2009-2010 - Financial Statements

Notes to the Financial Statements 2009-2010 (unaudited)

Statement of Management Responsibility

Responsibility for the compilation, content and presentation of the accompanying future-oriented financial information for the years ended March 31, 2010 and 2011 and all information contained in these statements rests with Copyright Board of Canada management. The future-oriented financial information has been prepared by management in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector. The future-oriented financial information is submitted for Part III of Estimates (Report on Plans and Priorities) and will be used in the Copyright Board of Canada’s Departmental Performance Report to compare with actual results.

Management is responsible for the integrity and objectivity of the information contained in future-oriented financial information and for the process of developing assumptions. Assumptions and estimates are based upon information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in the Copyright Board of Canada’s mandate and strategic objectives. Much of the future-oriented financial information is based on these assumptions, best estimates and judgment and gives due consideration to materiality. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. However, as with all such assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

The actual results achieved for the fiscal years covered in the accompanying future-oriented financial information will vary from the information presented and the variations may be material.

The future-oriented financial statements of the Copyright Board of Canada have not been audited.

(Vacant)
	The paper version was signed by
Deputy Head	Claude Majeau	Ottawa, Canada
Gilles McDougall	A/Senior Financial Officer	Ottawa, Canada

Copyright Board of Canada
Future-oriented Statement of Operations (unaudited)
For the year ended March 31

(in thousands of dollars)
	Forecast 2010-11	Estimated Results 2009-10
Operating Expenses
Salaries and employee benefits	2,189	2,121
Professional and special services	560	560
Accommodation	229	224
Travel	207	206
Information services	94	94
Rentals	76	76
Telecommunication services	60	60
Utilities, materials and supplies	56	56
Other	53	53
Net cost of operations	3,521	3,450
The accompanying notes form an integral part of these future-oriented financial statements

Copyright Board of Canada
Future-oriented Statement of Financial Position (unaudited)
At March 31

(in thousands of dollars)
ASSETS	Forecast 2010-11	Estimated Results 2009-10
Financial assets
Accounts receivable (Note 8)	33	33
Non-financial assets
Tangible capital assets (Note 7)	42	53
TOTAL	75	86
LIABILITIES
Accounts payable and accrued liabilities (Note 8)	198	198
Vacation pay and compensatory leave	202	183
Employee future benefits (Note 9)	323	282
Total liabilities	723	663
Equity of Canada	(648)	(577)
TOTAL	75	86
Contractual obligations (Note 10)
The accompanying notes form an integral part of these future-oriented financial statements

Copyright Board of Canada
Future-oriented Statement of Equity of Canada (unaudited)
For the year ended March 31

(in thousands of dollars)
	Forecast 2010-11	Estimated Results 2009-10
Equity of Canada, beginning of year	(577)	(492)
Net cost of operations	(3,521)	(3,450)
Current year appropriations used (Note 5)	3,110	3,054
Change in net position in the Consolidated Revenue Fund	-	(21)
Services provided without charge (Note 11)	340	332
Equity of Canada, end of year	(648)	(577)
The accompanying notes form an integral part of these future-oriented financial statements

Copyright Board of Canada
Future-oriented Statement of Cash Flow (unaudited)
For the year ended March 31

(in thousands of dollars)
	Forecast 2010-11	Estimated Results 2009-10
Operating activities
Net cost of operations	3,521	3,450
Non cash items:
Services provided without charge (Note 11)	(340)	(332)
Amortization of tangible capital assets (Note 7)	(11)	(11)
Variations in Statement of Financial Position:
Increase in liabilities	(60)	(66)
Decrease in financial assets	-	(9)
Net cash provided by Government of Canada	3,110	3,032
The accompanying notes form an integral part of these future-oriented financial statements

 

1 - Authority and Objectives

The Copyright Board of Canada 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 Copyright Board of Canada plays a major role in the collective administration of copyright, particularly where the public performance and the communication to the public, by telecommunication, of musical works, as well as the retransmission of distant radio and television signals are concerned. The Copyright Board of Canada plays a surveillance role in three ways with respect to collective societies which administer very large repertoires of work created by a multitude of originators both in Canada and in other countries: as an economic regulatory body, by approving tariff proposals by the various copyright collective societies; as an arbitrator in private disputes; and as an arbitrator of the public interest.

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

The Copyright Board of Canada reports annually to Parliament through the Minister of Industry.

2 - Underlying Assumptions

These future-oriented statements have been prepared:

• as at December 16, 2009
• on the basis of government policies, government priorities and external environment at the time the future-oriented financial information was finalized
• according to the requirements of Treasury Board Accounting policies which are based on Canadian generally accepted accounting principles for the public sector
• on the basis that the resources provided will enable the Copyright Board of Canada to deliver the expected results specified in the Report on Plans and Priorities
• on the basis of historical costs and trends.

