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Library and Archives Canada: Financial Statements for 2008-2009
Notes to the Financial Statements (Unaudited)
For the Year Ended March 31
1. Authority and Objectives
Library and Archives Canada is a department within the Government of Canada and was established on May 24, 2004 as a result of the amalgamation of the former National Library of Canada and National Archives of Canada. Library and Achives Canada's role was confirmed in the 2004 Library and Archives of Canada Act. The Act assigns discretionary power to the Librarian and Archivist of Canada in the attainment of Library and Archives Canada's objects. Under the Act, no record under the control of a government or ministerial institution may be destroyed prior to receiving consent from the Librarian and Archivist of Canada and those records considered to be of historic or archival importance to the Librarian and Archivist of Canada, shall be transferred to the care and control of the Librarian and Archivist of Canada.
Library and Archives Canada is considered a Schedule I.1 organization within the Financial Administration Act and reports to Parliament through the Minister of Canadian Heritage.
The mandate of Library and Archives Canada is to preserve the documentary heritage of Canada for the benefit of present and future generations; to serve as a source of enduring knowledge accessible to all, contributing to the cultural, social and economic advancement of Canada as a free and democratic society; to facilitate in Canada cooperation among the communities involved in the acquisition, preservation and diffusion of knowledge; and to serve as the continuing memory of the Government of Canada and its institutions.
The Documentary Heritage Collection Sector ensures that Canada's documentary heritage is collected, safeguarded and organized for current and future use. Its functions are the development, organization, and care of the collections. All collections will be developed, managed and preserved under the auspices of the Documentary Heritage Collection Sector. The Programs and Services Sector increases awareness of, access to, and use and understanding of, Canada's documentary heritage. Its two functions are delivery of services in response to client demand of all types and via all channels; and delivery of programs to promote knowledge and understanding of Canada's documentary heritage. The former is responsive to demand; the latter is proactive, anticipating the information needs of Canadians. Combined, they are the important means through which Library and Archives Canada delivers its mandate to make known Canada's documentary heritage. The Corporate Management and Government Records Sector supports federal institutions in the management of information and sound recordkeeping. Its primary functions include Information Management (IM) Strategies, IM Solutions, and IM Services.
2. Summary of Significant Accounting Policies
The financial statements have been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.
Significant accounting policies are as follows:
(a) Parliamentary appropriations
Library and Archives Canada is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to Library and Archives Canada do not parallel financial reporting according to gererally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through appropriations for Parliament. Note 3 provides a high-level reconciliation between the two bases of reporting.
(b) Net Cash Provided by Government
Library and Archives Canada operates within the Consolidated Revenue Fund (CRF). The CRF is administered by the Receiver General for Canada. All cash received by Library and Archives Canada is deposited to the CRF and all cash disbursements made by Library and Archives Canada are paid from the CRF. Net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.
(c) Change in net position in the Consolidated Revenue Fund
Change in net position in the Consolidated Revenue Fund is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non respendable revenue recorded by the department. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.
(d) Revenues
i) Sales of goods and information products are revenues from regulatory fees and are recognized in the accounts based on the services provided in the year.
ii) Funds received from external parties for specified purposes are recorded upon receipt as deferred revenues. These revenues are recognized in the period in which the related expenses are incurred.
iii) Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
(e) Expenses – Expenses are recorded on the accrual basis:
i) Grants are recognized in the year in which the conditions for payment are met. In the case of grants which do not form part of an existing program, the expense is recognized when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements.
ii) Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement.
iii) Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
iv) Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans, employee compensation payments and legal services are recorded as operating expenses at their estimated cost.
(f) Employee future benefits
i) Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government of Canada. Library and Archives Canada's 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 Library and Archives Canada to make contributions for any actuarial deficiencies of the Plan.
ii) 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.
(g) Accounts receivables and advances
Accounts receivables and advances are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.
(h) Tangible capital assets
All tangible capital assets having an initial cost of $10,000 or more are recorded at their acquisition cost. Software under development is capitalized and amortized once in service. The department does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value.
Amortization is done on a straight-line basis over the estimated useful lives of the assets as follows:
| Asset Class | Amortization Period |
|---|---|
| Machinery and equipment | 5-15 years |
| Informatics hardware | 3-10 years |
| Informatics purchased and developed software | 2-7 years |
| Other equipment, including furniture | 5-10 years |
| Motor vehicles | 3-15 years |
(i) Collections
The collections of Library and Archives Canada are presented on the Statement of Financial Position at a nominal value of $1,000. Items purchased for the collections are recorded as an expense in the year of acquisition. Items collected from the Federal government are not recorded on the Statement of Financial Position.
(j) Measurement uncertainty
The preparation of these financial statements, in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector, 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 liability for employee severance 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 Appropriations
Library and Archives Canada receives most of its funding through annual Parliamentary appropriations. Items recognized in the statements of operations and the statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, Library and Archives Canada has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences between net results of operations and appropriations are reconciled in the following tables.
| 2009 | 2008 | |
|---|---|---|
| (a) Reconciliation of net cost of operations to current year appropriations used | ||
| Net cost of operations | 171,811 | 164,823 |
| Adjustments for items affecting net cost of operations but not affecting appropriations: | ||
| Add(Less): | ||
| Services provided without charge | (46,307) | (45,226) |
| Amortization of tangible capital assets | (3,760) | (3,280) |
| Employee severance benefits | (866) | (3,225) |
| Vacation pay and compensatory leave | (3,407) | 180 |
| Reversal of previous year expenses | 244 | 178 |
| Revenue not available for spending | 183 | 137 |
| Loss on disposal and write-down of tangible capital assets | (118) | (47) |
| Other | - | (19) |
| (54,031) | (51,302) | |
| Adjustments for items not affecting net cost of operations but affecting appropriations | ||
| Add(Less): | ||
| Acquisition of tangible capital assets | 8,814 | 8,933 |
| Accountable advances | (2) | 2 |
| 8,812 | 8,935 | |
| Current year appropriations used | 126,592 | 122,456 |
(b) Appropriations provided and used |
||
| Operating expenditures - Vote 45 | 160,137 | 148,463 |
| Statutory amounts | 12,521 | 11,490 |
| Appropriations available for use | 172,658 | 159,953 |
| Less: | ||
| Lapsed appropriations: operating | (3,333) | (2,950) |
| Lapsed appropriations: Frozen allotments | (42,629) | (34,478) |
| Total lapsed | (45,962) | (37,428) |
| Appropriations available for future years | (104) | (69) |
| Current year appropriations used | 126,592 | 122,456 |
(c) Reconciliation of net cash provided by Government to current year appropriations used |
||
| Net cash provided by Government | 125,461 | 116,281 |
| Revenue not available for spending | 183 | 137 |
| Change in net position in the Consolidated Revenue Fund | ||
| Variation in accounts receivable and advances | 1,482 | (916) |
| Variation in accounts payable and accrued liabilities | (562) | 6,892 |
| Variation in deferred revenue | (212) | (133) |
| Other adjustments | 240 | 195 |
| 948 | 6,038 | |
| Current year appropriations used | 126,592 | 122,456 |
4. Accounts Receivable and Advances
The following table presents details of accounts receivable and advances:
| 2009 | 2008 | |
|---|---|---|
| Receivable from other Federal Government Departments and Agencies | 276 | 1,707 |
| Receivable from external parties | 134 | 182 |
| Employee advances | 9 | 12 |
| Total | 419 | 1,901 |
5. Tangible Capital Assets
| Cost | Opening Balance |
Acquisitions | Reclassification of Assets |
Disposals and write-offs |
Closing Balance |
|---|---|---|---|---|---|
| Machinery and equipment | 786 | 33 | - | (10) | 809 |
| Informatics hardware | 9,534 | 344 | - | (316) | 9,562 |
| Informatics purchased and developed software | 13,514 | 2,079 | - | - | 15,593 |
| Other equipment | 30,172 | 80 | - | (256) | 29,996 |
| Motor vehicles | 491 | - | - | (20) | 471 |
| Software under development | 6,748 | 6,278 | - | - | 13,026 |
| 61,245 | 8,814 | - | (602) | 69,457 | |
| Accumulated amortization | Opening Balance |
Acquisitions | Reclassification of Assets |
Disposals and write-offs |
Closing Balance |
| Machinery and equipment | 606 | 28 | - | (10) | 624 |
| Informatics hardware | 5,540 | 1,224 | - | (244) | 6,520 |
| Informatics purchased and developed software | 5,854 | 1,379 | - | - | 7,233 |
| Other equipment | 14,776 | 1,079 | - | (217) | 15,638 |
| Motor vehicles | 321 | 50 | - | (12) | 359 |
| 27,097 | 3,760 | - | (483) | 30,374 | |
| Net book value | 2009 | 2008 | |||
| Machinery and equipment | 185 | 180 | |||
| Informatics hardware | 3,042 | 3,994 | |||
| Informatics purchased and developed software | 8,360 | 7,660 | |||
| Other equipment | 14,358 | 15,396 | |||
| Motor vehicles | 112 | 170 | |||
| Software under development | 13,026 | 6,748 | |||
| 39,083 | 34,148 | ||||
Amortization expense for the year ended March 31, 2009 is $3,760 ($3,280 in 2008).
