Home / Annual Report 2006-2007 – Notes to the Financial Statements

Annual Report 2006-2007 – Notes to the Financial Statements

For the year ended March 31, 2007

1. Authority and Purpose

The National Round Table on the Environment and the Economy (NRTEE) was established in 1994 under the National Round Table on the Environment and the Economy Act and is a departmental corporation named in Schedule II of the Financial Administration Act. The NRTEE fulfils its objective of promoting sustainable development and the integration of the environment and economy in decision making in all sectors, by conducting studies, organizing stakeholder “dialogues” on specific issues and economic sectors, providing advice, carrying out educational and communication activities, and by acting as a catalyst for change. Its operating expenses are funded mainly by a budgetary lapsing authority and, to a lesser extent, from cost recovery and cost sharing for specific activities. Employee benefits are in accordance with the related statutory authorities. The NRTEE is not subject to the provisions of the Income Tax Act.

2. Summary of Significant Accounting Policies

These financial statements have been prepared in accordance with the Treasury Board Secretariat accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector, and year-end instructions issued by the Office of the Comptroller General. Significant accounting policies are as follow:

a) Parliamentary Appropriations

The NRTEE is financed mainly by the Government of Canada through Parliamentary appropriations. Appropriations provided to the NRTEE do not parallel financial reporting according to Canadian generally accepted accounting principles for the public sector, as they are based in a large part 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 9 provides a high-level reconciliation between the two basis of reporting.

b) Due from Consolidated Revenue Fund

The NRTEE operates within the Consolidated Revenue Fund (CRF). The CRF is administered by the Receiver General for Canada. All cash received by the NRTEE is deposited to the CRF and all cash disbursements made by the NRTEE are paid from the CRF. Due from the CRF represents the amount of cash that the NRTEE is entitled to draw from the Consolidated Revenue Fund, without further Parliamentary appropriations, in order to discharge its liabilities.

c) Revenues

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 presented as deferred revenues.

d) Expenses

Expenses are recorded on the accrual basis:

• Employees severance benefits are accrued as earned and are calculated using the actual time worked at the NRTEE by the employees as the basis to determine the future benefits payable to the employees on the cessation of employment. Employee severance benefits on cessation of employment represent obligations of the NRTEE that are normally funded through future year appropriations.
• Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
• Contributions to the Public Service Pension Plan are charged to expenses in the year incurred and represent the total NRTEE obligation to the Plan. Current legislation does not require the NRTEE to make contributions for any actuarial deficiencies of the Public Service Pension Plan.
• Services provided without charge by other government departments are recorded as expenses at their estimated costs. A corresponding amount is credited directly to the Equity of Canada.

e) Receivables

Receivables are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.

f) Publication Inventory for Resale

An independent distributor sells the NRTEE’s publication inventory for resale. The distributor is entitled to a 50% commission fee on the sale price of each publication sold. Inventory for resale is valued at net realizable value, which is always less than cost.

g) Tangible Capital Assets

Tangible capital assets with an acquisition cost of $2,000 or more are capitalized at cost and amortized over their estimated useful lives on a straight-line basis. The estimated useful life of each tangible capital asset class is as follows:

h) Measurement Uncertainty

The preparation of these financial statements in accordance with Treasury Board of Canada Secretariat accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector and year-end instructions issued by the Office of the Comptroller General, 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 the useful life of tangible capital assets, writedown and write-offs of inventory of publications for resale, and assumptions underlying the employee severance liability. Actual results could differ from those estimates. Management’s estimates are reviewed periodically and, as adjustments becomes necessary, they are recorded in the financial statements in the year they become known.

3. Related Party Transactions

The NRTEE is related in terms of common ownership to all Government of Canada departments and Crown corporations. The NRTEE enters into transactions with these entities in the normal course of business and on normal trade terms, with the exception of services provided without charge.

The NRTEE incurred expenses with related parties of $1,226,745 (2006 – $951,625), including $413,484 (2006 – $412,950) for services provided without charge. Services provided without charge include $367,484 (2006 – $368,450) for the rental of space, $44,000 (2006 – $42,500) for audit services, and $2,000 (2006 – $2,000) for payroll administration services. Revenues generated from related parties amounted to $20,000 (2006 – $25,405) for cost sharing events organized by the NRTEE.

4. RECEIVABLES

5. TANGIBLE CAPITAL ASSETS

6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

7. EMPLOYEE FUTURE BENEFITS

a) Severance Benefit

The NRTEE uses the actual time worked at the NRTEE for calculating the liability for employee severance benefits. The employee severance benefit liability, including the current portion, is determined to be $192,309 (2006 – $186,353). The amount expensed to salary and benefits in the period was $21,262 (2006 – $33,554) and the amount paid was $15,306 (2006 – $1,983).

b) Pension Benefits

Contributions by the NRTEE to the Public Service Pension Plan of $216,892 (2006 – $290,159) and contributions by employees of $91,966 (2006 – $82,668) are expensed to salaries and employee benefits in the period incurred and represent the total cost under the Plan.

8. CONTRACTUAL OBLIGATIONS

The nature of the NRTEE’s activities can result in some large multi-year contracts and obligation whereby the NRTEE will be obligated to make future payments when the services are rendered. Significant contractual obligations that can be reasonably established are summarized as follows:

9. PARLIAMENTARY APPROPRIATIONS

The NRTEE receives the majority of its funding through Parliamentary appropriations, which are based primarily on cash flow requirements. Items recognized in the Statement of Operations and Statement of Financial Position in one year may be funded through Parliamentary appropriations in prior and future years. Accordingly, the NRTEE has different net results of operations for the year on a government funding basis than on an accrual basis of accounting. These differences are reconciled below.

a) Reconciliation of net cost of operations to current year appropriations used:

b) Reconciliation of appropriations provided and used:

c. Reconciliation of net cash provided by government to current year appropriations used: