2001-2002 Annual Report to Parliament
Disclaimer
We do not guarantee the accuracy of this copy of the CRA website.
Scraped Page Content
Statement of Management Responsibility
We have prepared the accompanying Statements of Operations of the Canada Customs and Revenue Agency in accordance with accounting principles consistent with those applied in preparing the financial statements of the Government of Canada. Significant accounting policies are set out in Note 2 to each of the Statements.
Responsibility for the integrity and objectivity of data in these financial statements rests with the management of the Agency. In order to assure objectivity and freedom from bias, the financial statements are approved by the Agency's Audit Committee on behalf of the Board of Management. The Audit Committee meets with management, the internal auditors and the Auditor General of Canada on a regular basis, and the auditors have full and free access to the Audit Committee.
Some of the information, such as accruals and services provided without charge by other government departments, included in the Statements of Operations, are based on management's best estimates and judgments with due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts which provides a record of the Agency's financial transactions. Financial information submitted to the Public Accounts of Canada is consistent with these Statements of Operations.
The Agency maintains systems of financial management and internal control which give due consideration to costs, benefits and risks. They are designed to provide reasonable assurance that transactions are within the authorities provided by Parliament and are executed in accordance with prescribed regulations, and are properly recorded so as to maintain accountability of Government funds and safeguarding of its assets. Financial management and internal control systems are reinforced by the maintenance of internal audit programs. The Agency also seeks to assure the objectivity and integrity of data in its financial statements by the careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that its regulations, policies, standards and managerial authorities are understood throughout the organization.
The Auditor General of Canada conducts independent audits and expresses opinions on the accompanying financial statements.
Approved by:
Ottawa, Ontario
September 16, 2002
(in thousands of dollars)
Notes to the Statement of Operations – Agency Activities
The Canada Customs and Revenue Agency (the “Agency”) was established effective November 1, 1999, under the Canada Customs and Revenue Agency Act. The Agency was established to support the evolution of tax administration and customs services in Canada.
The Agency is a departmental corporation named in Schedule II of the Financial Administration Act and reports to Parliament through the Minister of National Revenue. The Agency's expenditures are funded by the Government of Canada through appropriations.
The Agency's mandate is to provide support, advice and services when:
- supporting the administration and enforcement of program legislation;
- implementing agreements between the Government of Canada or the Agency and the government of a province or other public body performing a function of government in Canada to carry out an activity or administer a tax or program;
- implementing agreements or arrangements between the Agency and departments or agencies of the Government of Canada to carry out an activity or administer a program; and
- implementing agreements between the Government of Canada and aboriginal governments to administer a tax.
In delivering its mandate, the Agency:
For financial reporting purposes, the activities of the Agency have been divided into two Statements of Operations: Agency Activities and Administered Activities. This Statement of Operations – Agency Activities includes those operational revenues and expenditures which are controlled by the Agency and utilized in running the organization. The separate Statement of Operations – Administered Activities has been divided into two components: administered revenues and administered expenditures. It includes those revenues and expenditures which are controlled by someone other than the Agency, such as the federal government, a province or territory, or other groups or organizations, but are managed by the Agency on their behalf. The purpose of the distinction between Agency and Administered activities is to facilitate, among other things, the assessment of the administrative efficiency of the Agency in achieving its mandate.
The Agency administers, on behalf of others, income taxes and sales taxes, Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, as well as amounts collected for other groups or organizations. The Agency is responsible for the administration and enforcement of the following acts, and certain other acts for which the Minister of National Revenue has a mandated role: Canada Customs and Revenue Agency Act, Children's Special Allowances Act, Customs Act, Customs Tariff, Excise Act, Excise Tax Act (includes Goods and Services Tax (GST)/Harmonized Sales Tax (HST)), Income Tax Act, and others.
The Minister of National Revenue is responsible for the Agency and remains accountable to Parliament for the administration and the enforcement of the various tax and customs programs' legislation.
As required by section 88(2)(a) of the Canada Customs and Revenue Agency Act, the Statement of Operations – Agency Activities has been prepared in accordance with accounting principles consistent with those applied in preparing the financial statements of the Government of Canada. The most significant accounting policies are as follows:
All expenditures are recorded on the accrual basis.
