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, 2015, and all information contained in these statements rests with the management of the Canadian Radio-television and Telecommunications Commission (CRTC). 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 CRTC’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the CRTC’s Departmental Performance 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 CRTC and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR to comply with the Policy on Internal Control (PIC).

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

The CRTCwill be subject to periodic Core Control Audits performed by the Office of the Comptroller General and will use the results of such audits to adhere to the Treasury Board PIC.

In the interim, the CRTC’s has undertaken a risk-based assessment of the system of ICFR for the year ended March 31, 2015 in accordance with the Treasury Board PIC, and the results and action plan are summarized in the annex.

The financial statements of the CRTC have not been audited.

Jean-Pierre Blais,
Chairman and Chief Executive Officer
Gatineau, Canada
August 10, 2015  
John Traversy,
Chief Financial Officer
Gatineau, Canada
August 10, 2015

 

Canadian Radio-television and Telecommunications Commission
Statement of Financial Position (Unaudited)
As at March 31, 2015
(in thousands of dollars)
2015 2014
Liabilities
  Accounts payable and accrued liabilities (note 4) 5,094 2,611
  Vacation pay and compensatory leave 1,934 1,857
  Deferred revenue (note 5) 34 37
  Employee future benefits (note 6) 2,814 2,070
Total gross liabilities 9,876 6,575
Liabilities held on behalf of Government
  Deferred revenue (note 5) (34) (37)
Total liabilities held on behalf of Government (34) (37)
Total net liabilities 9,842 6,538
Financial assets
  Due from Consolidated Revenue Fund 4,878 2,326
  Accounts receivable and advances (note 7) 1,215 603
Total gross financial assets 6,093 2,929
Financial assets held on behalf of Government
  Accounts receivable and advances (note 7) (754) (163)
Total financial assets held on behalf of Government (754) (163)
Total net financial assets 5,339 2,766
Departmental net debt 4,503 3,772
Non-financial assets
  Prepaid expenses 240 163
  Tangible capital assets (note 8) 3,368 3,393
Total non-financial assets 3,608 3,556
Departmental net financial position (895) (216)
The accompanying notes form an integral part of these financial statements.
Jean-Pierre Blais
Chairman and Chief Executive Officer
Gatineau, Canada
August 10, 2015
John Traversy 
Chief Financial Officer
Gatineau, Canada
August 10, 2015

 

Canadian Radio-television and Telecommunications Commission
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31, 2015
(in thousands of dollars)
2015 2015 2014
Planned Results Restated Note 12
Expenses
  Canadian Content Creation 18,273 17,421 16,317
  Connection to the Communication System 21,200 19,793 18,836
  Protection within the Communication System 10,624 11,043 10,653
  Internal services 14,971 15,239 14,955
  Expenses incurred on behalf of Government (38) (33) (99)
Total expenses 65,030 63,463 60,662
Revenues
  Rights and privileges  107,280 107,280 106,323
  Regulatory fees  60,463 59,321 55,606
  Miscellaneous revenues  690 1,827 1,009
  Revenues earned on behalf of Government (120,989) (122,106) (115,746)
Total revenues 47,444 46,322 47,192
Net cost of operations before government funding and transfers 17,586 17,141 13,470
Government funding and transfers
  Net cash provided by Government 8,965 11,735
  Change in due from Consolidated Revenue Fund 2,552 (1,413)
  Services provided without charge by other government departments (note 9) 6,347 6,418
  Transfer of the transition payments for implementing salary payments in arrears (note 10) (1,402) -
Net cost (revenue) of operations after government funding and transfers 679 (3,270)
Departmental net financial position - Beginning of year (216) (3,486)
Departmental net financial position - End of year (895) (216)
Segmented information (note 11)
The accompanying notes form an integral part of these financial statements.
Canadian Radio-television and Telecommunications Commission
Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31, 2015
(in thousands of dollars)
2015 2014
Net cost (revenue) of operations after government funding and transfers 679 (3,270)
Change due to tangible capital assets
  Acquisition of tangible capital assets 1,155 1,334
  Amortization of tangible capital assets (1,173) (1,401)
  Loss on write-offs of tangible capital assets (7) -  
Total change due to tangible capital assets (25) (67)
Change due to prepaid expenses 77 (97)
Net increase (decrease) in departmental net debt 731 (3,434)
Departmental net debt - Beginning of year 3,772 7,206
Departmental net debt - End of year 4,503 3,772
The accompanying notes form an integral part of these financial statements.
Canadian Radio-television and Telecommunications Commission
Statement of Cash Flows (Unaudited)
For the Year Ended March 31, 2015
(in thousands of dollars)
2015 2014
Operating activities
  Net cost of operations before government funding and transfers 17,141 13,470
  Non-cash items:
    Amortization of tangible capital assets (1,173) (1,401)
    Services provided without charge by other government departments (note 9) (6,347) (6,418)
    Loss on write-offs of tangible capital assets (7) -
    Transition payments for implementing salary payments in arrears (note 10) 1,402 -
  Variations in Statement of Financial Position:
    Increase (decrease) in accounts receivable and advances 21 320
    Increase (decrease) in prepaid expenses 77 (97)
    Decrease (increase) in accounts payable and accrued liabilities (2,483) 1,131
    Decrease (increase) in vacation pay and compensatory leave (77) 46
    Decrease (increase) in future employee benefits (744) 3,350
Cash used in operating activities 7,810 10,401
Capital investing activities
  Acquisitions of tangible capital assets 1,155 1,334
Cash used in capital investing activities 1,155 1,334
Net cash provided by Government of Canada 8,965 11,735
The accompanying notes form an integral part of these financial statements.

1. Authority and objectives

The Canadian Radio-television and Telecommunications Commission (CRTC) was created by Parliament in 1968 under the Canadian Radio-television and Telecommunications Commission Act. The CRTC reports to Parliament through the Minister of Canadian Heritage and Official Languages.

The CRTC is vested with the authority to regulate and supervise all aspects of the Canadian broadcasting system, as well as the telecommunications services providers and common carriers that come under federal jurisdiction. The CRTC’s powers in the area of broadcasting regulation derive from the Broadcasting Act. Its powers over telecommunications come from the Telecommunications Act and from various “special acts” of Parliament passed for specific telecommunications companies.

In December 2010, Royal Assent was granted for Anti-spam legislation entitled An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act (hereinafter referred to as Anti-spam legislation).Under this legislation, the CRTC has new investigative and enforcement responsibilities and powers to counter spam and malware. This Act came into force on July 1, 2014.

Upon Royal Assent on June 19, 2014, the CRTC was given specific responsibilities under the Fair Elections Act, which amended the Canada Elections Act and the Telecommunications Act. The CRTC’s new responsibilities for the Voter Contact Registry program include: a) the establishment of a secure on-line Voter Contact Registry before the next general federal election; b) maintaining the Registry; and c) conducting compliance and enforcement activities in 2015-16 and on-going. 

The CRTC’s Program Alignment Architecture (PAA) in 2012-13 included the following programs: Canadian Broadcasting; Canadian Telecommunications; and Internal Services. For fiscal year 2013-14 the CRTC received the Treasury Board of Canda’s (Treasury Board) approval to revise its PAA to the following programs: Canadian Content Creation; Connection to the Communication System; and Internal Services. The Treasury Board approved an additional change for 2014-15 to add the program "Protection within the Communication System". This new program was funded through a reallocation of resources from the three programs that existed in 2013-14.

The following are the program descriptions for the CRTC:

Canadian Content Creation

This program focuses on ensuring that a wealth of Canadian content is created and made available to all Canadians on a variety of platforms. Through its orders, decisions, licensing frameworks, and other regulatory activities, the CRTC encourages the creation of diverse programming that reflects the attitudes, opinions, ideas, values and artistic creativity of Canadians. By requiring the display of Canadian content in entertainment programming and the provision of information and analysis concerning Canada, the CRTC is enabling Canadians to better participate in their country’s democratic and cultural life.

Connection to the Communication System

The CRTC facilitates the orderly development of a communication system for all Canadians in order to strengthen the social and economic fabric of Canada and enhance the safety and interests of Canadians. This program focuses on ensuring that Canadians can connect to a choice of accessible, innovative and quality communication services at affordable prices, and thereby have access, amongst other things, to compelling and creative Canadian programming.

Protection within the Communication System

Through this program, the CRTC promotes compliance with and enforcement of its various laws and regulations, including unsolicited communications. It helps to ensure that Canadians have access to emergency communication services such as 9‑1‑1 service and alerting systems. As a result, Canadians have increased protection and benefit from a more secure communication system.

Internal Services

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are Management and Oversight Services, Communications Services, Legal Services, Human Resources Management Services, Financial Management Services, Information Management Services, Information Technology Services, Real Property Services, Material Services, Acquisition Services, and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not those provided to a specific program.

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:

  1. Parliamentary authorities and vote-netting ­ The CRTC is financed in part by the Government of Canada through Parliamentary authorities (e.g. Statutory Vote for Employee Benefits Plans (EBP), Budgetary Vote for the Anti-spam legislation and Voter Contact Registry activities) and the balance by vote-netted fees it collects from the regulated industries. Vote-netting is a means of funding selected programs or activities wherein Parliament authorizes a department to apply revenues collected from fee payers towards costs directly incurred for specific activities. CRTC has the authority to use a portion of: a) the Part I licence fees collected from broadcasters; b) the annual telecommunications fees collected from telecommunications carriers; and c) the unsolicited telecommunications fees from telemarketers to finance its regulatory costs it incurs in discharging its statutory responsibilities under the Broadcasting Act and Telecommunications Act (i.e. respendable revenue). The balance of these three fees recovers the costs for items funded through authorities (e.g. EBP) and costs incurred by other government departments on the CRTC’s behalf and are classified as non-respendable revenue. Part II broadcasting licence fees are entirely classified as non-respendable revenue.

    The accounting of fees collected and the charges to the authorities in a given year does 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 fee collection and through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the “Expenses” and “Revenues” 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 2014-15 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 2014-15 Report on Plans and Priorities.

  2. Net cash provided by Government ­ The CRTC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the CRTC is deposited to the CRF, and all cash disbursements made by the CRTC are paid from the CRF. The net cash provided to Government is the difference between all cash receipts and all cash disbursements, including transactions between departments of the Government.
  3. 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 CRTC is entitled to draw from the CRF without further authorities to discharge its liabilities.
  4. Revenues ­ The CRTC collects fees under the authority of the Broadcasting Act and Telecommunications Act and the regulations made pursuant to these Acts, namely the Broadcasting Licence Fee Regulations, 1997, the Telecommunications Fee Regulations, 2010 and the Unsolicited Telecommunications Fees Regulations. The CRTC’s regulatory fees recover the CRTC’s costs associated with its program activities. The Part II licence fees are regulatory charges imposed in relation to a broadcaster’s privilege (i.e. rights and privileges). These fees recover part of the Government of Canada’s substantial annual investment in the Canadian broadcasting system. Miscellaneous revenues are mainly comprised of revenues received as a result of administrative monetary penalties (AMPs) imposed due to contraventions of the Telecommunications Act relating to the National Do Not Call List (DNCL) and Canada’s Anti-Spam Legislation (CASL) and other revenues such as: interest on overdue accounts receivable for CRTC broadcasting licence fees, telecommunications fees and AMPs, miscellaneous non tax revenue (e.g. access to information (ATI) fees), and gain on disposal of capital and non-capital assets to outside parties. All revenue from AMPs is recorded as non-respendable non-tax revenue.

    Revenues from regulatory fees are recognized in the accounts based on the services provided in the 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 the CRTC 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 the CRTC's liabilities. While the Chairman and Chief Executive Officer 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 Government of Canada and are therefore presented in reduction of the entity's gross revenues.

  5. Expenses ­ Expenses are recorded on an accrual basis:

    Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.

    Services provided without charge by other government departments for accommodation, employer contributions to the health and dental insurance plans, and workers’ compensation are recorded as operating expenses at their estimated cost.

  6. Employee future benefits
    1. Pension benefits ­ Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The CRTC’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The CRTC’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 ­ 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. Tangible capital assets – All tangible capital assets and leasehold improvements having an initial cost of $5,000 or more are recorded at their acquisition cost. The CRTC 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:

    Asset Class Amortization period
    Informatics equipment 3 years
    Informatics software 5 years
    Vehicles 5 years
    Equipment 5 years
    Leasehold improvements 25 years

    Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.

