Statement of Management Responsibility Including Internal Control Over Financial Reporting 2015-2016

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2016, 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, 2016 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 18, 2016
Danielle May-Cuconato
Officer Chief Financial Officer
Gatineau, Canada
August 18, 2016
Canadian Radio-television and Telecommunications Commission
Statement of Financial Position (Unaudited)
As at March 31, 2016
(in thousands of dollars)
2016 2015
Liabilities
Accounts payable and accrued liabilities (note 4) 5,440 5,094
Vacation pay and compensatory leave 1,875 1,934
Deferred revenue (note 5) 24 34
Employee future benefits (note 6) 2,743 2,814
Total gross liabilities 10,082 9,876
Liabilities held on behalf of Government
Deferred revenue (note 5) (24) (34)
Total liabilities held on behalf of Government (24) (34)
Total net liabilities 10,058 9,842
Financial assets
Due from Consolidated Revenue Fund 4,918 4,878
Accounts receivable and advances (note 7) 1,474 1,215
Total gross financial assets 6,392 6,093
Financial assets held on behalf of Government
Accounts receivable and advances (note 7) (783) (754)
Total financial assets held on behalf of Government (783) (754)
Total net financial assets 5,609 5,339
Departmental net debt 4,449 4,503
Non-financial assets
Prepaid expenses 176 240
Tangible capital assets (note 8) 2,892 3,368
Total non-financial assets 3,068 3,608
Departmental net financial position (1,381) (895)

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

Jean-Pierre Blais
Chairman and Chief Executive Officer
Gatineau, Canada
August 18, 2016
Danielle May-Cuconato
Officer Chief Financial Officer
Gatineau, Canada
August 18, 2016
Canadian Radio-television and Telecommunications Commission
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31, 2016
(in thousands of dollars)
2016
Planned Results
2016 2015
Expenses
Canadian Content Creation 18,137 16,621 17,421
Connection to the Communication System 21,505 20,646 19,793
Protection within the Communication System 12,438 11,693 11,043
Internal services 15,463 15,538 15,239
Expenses incurred on behalf of Government (1,200) (49) (33)
Total expenses 66,343 64,449 63,463
Revenues
Rights and privileges 109,426 109,426 107,280
Regulatory fees 61,221 60,583 59,321
Miscellaneous revenues 6,027 1,447 1,827
Revenues earned on behalf of Government (129,049) (124,750) (122,106)
Total revenues 47,625 46,706 46,322
Net cost of operations before government funding and transfers 18,718 17,743 17,141
Government funding and transfers
Net cash provided by Government 10,808 8,965
Change in due from Consolidated Revenue Fund 40 2,552
Services provided without charge by other government departments (note 9) 6,413 6,347
Transfer of the transition payments for implementing salary payments in arrears (note 10) (4) (1,402)
Net cost (revenue) of operations after government funding and transfers 486 679
Departmental net financial position - Beginning of year (895) (216)
Departmental net financial position - End of year (1,381) (895)

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, 2016
(in thousands of dollars)
2016 2015
Net cost (revenue) of operations after government funding and transfers 486 679
Change due to tangible capital assets
Acquisition of tangible capital assets 675 1,155
Amortization of tangible capital assets (1,151) (1,173)
Loss on write-offs of tangible capital assets - (7)
Total change due to tangible capital assets (476) (25)
Change due to prepaid expenses (64) 77
Net increase (decrease) in departmental net debt (54) 731
Departmental net debt - Beginning of year 4,503 3,772
Departmental net debt - End of year 4,449 4,503

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, 2016
(in thousands of dollars)
2016 2015
Operating activities
Net cost of operations before government funding and transfers 17,743 17,141
Non-cash items:
Amortization of tangible capital assets (1,151) (1,173)
Services provided without charge by other government departments (note 9) (6,413) (6,347)
Loss on write-offs of tangible capital assets - (7)
Transition payments for implementing salary payments in arrears (note 10) 4 1,402
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances 230 21
Increase (decrease) in prepaid expenses (64) 77
Decrease (increase) in accounts payable and accrued liabilities (346) (2,483)
Decrease (increase) in vacation pay and compensatory leave 59 (77)
Decrease (increase) in future employee benefits 71 (744)
Cash used in operating activities 10,133 7,810
Capital investing activities
Acquisitions of tangible capital assets 675 1,155
Cash used in capital investing activities 675 1,155
Net cash provided by Government of Canada 10,808 8,965

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 Canadian Radio-television and Telecommunications Commission (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 to, amongst other things, 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. Internal services include only those activities and resources that apply across an organization, and not those provided to a specific program. The groups of activities 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; Materiel Services; and Acquisition Services.

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 2015-16 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 2015-16 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:

2016
(in thousands
of dollars)
2015
(in thousands
of dollars)
Net cost of operations before government funding and transfers 17,743 17,141
Adjustments for items affecting net cost of operations but not affecting authorities:
Decrease (increase) in employee future benefits 71 (744)
Services provided without charge by other government departments (6,413) (6,347)
Amortization of tangible capital assets (1,151) (1,173)
Refund of prior years’ expenditures and adjustments to payables at year end 43 14
Decrease (increase) in vacation pay and compensatory leave 59 (77)
Loss on write-offs of tangible capital assets - (7)
Sub-total (7,391) (8,334)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets 675 1,155
Loans issued on behalf of Government 32 5
Transition payments for implementing salary payments in arrears 4 1,402
Increase (decrease) in prepaid expenses (64) 77
Sub-total 647 2,639
Current year authorities used 10,999 11,446

(b) Authorities provided and used

2016
(in thousands
of dollars)
2015
(in thousands
of dollars)
Authorities provided:
Vote 1 - Operating expenditures 7,940 7,977
Statutory amounts 6,416 6,471
Less:
Lapsed: Operating (3,357) (3,002)
Current year authorities used 10,999 11,446

4. Accounts payable and accrued liabilities

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

2016
(in thousands
of dollars)
2015
(in thousands
of dollars)
Accounts payable - Other government departments and agencies 200 86
Accounts payable - External parties 1,628 1,770
Total accounts payable 1,828 1,856
Accrued liabilities 3,612 3,238
Total accounts payable and accrued liabilities 5,440 5,094

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 2016, a number of broadcasting undertakings paid their 2016-17 Part I broadcasting licence fees in advance of the April 20, 2016 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 2016-2017, 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:

2016
(in thousands
of dollars)
2015
(in thousands
of dollars)
Opening balance 34 37
Amounts received 24 34
Revenues recognized (34) (37)
Gross closing balance 24 34
Deferred revenues held on behalf of Government (24) (34)
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 2015-2016 expense amounts to $4.4 million ($4.4 million in 2014-2015). For Group 1 members, the expense represents approximately 1.25 times (1.41 times in 2014-2015) the employee contributions and, for Group 2 members, approximately 1.24 times (1.39 times in 2014-2015) 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.

2016
(in thousands
of dollars)
2015
(in thousands
of dollars)
Accrued benefit obligation - Beginning of year 2,814 2,070
Expense for the year 571 1,365
Benefits paid during the year (642) (621)
Accrued benefit obligation - End of year 2,743 2,814

7. Accounts receivable and advances

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

2016
(in thousands
of dollars)
2015
(in thousands
of dollars)
Receivables - Other government departments and agencies 649 452
Receivables - External parties 951 913
Employee advances 40 8
Subtotal 1,640 1,373
Allowance for doubtful accounts on receivables from external parties (166) (158)
Gross accounts receivable 1,474 1,215
Accounts receivable held on behalf of Government (783) (754)
Net accounts receivable 691 461

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
2016 2015
Equipment 245 7 - 252 234 2 - 236 16 11
Vehicles 48 - - 48 18 10 - 28 20 30
Informatics equipment 3,963 56 1,878 2,141 3,128 402 1,878 1,652 489 835
Informatics software 9,064 612 - 9,676 6,857 723 - 7,580 2,096 2,207
Leasehold improvements 347 - - 347 62 14 - 76 271 285
Total 13,667 675 1,878 12,464 10,299 1,151 1,878 9,572 2,892 3,368

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:

2016
(in thousands
of dollars)
2015
(in thousands
of dollars)
Employer's contribution to the health and dental insurance plans 3,588 3,337
Accommodation 2,756 2,927
Worker's compensation 69 83
Total 6,413 6,347

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 Services and Procurement 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:

2016
(in thousands
of dollars)
2015
(in thousands
of dollars)
Accounts receivable - Other government departments and agencies 649 452
Accounts payable - Other government departments and agencies 200 86
Expenses - Other government departments and agencies 1,760 1,820

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 Services and Procurement 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
2016
Total
2015
Total
Expenses
Salaries and employee benefits 13,448 16,762 9,000 11,937 51,147 50,896
Professional and special services 969 1,249 908 1,796 4,922 4,461
Accommodation 725 903 485 643 2,756 2,927
Transportation and telecommunications 315 423 393 209 1,340 1,277
Amortization 291 354 277 229 1,151 1,173
Information 366 212 131 355 1,064 818
Machinery and equipment 219 410 144 136 909 685
Rentals 166 197 204 125 692 654
Utilities, materials and supplies 61 66 62 62 251 286
Repair and maintenance 57 68 41 45 211 269
Bad debt 2 - 47 - 49 33
Other 2 2 1 1 6 10
Loss on write-offs of tangible capital assets - - - - - 7
Expenses incurred on behalf of Government (2) - (47) - (49) (33)
Total expenses 16,619 20,646 11,646 15,538 64,449 63,463
Revenues
Rights and privileges 109,426 - - - 109,426 107,280
Regulatory fees 22,372 20,359 6,577 11,275 60,583 59,321
Other revenues 8 5 1,434 - 1,447 1,827
Revenues earned on behalf of Government (118,100) (4,072) (2,354) (224) (124,750) (122,106)
Total revenues 13,706 16,292 5,657 11,051 46,706 46,322
Net cost of operations before government funding and transfers 2,913 4,354 5,989 4,487 17,743 17,141

Annex to the Statement of Management Responsibility Including Internal Control Over Financial Reporting - Fiscal Year 2015-2016 (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 that:

    • Financial arrangements or contracts are entered into only when sufficient funding is available;
    • Payments for goods and services are made only when the goods or services are received or the conditions of contracts or other arrangements have been satisfied; and
    • Payments have been properly authorized.

    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 2015-2016.

  2. Assessment results during fiscal year 2015-2016

    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.

    CRTC continued to make progress in assessing and improving its key controls and corrective measures that resulted from recommendations made in previous years was followed up.

    In 2015-2016, implementation of the Government wide initiative “Transformation of Pay Administration” concerning Payroll occurred and documentation and testing of design and operating effectiveness of key controls 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 develop an on-going monitoring plan for the future.

    As a result of the core control audit performed in spring 2016, the CRTC will leverage the observations from the Office of the Comptroller General to adjust their internal controls as required.

Date modified: