's contribution to the health and dental insurance plans. These services provided without charge have been recorded in the Board's Statement of Operations and Departmental Net Financial Position as follows:

2017 2016
(in dollars)
Accommodation $ 293,577 $ 284,072
Employer's contribution to the health and dental insurance plans 139,955 127,710
Total $ 433,532 $ 411,782

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the 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 in the Board's Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties

2017 2016
(in dollars)
Expenses - Other Government departments and agencies 764,913 659,413

Expenses disclosed in (b) exclude common services provided without charges, which are already disclosed in (a).

10. Segmented Information

Introduction

Presentation by segment is based on the Board program alignment architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the main program, by major object of expense and by major type of revenue. The segment results for the period are as follows:

(in dollars) Copyright Tariff Setting and Issuance of Licences Internal Services 2017 Total 2016 Total
Operating expenses
Salaries and employee benefits $ 1,566,547 $ 367,461 $ 1,934,008 $ 1,929,977
Professional and special services 553,377 130,307 683,684 548,620
Accommodation 237,798 55,780 293,578 284,072
Communication 106,277 24,929 131,206 164,543
Rental 89,749 21,157 110,906 87,875
Equipment repair and maintenance 35,665 43,720 79,385 31,647
Utilities, materials and supplies 44,919 11,909 56,828 51,294
Furniture and equipment 42,512 9,972 52,484 74,063
Travel 24,661 5,785 30,446 45,540
Amortization 10,048 - 10,048 -
Postage and freight 509 119 628 882
Other operating expenses (595) (49) (644) (392)
Total expenses 2,711,467 671,090 3,382,557 3,218,122
Revenues
Sales of services 205 - 205 15
Revenues earned on behalf of Government (205) - (205) (15)
Total Revenues - - - -
Net cost from continuing operations $ 2,711,467 $ 671,090 $ 3,382,557 $ 3,218,122