3 - Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for 2010/11, actual results achieved are likely to vary from the forecast information presented, and this variation could be material.

Once the Report on Plans and Priorities is presented, Copyright Board of Canada will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates.

4 - Summary of Significant Accounting Policies

The future-oriented financial information has been prepared in accordance with accounting standards issued by the Treasury Board of Canada Secretariat which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

1. Parliamentary appropriations – the Copyright Board of Canada is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the Copyright Board of Canada 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 future-oriented statement of operations and the future-oriented statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 5 provides a high-level reconciliation between the two bases of reporting.
2. Net Cash Provided by Government – The Copyright Board of Canada operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the department is deposited to the CRF and all cash disbursements made by the Copyright Board of Canada 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.
3. Forecasted expenses – The following expenses are recorded on the accrual basis:
   • Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
   • Services provided without charge by other government departments for accommodation, and the employer’s contribution to the health and dental insurance plans are recorded as operating expenses at their estimated cost.
4. Employee future benefits
   1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government of Canada. The Copyright Board of Canada’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 Copyright Board of Canada 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.
5. Account receivables are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.
6. Tangible capital assets – All tangible capital assets having an initial cost of $10,000 or more are recorded at their acquisition cost. The Copyright Board of Canada 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

7. Measurement uncertainty – The preparation of the future-oriented financial information requires management to make estimates and assumptions that affect the reported amounts of all the assets, liabilities, revenues and expenses reported in the future-oriented financial statements. Assumptions are based on information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in Copyright Board of Canada’s mandate and strategic objectives. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Nonetheless, as with all such estimates and assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

5 - Parliamentary Appropriations

The Copyright Board of Canada receives most of its funding through annual Parliamentary appropriations. Items recognized in the Future-oriented Statement of Operations and the Future-oriented Statement of Financial Position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the Copyright Board of Canada has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences between net results of operations and appropriations are reconciled in the following table.

Reconciliation of net cost of operations to appropriations available for use:

(in thousands of dollars)	Forecast 2010-11	Estimated Results 2009-10
Net cost of operations	3,521	3,450
Adjustments for items affecting net cost of operations but not affecting appropriations
Add (Less):
Services provided without charge	(340)	(332)
Employee severance benefits	(40)	(35)
Amortization of tangible capital assets	(11)	(11)
Vacation pay and compensatory leave	(20)	(18)
Appropriations available for use	3,110	3,054

6 - Accounts Receibable

The Copyright Board of Canada does not operate in a revenue collecting environment. At the end of the year, its accounts receivable consist mainly of receivables from other government departments which are ultimately collectible. The estimated results in 2009–2010 for accounts receivable were based on a historical trend, and to be conservative, the same amount was used for the forecast in 2010–2011.

7 - Tangible Capital Assets

During the forecasting horizon, the Copyright Board of Canada does not plan on acquiring any capital assets greater than $10,000.

Therefore, in the upcoming years, only the existing assets will continue to depreciate at a rate of $11,039 per year.

8 - Accounts Payable

The Copyright Board of Canada’s accounts payable consist mainly of salary accruals, payables to other government departments, and other year end accruals. The estimated results in 2009–2010 for accounts payable were based on a historical trend, and to be conservative, the same amount was used for the forecast in 2010–2011.

9 - Employee Benefits

1. Pension benefits

   The Copyright Board of 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% 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 Copyright Board of Canada contribute to the cost of the Plan. The 2010–2011 forecasted expense amounts to $232,682 ($229,315 forecasted in 2009–2010).

   The Copyright Board of Canada’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 Copyright Board of Canada 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:

   (in thousands of dollars)	Forecast 2010-11	Estimated Results 2009-10
   Accrued benefit obligation, beginning of year	283	248
   Expense for the year	40	102
   Benefits paid during the year	-	(68)
   Accrued benefit obligation, end of year	323	282

10. Contractual Obligations

The nature of the Copyright Board of Canada’s activities can result in some large multi-year contracts and obligations whereby the Copyright Board of Canada will be obligated to make future payments when the services/goods are received. No significant contractual obligations have been identified.

11. Related party transactions

The Copyright Board of Canada is related as a result of common ownership to all Government of Canada departments, agencies and Crown corporations. The Copyright Board of Canada enters into transactions with these entities in the normal course of business and on normal trade terms.

During the year the Copyright Board of Canada is forecasted to receive, without charge from other departments, accommodation and the employer's contribution to the health and dental insurance plans. These services without charge have been recognized in the Copyright Board of Canada’s Future-oriented Statement of Operations as follows:

(in thousands of dollars)	Forecast 2010-11	Estimated Results 2009-10
Accommodation	229	224
Employer's contribution to the insurance plans	111	108
Total	340	332

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, are not included as an expense in Copyright Board of Canada’s Future-oriented Statement of Operations.