2018–19 Departmental Plan (07612)

Innovation, Science and Economic Development Canada
Consolidated Future-Oriented Statement of Operations (Unaudited)
For the Year Ended March 31
(in thousands of dollars)
Forecast Results
2017–18
Planned Results
2018–19
Expenses
People, Skills and Communities
  252,677 471,744
Science, Technology, Research and Commercialization
941,1751,059,607
Companies, Investment and Growth
1,111,1731,294,086
Internal Services
228,829235,389
Expenses incurred on behalf of government
(3,472)(3,457)
Total expenses2,530,3823,057,369
Revenues
Radio spectrum licences
1,127,4981,031,728
Sales of services
327,399342,383
Revenue from fines
29,44229,774
Amortization of discounts
6,1056,105
Other revenue
808913
Revenues earned on behalf of Government
(1,233,565)(1,137,876)
Total revenues257,687273,027
Net cost of operations2,272,6952,784,342
The accompanying notes form an integral part of these financial statements.

Notes to the Consolidated Future-Oriented Statement of Operations (Unaudited)

1. Authority and Objectives

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

Through its three interdependent and mutually reinforcing core responsibilities, as defined in the Planned results section of the Departmental Plan, ISED helps Canadian businesses grow, innovate and expand so they can create good-quality jobs and wealth for Canadians. It also supports science research and the integration of scientific considerations into investment and policy choices. The Department helps small businesses grow through trade and innovation and promotes increased tourism in Canada. The Department also works to position Canada as a global centre for innovation where growth is clean and inclusive, the middle class prospers through more opportunities for all Canadians, and our companies become global leaders.

Internal Services are groups of activities and resources that are administered to support the needs of programs and other corporate obligations of ISED. Internal Services include only those activities and resources that apply across ISED, not those provided specifically to a program.

ISED's activities are delivered at its headquarters in Ottawa as well as in the regions. There are five regional offices with service points located across Canada and an office for FedNor.

ISED 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 ISED's core responsibilities.

2. Methodology and Significant Assumptions

The Future-Oriented Statement of Operations has been prepared on the basis of the government priorities and the departmental plans as described in the Departmental Plan.

The information in the forecast results for fiscal year 2017–18 is based on actual results as at December 31, 2017 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2018–19 fiscal year.

The main assumptions underlying the forecasts are as follows:

  • ISED's activities will remain substantially the same as in the previous year.
  • Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
  • Allowances are based on historical experience and the most up-to-date information possible.
  • The resources provided will enable ISED to deliver the expected results specified in the Departmental Plan.

These assumptions are valid as at January 31, 2018.

3. Variations and Changes to the Forecast Financial Information

Although every attempt has been made to forecast final results for the remainder of 2017–18 and for 2018–19, actual results achieved for both years are likely to differ from the forecast information presented, and this variation could be material.

In preparing this Future-Oriented Statement of Operations, ISED has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are based on past experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and continually evaluated.

Factors that could lead to material differences between the Future-Oriented Statement of Operations and the historical statement of operations include the following:

  • the timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense;
  • the implementation of new collective agreements;
  • economic conditions may affect both the amount of revenue earned and the collectability of loan receivables;
  • interest rates in effect at the time of issue will affect the net present value of non-interest bearing loans;
  • other changes to the operating budget, such as new initiatives or technical adjustments later in the year.

After the Departmental Plan is tabled in Parliament, ISED will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Results Report.

4. Summary of Significant Accounting Policies

The Future-Oriented Statement of Operations has been prepared using the Government of Canada's accounting policies in effect for the 2017–18 fiscal year, and is 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:

  1. Consolidation

    The Consolidated Future-Oriented Statement of Operations includes the accounts of ISED and the Canadian Intellectual Property Office (CIPO) Revolving Fund. The accounts of this sub-entity have been consolidated with those of ISED and all inter-organizational balances and transactions have been eliminated.

  2. Expenses

    Expenses are recorded on an accrual basis.

    Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses 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 statement. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.

    Other expenses are generally recorded when goods are received or services are rendered and include expenses related to personnel, professional and special services, repair and maintenance, utilities, materials and supplies, as well as amortization of tangible capital assets. Provisions to reflect changes in the value of assets or liabilities, such as provisions for bad debts, loans, investments and advances and inventory obsolescence, as well as utilization of inventories and prepaid expenses, and other are also included in other expenses.

  3. Revenues

    Revenues from regulatory fees are recognized in the accounts based on the services provided in the fiscal year.

    Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.

    Funds that have been received are recorded as deferred revenue, provided that ISED has an obligation to other parties for the provision of goods, services or the use of assets in the future.

    Other 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 ISED's liabilities. Although the Deputy Head is expected to maintain accounting control, he or she has no authority over the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented as a reduction of the ISED's gross revenues.

5. Parliamentary Authorities

ISED is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to ISED differs from financial reporting according to generally accepted accounting principles because authorities are based mainly on cash flow requirements. Items recognized in the Future-Oriented Statement of Operations in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, ISED has different net cost 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 requested authorities
(in thousands of dollars)
Estimated Results
2017–18
Planned Results
2018–19
Net cost of operations2,272,695 2,784,342
Adjustments for items affecting net cost of operations but not affecting authorities:
Repayment of conditionally repayable contributions
101,900113,200
Services provided without charge by other government departments
(75,044) (73,336)
Amortization of tangible capital assets
(14,682) (13,388)
Increase in employee future benefits
(4,763)(6,043)
Salary expense recorded at Treasury Board Secretariat
- (6,852)
Transfer payment accruals
7,50049,700
Increase in vacation pay and compensatory leave
(785)(812)
Total items affecting net cost of operations but not affecting authorities
14,12662,469
Adjustments for items not affecting net cost of operations but affecting authorities:
Increase in loans and advances
95,05952,087
Acquisitions of tangible capital assets
17,2605,983
Total items not affecting net cost of operations but affecting authorities
112,31958,070
Forecast authorities available2,399,1402,904,881
b) Authorities requested
(in thousands of dollars)
Estimated Results
2017–18
Planned Results
2018–19
Authorities requested: 
Vote 1 – Operating expenditures
387,556390,624
Vote 5 – Capital expenditures
17,2605,983
Vote 10 – Grants and contributions
1,810,6152,313,338
Statutory amounts
183,709194,936
Total Authorities Requested2,399,1402,904,881

Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in Estimates documents and, when reasonable estimates can be made, estimates of amounts to be allocated from Treasury Board central votes.