ARCHIVED - Future-oriented Financial Statements - 2013-2014

Future-oriented Financial Statements [PDF 357 KB]

Statement of Management Responsibility

National Energy Board management is responsible for these future-oriented financial statements, including responsibility for the appropriateness of the assumptions on which these statements are prepared. These statements are based on the best information available and assumptions adopted as at December 31, 2012 and reflect the plans described in the 2013-14 Report on Plans and Priorities.

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

The future-oriented financial statements for the National Energy Board have not been audited.

Future-oriented Statement of Financial Position
As at March 31
(in thousands of dollars)

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012.

Contingent liabilities (Note 10)
Contractual obligations (Note 11)

The accompanying notes form an integral part of these financial statements

Future-oriented Statement of Operations and
Departmental Net Financial Position
For the Year Ended March 31
(in thousands of dollars)

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012.

Segmented information (Note 13)

The accompanying notes form an integral part of these financial statements.

Future-oriented Statement of Change in Departmental Net Debt
For the Year Ended March 31
(in thousands of dollars)

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012.

The accompanying notes form an integral part of these financial statements.

Future-oriented Statement of Cash Flows
For the Year Ended March 31
(in thousands of dollars)

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012.

The accompanying notes form an integral part of these financial statements.

1. Authority and Objectives

The National Energy Board (NEB or Board) is an independent regulatory agency, established in 1959 under the National Energy Board Act and is designated as a department and named under Schedule I.1 of the Financial Administration Act, reporting to Parliament through the Minister of Natural Resources.

The NEB regulates the following specific aspects of the energy industry:

1. the construction and operation of international and interprovincial pipelines;
2. the construction and operation of international and designated interprovincial power lines;
3. traffic, tolls and tariffs of international and interprovincial pipelines;
4. exports of oil, gas and electricity and imports of gas; and
5. oil and gas activities on frontier lands not subject to a federal/provincial accord.

Other responsibilities of the NEB include providing advice to the Minister of Natural Resources Canada on the development and use of energy resources. The NEB operates as a quasi-judicial tribunal. The Board may hold public hearings at which applicants and interested parties have full rights of participation.

NEB’s corporate purpose is to promote safety, environmental protection and economic efficiency in the Canadian public interest within the mandate set by Parliament in the regulation of pipelines, energy development and trade. This principle guides the NEB in carrying out and interpreting its regulatory responsibilities. The companies that are regulated by the Board create wealth for Canadians through the transport of oil, natural gas and natural gas liquids, and through the export of hydrocarbons and electricity. As a regulatory agency, the Board’s role is to help create a framework which allows these economic activities to occur when they are in the public interest.

The NEB’s framework of program activities is comprised of:

• Energy Regulation - this is grouped into two sub-programs, the first part being the development of regulation and compliance tools, guidance and processes and the second part being regulation implementation which is the processing of applications and regulatory oversight through monitoring and enforcement;
• Energy Information - provides energy industry information, market outlook and surveillance to the Board, industry and the Canadian public;
• Internal Services - the activities that provide management and support services to the Board such as Human Resources, Financial and Information Management.

2. Methodology and significant policies

The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of the department as described in the Report on Plans and Priorities.

The main assumptions are as follows:

• The department’s activities will remain substantially the same as for 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.
• Estimated year end information for 2012-13 is used as the opening position for the 2013-14 planned results.

These assumptions are adopted as at December 31, 2012.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2012-13 and for 2013-14, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these future-oriented financial statements the National Energy Board has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the future-oriented financial statements and the historical financial statements include:

1. Implementation of new collective agreements.
2. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.
3. Volume and complexity of regulatory applications and hearings.

Once the Report on Plans and Priorities is presented, the National Energy Board will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of Significant Accounting Policies

The future-oriented financial statements have been prepared in accordance with Treasury Board accounting policies in effect for the 2011-2012 fiscal year. These accounting policies, stated below, are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

Significant accounting policies are as follows:

1. Parliamentary authorities - the NEB is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the NEB 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 Future-oriented Statement of Operations and the Future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a high-level reconciliation between the bases of reporting.
2. Net Cash Provided by Government - The NEB 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 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.
3. Amounts due from/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 NEB is entitled to draw from the CRF without further parliamentary expenditure authorities to discharge its liabilities.
4. Revenues - are recorded on an accrual basis:
   • Revenues from regulatory levies are recognized in the accounts when they are invoiced and, in accordance with the National Energy Board Cost Recovery Regulations, are based on the estimated cost of operations for the calendar year, with a billing adjustment to actual costs once the costs are known.
   • 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 invoiced but not yet earned are recorded as deferred revenues.
5. Expenses - are recorded on an accrual basis:
   • Vacation pay and compensatory leave are accrued as the benefits are earned 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 legal services are recorded as operating expenses at their estimated cost.
   • Expenditures that are excluded from Cost Recovery Regulations are those expenditures related to the regulation of oil and gas exploration and development on frontier lands. These amounts are included as Expenses in the Statement of Operations.
6. Employee future benefits
   • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government. The NEB 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.
   • 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.
7. Accounts receivables are stated at the lower of cost and net recoverable value; a valuation allowance is established for receivables where recovery is considered uncertain.
8. 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 future-oriented financial statements.
9. Tangible capital assets - All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more or significant bulk purchases over $10,000 where each item may be less than $10,000, 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:
   
   
   Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:
   

   Asset class and amortization period

   Asset class	Amortization period
   Informatics hardware:
   PCs and accessories	3 years
   Computer servers & accessories	5 years
   Informatics software
   Commercial software	2 years
   In-house developed software	5 years
   Machinery and equipment	5 years
   Furniture	10 years
   Vehicles	5 years
   Leasehold improvements	Lesser of the remaining term of the lease or useful life of the improvement

   
   The cost of software not yet in service forms the basis of the Assets under development account. Assets under development are amortized once they are in service.
10. Measurement uncertainty - The preparation of these future-oriented financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the future-oriented financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Actual results could significantly differ from those estimated.

5. Parliamentary Authorities

The NEB receives most of its funding through expenditure authorites provided by Parliament. The majority of expenditures are subsequently recovered from the companies regulated by the NEB and the funds are deposited in the Consolidated Revenue Fund of the Government of Canada.

Items recognized in the Future-oriented Statements of Operations and Financial Position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the NEB 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:

6. Accounts payable and accrued liabilities

The following table presents details of the NEB’s accounts payable and accrued liabilities:

7. Employee benefits

(a) Pension benefits:

The NEB's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. 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 NEB contribute to the cost of the Plan. The forecast expenses are $5,137,239 in 2013-14 and $5,437,080 in 2012-13, representing approximately 1.9 times the contributions by employees.

The NEB'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.

(b) Severance benefits:

The NEB 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 authorities.

As a result of 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 estimated and forecasted severance benefit obligation.

Information about the severance benefits, estimated as at the date of these statements, is as follows:

8. Accounts receivable and advances

The following table presents details of NEB’s accounts receivable and advances balances:

9. Tangible Capital Assets

(in thousands of dollars)

10. Contingent liabilities

Claims and litigation

Claims have been made against the NEB in the normal course of operations. As of the date of the preparation of these future-oriented financial statements, legal proceedings for claims totalling approximately $4,200,000 are pending.

11. Contractual obligations

The nature of the NEB's activities can result in some large multi-year contracts and obligations whereby the NEB 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:

12. Related party transactions

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

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

During the year the NEB received services without charge from certain common service organizations, related to accommodation, legal services and the employer's contribution to the health and dental insurance plans. These services provided without charge have been recognized in the NEB's Future-Oriented Statement of Operations as follows:

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 performs services for all other departments and agencies without charge. The costs of these services, such as the payroll Government uses central agencies and common service organizations so that one department 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 NEB's Future Oriented Statement of Operations.

(b) Other transactions with related parties:

13. Segmented information

Presentation by segment is based on the NEB’s program activity architecture. The presentation by segment is based on the same accounting policies as described in the Summary of Significant Accounting Policies in note 4. The following table presents the forecasted expenses incurred and forecasted revenues generated for the main program activities, by major object of expense and by major type of revenues. The segment results for the period are as follows:

Date modified:

2023-11-27