National Round Table on the Environment and the Economy
Annual Report  2005-2006

Notes to the Financial Statements For the Year ended March 31, 2006

1.   Authority and Purpose

The National Round Table on the Environment and the Economy (Round Table) was established in 1994 under the National Round Table on the Environment and the Economy Act and is a departmental corporation named in Schedule II of the Financial Administration Act. The Round Table fulfils its objective of promoting sustainable development, and the integration of the environment and economy in decision making in all sectors, by conducting studies, organizing stakeholder "dialogues" on specific issues and economic sectors, providing advice, carrying out educational and communication activities, and by acting as a catalyst for change. Its operating expenditures are funded mainly by a budgetary lapsing authority and, to a lesser extent, from cost recovery and cost sharing for specific activities. Employee benefits are in accordance with the related statutory authorities. The Round Table is not subject to the provisions of the Income Tax Act.

2.   Summary of Significant Accounting Policies

These 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, and year-end instructions issued by the Office of the Comptroller General. Significant accounting policies are as follows:

a)   Parliamentary Appropriations

The Round Table is financed mainly by the Government of Canada through Parliamentary appropriations. Parliamentary appropriations are disclosed in the Statement of Equity of Canada. Appropriations provided to the Round Table do not parallel financial reporting according to Canadian generally accepted accounting principles, as they are based in a large part on cash flow requirements. Consequently, items recognized in the Statement of Equity of Canada are not necessarily the same as those provided through appropriations from Parliament.

b)   Due from Consolidated Revenue Fund

The Round Table operates within the Consolidated Revenue Fund (CRF). The CRF is administered by the Receiver General for Canada. All cash received by the Round Table is deposited to the CRF and all cash disbursements made by the Round Table are paid from the CRF. Due from the CRF represents the amount of cash that the Round Table is entitled to draw from the Consolidated Revenue Fund, without further Parliamentary appropriations, in order to discharge its liabilities.

c)   Employees Future Benefits

i)    Pension Plan

Employees participate in the Public Service Pension Plan administered by the Government of Canada. The Round Table’s contribution to the Plan reflects the full cost of the employer contributions. This amount is currently based on a multiple of the employee’s required contributions, and may change over time depending on the experience of the Plan. These contributions represent the total pension obligations of the Round Table and are charged to operations on a current basis.

ii)   Severance Benefit

Employees of the Round Table are entitled to termination benefits as provided for in the Termination Benefits Guidelines within the Employment Status Policy of the Round Table. The cost of these termination benefits is accrued as the employees render the services necessary to earn them. Management determined the accrued severance benefit to obligations using a method based upon assumptions and its best estimates. Employee severence benefits payable on cessation of employment represent obligations of the Round Table that are normally funded by future year’s appropriations.

d)   Receivables

These are stated at amounts ultimately expected to be realized. An allowance is made for receivables where recovery is considered uncertain.

e)   Publication Inventory for Resale

An independent distributor sells the Round Table’s publication inventory for resale. The distributor is entitled to a 50% commission fee on the sale price of each publication sold. Inventory for resale is valued at net realizable value, which is always less than cost.

f)    Tangible Capital Assets

Tangible capital assets with an acquisition cost of $2,000 or more are capitalized at cost and amortized over their estimated useful lives on a straight-line basis. The estimated useful life of each tangible capital asset class is as follows:

Asset Class	Useful Life
Informatics Equipment and Purchased Software	3 years
Furniture and Equipment	10 years
Leasehold Improvements	lower of lease term and 10 years

g)   Services Received Without Charge

Services received without charge from other government departments are recorded as expenditures at their estimated cost. A corresponding amount is credited directly to the Equity of Canada.

h)   Measurement Uncertainty

The preparation of financial statements requires management to make estimates and assumptions that affect 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 useful life of tangible capital assets, write-down and write-offs of inventory of publications for resale, and severance benefits. Actual results could differ from management’s best estimates as additional information becomes available in the future.

  

3.   Related Party Transactions

The Round Table is related in terms of common ownership to all Government of Canada departments and Crown corporations.  The Round Table enters into transactions with these entities in the normal course of business and on normal trade terms, with the exception of services received without charge.

During the year, the Round Table received funding in the amount of $25,405 (2005 - $0) from another government department, Public Works Government Services Canada, for a communications project.

The Round Table also incurred expenses with related parties of $951,625 (2005 - $1,056,293), including $412,950 (2005 - $408,450) for services received without charge. Services received without charge include $368,450 (2005 - $368,450) for the rental of space, $42,500 (2005 - $38,000) for audit services and $2,000 (2005 - $2,000) for payroll administration services.

4.   Receivables

	2006	2005
Other Government Departments	47,213	26,305
External Parties	12,179	16,377
Total Receivables	59,392	42,682

              

5.   Tangible Capital Assets

		Cost as at March 31, 2006	Acquisitions	Dispositions	Cost as at March 31, 2005
Leasehold Improvements	247,532	32,769	-	280,301
Informatics and Purchased Software	237,734	7,855	(3,200)	242,389
Furniture and Equipment	180,191	-	-	180,191
		665,457	40,624	(3,200)	702,881

	Accumulated Amortization	Net Book Value at March 31, 2006	Net Book Value at March 31, 2005
Leasehold Improvement	177,042	103,259	114,925
Informatics and Purchased Software	206,083	36,306	54,115
Furniture and Equipment	113,050	67,141	84,824
	496,175	206,706	253,864

Amortization expense for the year ended March 31, 2006 is $87,782 (2005 - $107,157).

6.   Accounts Payable and Accrued Liabilities

	2006	2005
Trade	538,211	459,225
Other Government Departments	155,068	4,256
Total Accounts Payable and Accrued Liabilities	693,279	463,481

7.   Employee Future Benefits

i)    Pension Plan

The Round Table and all eligible employees contribute to the Public Service Pension Plan. This pension plan provides benefits based on years of service and average earnings at retirement. The Round Table’s and employees’ contributions to the Public Service Pension Plan for the year were as follows:

	2006	2005
Round Table contributions	290,159	251,195
Employee contributions	82,668	77,015
	372,827	328,210

ii)   Severance Benefit

On termination, the Round table provides a severance benefit to its employees in the form of a termination benefit. This benefit is not prefunded and thus has no assets, resulting in a plan deficit equal to the accrued benefit obligation. Information about the plan is as follows:

		2006	2005
Accrued severance benefit, beginning of year	154,782	118,545
Cost for the year	33,554	47,345
Severance benefit paid during the year	(1,983)	(11,108)
Accrued severance benefit, end of year	186,353	154,782
Short-term portion	-	16,495
Long-term portion	186,353	138,287
		186,353	154,782

8.   Commitments

a)   The Round Table entered into a long-term lease for an office photocopier during fiscal year 2001/02 and modified the lease agreement during 2003/04 to include an additional component for the remainder of the lease term. The remaining value of the lease is $13,466 (2005 - $28,160). The payments are expected to be made over the next fiscal year.

b)   The Round Table has entered into contracts for operating expenditures for approximately $75,368 (2005 - $0). The payments under these contracts are expected to be made over the next fiscal year.

9.   Parliamentary Appropriations

The Round Table receives the majority of its funding through annual Parliamentary appropriations, which are based primarily on cash flow requirements. Items recognized in the Statement of Operations and Statement of Financial Position in one year may be funded through Parliamentary appropriations in prior and future years. Accordingly, the Round Table has different net results of operations for the year on a government funding basis than on an accrual basis. These differences are reconciled below.

a)   Reconciliation of net cost of operations to Current year appropriations used:

		2006	2005
Net cost of operations	6,040,871	5,225,456
Publications revenue in accordance with section 29.1(1) of the Financial Administration Act	2,894	3,771
Adjustments for items affecting net      cost of operations but not affecting      appropriations:
Amortization	(87,782)	(107,157)
Services received without charge	(412,950)	(408,450)
Funding from other government      department	25,405	-
Net loss result resulting from theft      of equipment	-	(10,791)
Gain on cancellation of a liability	-	4,622
Sale of surplus Crown Assets	-	40
		(475,327)	(521,736)
Changes in accounts affecting net cost of operations but not affecting appropriations:
Vacation pay and compensatory time	16,630	7,388
Employee future benefits	(31,571)	(36,237)
GST included in the liabilities	16,372	-
		1,431	(28,849)
Adjustments for items not affecting net cost of operations but affecting appropriations:
Acquisitions of tangible capital assets	40,624	41,053
Increase (decrease) in publication      inventory for resale	6,401	(2,264)
Decrease in prepayments	(24,939)	(3,640)
		22,086	35,149
Current year appropriations used	5,591,955	4,713,791

b)   Reconciliation of Parliamentary appropriations voted to Current year appropriations used:

	2006	2005
Parliamentary appropriation - voted:
Vote 25 - Operating expenditures	5,244,888	4,701,000
Statutory appropriation:
Contributions to employee benefit plans	439,000	342,695
Expenses incurred for publications      for resale	2,894	3,771
Spending of proceeds from disposal      of surplus Crown	-	40
Assets	5,686,782	5,047,506
Less: Lapsed appropriations -      operations	(94,827)	(333,715)
Current year appropriations used	5,591,955	4,713,791

c)   Reconciliation of net cash provided by government to Current year appropriations used:

	2006	2005
Net cash provided by government	5,317,566	4,740,285
Publications revenue in accordance with section 29.1(1) of the Financial Administration Act	2,894	3,771
Adjustments for items affecting net cash provided by government but not affecting appropriations:
Funding from other government      department	25,405	-
Gain on cancellation of a liability	-	4,622
Sale of surplus Crown Assets	-	40
	25,405	4,662
Adjustments for items not affecting net cash provided by government but affecting appropriations:
Variation in receivables	(16,710)	(39,268)
Variation in accounts payable and      accrued liabilities	262,800	4,341
	246,090	(34,927)
Current year appropriations used	5,591,955	4,713,791

 

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