All non-tax revenue is recorded on the accrual basis. Non-tax revenue reported in this statement excludes administered revenues collected under the authority of the Income Tax Act, the Customs Act, the Excise Act, the Excise Tax Act and other similar legislation.
Acquisitions of capital assets are charged to operating and administrative expenditures in the year of purchase.
Refunds of previous years' expenditures are recorded as non-tax revenue and are not deducted from expenditures.
Estimates of amounts for services provided without charge by other government departments are included in expenditures. Those amounts include:
The Agency's employees participate in the Public Service Superannuation Plan administered by the Government of Canada. The employees and the Agency contribute to the cost of the Plan. Contributions by the Agency are charged to expenditures in the period incurred and represent the total pension obligation of the Agency to the Plan. The Agency is not required under present legislation to make contributions with respect to actuarial deficiencies of the Public Service Superannuation Account and is not entitled to surpluses.
Employee severance benefits, vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment. The employee severance benefits liability is estimated using the Government of Canada's demographic population characteristics and demographic population assumptions. The liability for vacation pay and compensatory leave is calculated at the salary levels in effect at the end of the year for all unused vacation pay and compensatory leave benefits accruing to employees. Employee severance benefits and vacation pay liabilities payable on cessation of employment represent obligations of the Agency that are normally funded through the Treasury Board.
The Government had announced its intention to change its accounting policies to a form of full accrual accounting beginning in 2001-2002. However, in the 2001 Budget, the Minister of Finance announced that the Government had decided to delay the implementation of full accrual accounting for the purpose of the Government's audited financial statements for at least one year. Consequently, the Agency will defer the preparation of a full set of accrued financial statements pertaining to Agency Activities, i.e. Statement of Financial Position, Statement of Operations, Statement of Equity of Canada and a Statement of Cash Flows until the implementation of full accrual accounting.
The following table presents details of non-tax revenue as reported on the Statement of Operations:
5. Accounts receivable
At year-end, accounts receivable resulting from transactions with outside parties are as follows:
Revenues associated with these accounts receivable are reflected in the Statement of Operations.
6. Liabilities
At year-end, the Agency has the following liabilities:
Expenditures associated with these liabilities are reflected in the Statement of Operations.
7. Capital assets purchases
Accounting principles of the Government of Canada do not require the capitalization of capital assets. Capital expenditures have been charged to operating and administrative expenditures at the time of acquisition or construction. For information purposes, this table presents those acquisitions during the year that could otherwise have been capitalized under a full accrual accounting principle for tangible capital assets. For the purpose of this table, we have recorded only assets with an original individual cost of $10,000 or more.
8. Board of Management
Pursuant to the Canada Customs and Revenue Agency Act, a Board of Management is appointed to oversee the organization and administration of the Agency and the management of its resources, services, property, personnel and contracts. Expenditures relating to the Board's activities during the year total $920,000 (2001 – $1,045,000) and are included in the Statement of Operations. This includes payments to the Board of Management, secretariat staff personnel expenditures, travel and other expenditures.
9. Related party transactions
The Agency is related in terms of common ownership to all Government of Canada departments, agencies and Crown corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms applicable to all individuals and enterprises.
- Services provided without charge by other government departments:
During the year, the Agency received accommodation and professional services without charge from other government departments and agencies. Employer's contributions to the health insurance plan and workers' compensation benefits were also provided by other government departments without charge. Significant services provided without charge have been recorded in the Agency's statement of operations as follows:
- Payables and receivables outstanding at year end with related parties:
10. Contingent liabilities
In connection with its operations, the Agency is a defendant in certain cases of litigation. It is estimated that, at March 31, 2002, there are $5 million ($4 million at March 31, 2001) in potential liabilities arising from claims. A contingent liability will be recorded as an actual liability with a corresponding charge to expenditures when it becomes likely that a payment will be made and the amount of that payment may be reasonably and reliably estimated.
11. Capital lease obligations
The Agency has entered into agreements to rent information technology equipment under capital leases. The obligations for the upcoming years include the following:
12. Commitments
The nature of the Agency's activities results in some large multi-year contracts and obligations whereby the Agency will be committed to make future payments when the services/goods are rendered. Significant commitments that can be reasonably estimated are as follows (in thousands of dollars):
13. Comparative figures
Certain comparative figures have been reclassified to conform with the presentation used in the current year.
- Date modified:
- 2002-11-07