  9. Measurement uncertainty ­ The preparation of these financial statements 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 allowance for doubtful accounts, the liability for employee future 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 CRTC receives most of its funding through fees assessed against the regulated industries, as well as a portion from 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. Since Parliamentary authorities are not calculated on the accrual accounting basis, the CRTC 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:
(in thousands of dollars)
2015 2014
Net cost of operations before government funding and transfers 17,141 13,470
Adjustments for items affecting net cost of operations but not affecting authorities:
Decrease (increase) in employee future benefits (744) 3,350
Services provided without charge by other government departments (6,347) (6,418)
Amortization of tangible capital assets (1,173) (1,401)
Refund of prior years’ expenditures and adjustments to payables at year end 14 96
Decrease (increase) in vacation pay and compensatory leave (77) 46
Loss on write-offs of tangible capital assets (7) -  
Sub-total (8,334) (4,327)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets 1,155 1,334
Loans issued on behalf of Government 5 -  
Transition payments for implementing salary payments in arrears 1,402 -  
Increase (decrease) in prepaid expenses 77 (97)
Sub-total 2,639 1,237
Current year authorities used 11,446 10,380
(b) Authorities provided and used
(in thousands of dollars)
2015 2014
Authorities provided:
Vote 1 - Operating expenditures  7,977 6,839
Statutory amounts 6,471 6,625
Less:
Lapsed: Operating  (3,002) (3,084)
Current year authorities used 11,446 10,380

4. Accounts payable and accrued liabilities

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

(in thousands of dollars)
2015 2014
Accounts payable - Other government departments and agencies  86 164
Accounts payable - External parties 1,770 1,197
Total accounts payable  1,856 1,361
Accrued liabilities 3,238 1,250
Total accounts payable and accrued liabilities 5,094 2,611

5. Deferred revenue

Deferred revenue represents the balance at year-end of unearned revenues stemming from amounts received from external parties for fees prior to services being performed. During March 2015, a number of broadcasting undertakings paid their 2015-16 Part I broadcasting licence fees in advance of the April 22, 2015 due date. As a result of this partial collection of the Part I broadcasting licence fees, which are restricted to fund the expenditures related to the CRTC broadcasting activities for the government fiscal year 2015-2016, the CRTC has recorded this amount as deferred revenue. Revenue is recognized in the period in which these expenditures are incurred or in which the service is performed. Details of the transactions related to this account are as follows:

(in thousands of dollars)
2015 2014
Opening balance 37 3,722
Amounts received 34 37
Revenues recognized (37) (3,722)
Gross closing balance 34 37
Deferred revenues held on behalf of Government (34) (37)
Net closing balance  -   -  

6. Employee future benefits

(a) Pension benefits:

The CRTC's employees participate in the Public Service Pension Plan (the “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 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 CRTC 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 2014-2015 expense amounts to $4.4 million ($4.7 million in 2013-2014). For Group 1 members, the expense represents approximately 1.41 times (1.6 times in 2013-2014) the employee contributions and, for Group 2 members, approximately 1.39 times (1.5 times in 2013-2014) the employee contributions.

The CRTC'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 CRTC 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.

(in thousands of dollars)
  2015 2014
Accrued benefit obligation - Beginning of year 2,070 5,420
Expense for the year 1,365 (1,436)
Benefits paid during the year (621) (1,914)
Accrued benefit obligation - End of year 2,814 2,070

7. Accounts receivable and advances

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

(in thousands of dollars)
2015 2014
Receivables - Other government departments and agencies  452 437
Receivables - External parties 913 297
Employee advances  8 3
Subtotal 1,373 737
Allowance for doubtful accounts on receivables from external parties (158) (134)
Gross accounts receivable 1,215 603
Accounts receivable held on behalf of Government  (754) (163)
Net accounts receivable 461 440

8. Tangible capital assets

(in thousands of dollars)
Cost Accumulated amortization Net book value
Capital asset class Opening balance Acquisitions Disposals and write-offs Closing balance Opening balance Amortization Disposals and write-offs Closing balance 2015 2014
Equipment 240 5 -   245 232 2 -   234 11 8
Vehicles 54 27 33 48 46 5 33 18 30 8
Informatics equipment 3,639 356 32 3,963 2,763 397 32 3,128 835 876
Informatics software 8,333 767 36 9,064 6,130 756 29 6,857 2,207 2,203
Leasehold improvements 347 -   -   347 49 13 -   62 285 298
Total 12,613 1,155 101 13,667 9,220 1,173 94 10,299 3,368 3,393