6. Collections
Library and Archives Canada preserves the collective memory of the nation and of the Government of Canada and contributes to the protection of rights and the enhancement of a sense of national identity.
While the nominal valuation attributed to the collection in these Financial Statements is aligned with Canadian Public Sector reporting standards, this is not representative of the historical or market value of the collection. Although not capitalized like other assets such as buildings or equipment, these irreplaceable treasures have inestimable legal, evidentiary, cultural and, indeed, monetary value for Canadians now and for generations to come. These include documentary material transferred at no charge from government departments, publications received through Legal Deposit, materials purchased and donated materials for which receipts for tax purposes may have been issued.
7. Deferred Revenue
Deferred revenue represents the balance at year-end of unearned revenue stemming from donations. Some of these donations are restricted for specific purposes. Revenue is recognized each year in the amount of expenses incurred for the purposes for which the donations were received.
| 2009 | 2008 | |
|---|---|---|
| Balance, beginning of year | 696 | 829 |
| Add amount received from external organizations | 596 | 991 |
| Less revenues recognized in the year | (808) | (1,124) |
| Balance, end of year | 484 | 696 |
8. Employee Benefits
a) Pension benefits: Library and Archives Canada's employees participate in the Public Service Pension 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 Plans benefits and they are indexed to inflation.
Both the employees and Library and Archives Canada contribute to the cost of the Plan. The 2008-09 expense amounts to $8,908,864 ($8,260,795 in 2007-08), which represents approximately 2.0 (2.1 in 2007-08) times the contributions by employees.
Library and Archives' Canada responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficits are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.
(b) Severance benefits: Library and Archives Canada 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 appropriations. Information about the severance benefits, measured as at March 31, is as follows:
| 2009 | 2008 | |
|---|---|---|
| Accrued benefit obligation, beginning of year | 16,464 | 13,239 |
| Expense for the year | 2,728 | 4,742 |
| Benefits paid during the year | (1,863) | (1,517) |
| Accrued benefit obligation, end of year | 17,329 | 16,464 |
9. Related Party Transactions
Library and Archives Canada is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. Library and Archives Canada enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year, Library and Archives Canada received services which were obtained without charge from other Government departments as presented in part (a).
(a) Services provided without charge to Library and Archives Canada:
During the year Library and Archives Canada received without charge from other departments, accommodation, legal fees, employee compensation benefits and the employer's contribution to the health and dental insurance plans. These services without charge have been recognized in Library and Archives Canada's Statement of Operations as follows:
| 2009 | 2008 | |
|---|---|---|
| Accommodations | 40,426 | 39,971 |
| Employer Contribution to Health and Dental Insurance | 5,845 | 5,172 |
| Workers' compensation payments | 36 | 70 |
| Legal services | - | 13 |
| 46,307 | 45,226 |
The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of others without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada (PWGSC) and audit services provided by the Office of the Auditor General, are not included as an expense in Library and Archives Canada's Statement of Operations. Similarly, Library and Archives Canada manages records in all media on behalf of more than 90 federal government organizations across the country.
(b) Payables outstanding at year-end with related parties:
| 2009 | 2008 | |
|---|---|---|
| Accounts receivable with other government departments and agencies | 93 | 1,185 |
| Accounts payable to other government departments and agencies | 2,067 | 1,112 |
(c) Administration of programs on behalf of other government departments
Since February 2008, Library and Archives Canada coordinates and manages the funds obtain by the Council of the Network of Official Languages Champions (CNOLC). The Council is funded according to voluntary contributions from departments and agencies. In 2008-2009, the Council received $164,500 in contributions from which $146,715 was spent and thus, $17,785 ($5,000 in 2007-2008) was transferred to the Treasury Board Secretariat at year end.