9. Related party transactions

The CRTC is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The CRTC enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the CRTC 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 CRTC received services without charge from certain common service organizations, related to accommodation, the employer's contribution to the health and dental insurance plans and worker’s compensation coverage. These services provided without charge have been recorded in the CRTC's Statement of Operations and Departmental Net Financial Position as follows:

(in thousands of dollars)
2015 2014
Employer's contribution to the health and dental insurance plans 3,337 3,207
Accommodation  2,927 3,115
Worker's compensation 83 96
Total 6,347 6,418

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 of Canada are not included in the CRTC's Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties:

(in thousands of dollars)
2015 2014
Accounts receivable - Other government departments and agencies 452 437
Accounts payable - Other government departments and agencies  86 164
Expenses - Other government departments and agencies 1,820 2,310
Expenses and revenues disclosed in note (b) exclude common services provided without charge, which are already disclosed in (a).

10. Transfer of the transition payments for implementing salary payments in arrears

The Government of Canada implemented salary payments in arrears in 2014-15. As a result, a one-time payment was issued to employees and will be recovered from them in the future. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the CRTC. However, it did result in the use of additional spending authorities by the CRTC. Prior to year end, the transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Works and Government Services Canada, who is responsible for the administration of the Government pay system.

11. Segmented information

Presentation by segment is based on the CRTC's 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 programs, by major object of expense and by major type of revenue. The segment results for the period are as follows:

(in thousands of dollars)
Canadian Content Creation Connection to the Communication System Protection within the Communication System Internal services 2015 Total 2014 Total
Expenses
Salaries and employee benefits 14,364 16,212 8,415 11,905 50,896 47,175
Professional and special services 835 1,037 989 1,600 4,461 4,372
Accommodation 794 946 491 696 2,927 3,115
Transportation and telecommunications 318 430 332 197 1,277 1,643
Amortization  322 391 207 253 1,173 1,401
Information 341 207 54 216 818 779
Machinery and equipment 145 175 249 116 685 302
Rentals 159 228 159 108 654 939
Utilities, materials and supplies 64 76 71 75 286 269
Repair and maintenance 76 89 43 61 269 666
Bad debt  1 - 32 - 33 99
Other - - - 10 10 1
Loss on write-offs of tangible capital assets 2 2 1 2 7 -
Expenses incurred on behalf of Government (1) - (32) - (33) (99)
Total expenses 17,420 19,793 11,011 15,239 63,463 60,662
Revenues
Rights and privileges  107,280 - - - 107,280 106,323
Regulatory fees  21,789 20,316 5,948 11,268 59,321 55,606
Other revenues  11 5 1,809 2 1,827 1,009
Revenues earned on behalf of Government (115,366) (4,363) (2,375) (2) (122,106) (115,746)
Total revenues 13,714 15,958 5,382 11,268 46,322 47,192
Net cost of operations before government funding and transfers 3,706 3,835 5,629 3,971 17,141 13,470

12. Comparative information

Comparative figures have been reclassified to conform to the current year’s presentation.


Annex to the Statement of Management Responsibility Including Internal Control Over Financial Reporting - Fiscal Year 2014-2015 (unaudited)

1. Introduction

In support of an effective system of internal control, the Canadian Radio-television and Telecommunications Commission (CRTC) annually assesses the performance of its financial controls to ensure:

The CRTC will leverage the results of the periodic Core Control Audit performed by the Office of the Comptroller General. Below is a summary of the results of the assessment conducted during fiscal year 2014-2015.

2. Assessment results during fiscal year 2014-2015

For the most part, controls related to payment for goods and services and payment authority were functioning well and form an adequate basis for the CRTC system of internal control.

Following  the operating effectiveness testing of key controls done in 2013-2014, the CRTC completed all remediation actions for the majority of the higher and medium risks impact findings during 2014-2015 for its entity level controls, information technology (IT) general controls and business processes, including Financial Close and Reporting; Procure to Payment; Payroll; Capital Assets and Revenues.  The only medium/high risk item where remediation action is not completed is related to the Government wide initiative “Transformation of Pay Administration” concerning Payroll.  Implementation of this initiative is expected to occur in 2015-2016 and remediation is currently in progress.  

3. Assessment plan

The CRTC will continue to monitor the performance of its system of internal control with a focus on the core controls related to financial transactions.

Once remediation of the Payroll process is complete, CRTC strategy is to continue its remediation activities on the lower risks processes and to develop an on-going monitoring plan.

Date modified: