Financial Statements 2011-2012

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, 2012, and all information contained in these statements rests with the management of the Canadian International Development Agency (CIDA or the Agency). 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 Agency's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Agency'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 Agency and through conducting an annual risk-based assessment of the effectiveness of ICFR.

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.

A risk-based assessment of the system of ICFR for the year ended March 31, 2012 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plan are summarized in the annex.

The effectiveness and adequacy of the Agency's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the Agency's operations, and by the Departmental Audit Committee, which advises the President of CIDA on maintaining adequate control systems and on the quality of financial reporting, and which ultimately recommends the approval of financial statements to the President.

The financial statements of CIDA have not been audited.

(Original signed by Greta Bossenmaier
on behalf of Margaret Biggs)

_______________________
Margaret Biggs, President

Gatineau, Canada
August 21, 2012

(Original signed by Sue Stimpson)

_______________________
Sue Stimpson, Chief Financial Officer

Canadian International Development Agency - Statement of Financial Position (Unaudited) - As at March 31
(In thousands of dollars)20122011
Restated (Note 19)
Liabilities
Accounts payable and accrued liabilities (note 4)1,232,983650,675
Vacation pay and compensatory leave8,2849,082
Notes payable to International Financial Institutions (IFI) (note 5)2,5402,540
Accrued liability for Matching Fund program (note 6)3,22571,470
Employee future benefits (note 7)18,42538,635
Other liabilities (note 8)5392
Total net liabilities1,265,996772,404
Financial assets
Due from Consolidated Revenue Fund1,224,277716,238
Accounts receivable and advances (note 9)4,901239,662
Loans receivable (note 10)354,790134,846
Investments and advances to IFI (note 11)6,813,9286,399,523
Allowance for valuation of investments and advances to IFI (note 11)(6,813,928)(6,399,523)
Canada Investment Fund for Africa (note 12)50,49663,004
Total gross financial assets1,634,4641,153,750
Financial assets held on behalf of Government
Accounts receivable and advances (note 9)(566)(570)
Loans receivable (note 10)(354,790)(134,846)
Investments and advances to IFI (note 11)6,813,9286,399,523
Allowance for valuation of investments and advances to IFI (note 11)(6,813,928)(6,399,523)
Canada Investment Fund for Africa (note 12)(50,496)(63,004)
Total financial assets held on behalf of Government(405,852)(198,420)
Total net financial assets1,228,612955,330
Departmental net debt (net financial asset)37,384(182,926)
Non-financial assets
Prepaid expenses205,292210,207
Tangible capital assets (note 13)7,33010,323
Total non-financial assets212,622220,530
Departmental net financial position175,238403,456

Contractual obligations (note 14)
Contingent liabilities (note 15)

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

(Original signed by Greta Bossenmaier
on behalf of Margaret Biggs)

_______________________
Margaret Biggs, President

Gatineau, Canada
August 21, 2012

(Original signed by Sue Stimpson)

_______________________
Sue Stimpson, Chief Financial Officer

Canadian International Development Agency - Statement of Operations and Departmental Net Financial Position (Unaudited) - For the Year Ended March 31
(In thousands of dollars)2012
Planned Results
20122011
Restated (note 19)
Expenses
Global engagement and strategic policy1,299,3251,460,3291,138,294
Low-income countries935,743822,175841,089
Fragile countries and crisis-affected communities651,065722,107857,924
Middle-income countries357,869303,450306,685
Canadian engagement309,642249,304253,787
Internal services123 066116,961121,681
Expenses incurred on behalf of Government(174,206)(20,089)(60,027)
Total expenses3,502,5043,654,2373,459,433
Revenues
Gain on foreign exchange174,20622,057259,318
Amortization of discount on loans13,82713,82713,827
Miscellaneous revenues3,6003,0243,244
Revenues earned on behalf of Government(191,633)(38,908)(276,389)
Total revenues---
Net cost of operations before government funding and transfers3,502,5043,654,2373,459,433
Less : Government funding and transfers
Net cash provided by Government2,894,1314,023,120
Change in due from Consolidated Revenue Fund508,039(330,427)
Services provided without charge by other government departments (note 16)24,77323,900
Transfer of assets and liabilities to other government departments (note 17)(924)-
Net cost (revenues) of operations after government funding and transfers228,218(257,160)
Departmental net financial position - Beginning of year403,456146,296
Departmental net financial position - End of year175,238403,456

Segmented information (note 18)

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

Canadian International Development Agency - Statement of Change in Departmental Net Debt (Unaudited) - For the Year Ended March 31
(In thousands of dollars)20122011
Net cost (revenues) of operations after government funding and transfers228,218(257,160)
Change due to tangible capital assets
Acquisition of tangible capital assets1,0524,463
Amortization of tangible capital assets(2,209)(1,005)
Net loss on disposal of tangible capital assets(45)-
Transfer of net capital assets to other government departments(1,791)-
Total change due to tangible capital assets(2,993)3,458
Change due to prepaid expenses(4,915)28,505
Net increase (decrease) in departmental net debt220,310(225,197)
Departmental net debt - Beginning of year(182,926)42,271
Departmental net debt - End of year37,384(182,926)

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

Canadian International Development Agency - Statement of Cash Flow (Unaudited) - For the Year Ended March 31
(In thousands of dollars)20122011
Restated (note 19)
Operating activities
Net cost of operations before government funding and transfers3,654,2373,459,433
Non-cash items:
Amortization of tangible capital assets(2,209)(1,005)
Loss on disposal of tangible capital assets(45)-
Services provided without charge by other government departments (note 16)(24,773)(23,900)
Variations in Statement of Financial Position
Increase (decrease) in accounts receivable and advances(234,757)235,904
Increase (decrease) in prepaid expenses(4,915)28,505
Decrease (increase) in accounts payable and accrued liabilities(582,308)214,719
Decrease (increase) in vacation pay and compensatory leave798(1,161)
Decrease in notes payable to IFI-3,658
Decrease in accrued liability for Matching Fund program68,245104,275
Decrease (increase) in employee future benefits20,210(2,857)
Decrease (increase) in other liabilities(537)1,086
Transfer of liabilities to other government departments (note 17)(867)-
Cash used in operating activities2,893,0794,018,657
Capital investing activities
Acquisitions of tangible capital assets1,0524,463
Cash used in capital investing activities1,0524,463
Net cash provided by Government of Canada2,894,1314,023,120

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


Notes to the financial statements (Unaudited) for the year ended March 31

1. Authority and objectives

The Canadian International Development Agency (CIDA or the Agency) is designated as a department for the purposes of the Financial Administration Act by Order-in-Council P.C. 1968-923 of May 8, 1968. The authority for the CIDA program and related purposes is found in the Department of Foreign Affairs and International Trade Act, in the Annual Appropriations Act and in the International Development (Financial Institutions) Assistance Act. CIDA is the lead government organization responsible for Canada's Official Development Assistance (ODA). In addition, the Official Development Assistance Accountability Act (ODAAA) came into force on June 28, 2008. The ODAAA imposes reporting obligations on the Government.

CIDA's mandate is to manage Canada's aid resources effectively and accountably to achieve meaningful, sustainable development results, and to engage in policy development in Canada and internationally, enabling Canada's effort to realize its development objectives. CIDA fulfills its mandate through six main program activities:

  • Fragile countries and crisis-affected communities: This program activity seeks to address developmental issues in selected countries identified as fragile or crisis-affected. Fragile countries are defined as those that face particularly severe development challenges with complex national and regional contexts given weak institutional capacity, poor governance, political instability, and ongoing violence or a legacy of past conflict. Improving the situation in these countries is frequently considered critical in meeting Canada's foreign policy objectives. CIDA's programming in these countries seeks to enhance long-term development by improving the effectiveness of public institutions and society, fostering stability and security, as well as supporting the delivery of key services. This program activity also involves humanitarian assistance in response to man-made crises or natural disasters to ensure the delivery of and access to essential emergency services to crisis-affected populations. In both cases, various partnerships offer flexibility and expertise to provide the most effective response.
  • Low-income countries: This program activity focuses on addressing pervasive poverty in countries having an annual gross national income (GNI) per capita equivalent to $995 US or less (2009 World Bank data). This requires engagement in long-term development assistance supporting the national priorities of a selected number of low-income countries, as well as programming with regional institutions addressing transboundary issues. CIDA's support aims to help these countries achieve their priority development goals that differ from country to country, and region to region. Programming aims at reducing poverty and increasing economic opportunities. It focuses on areas such as basic health and education, agriculture/food security, income generation, and the foundations for good governance.
  • Middle-income countries: This program activity focuses on addressing specific challenges in attaining self-reliance for countries having a GNI per capita equivalent or more than $996 US but less than $12,195 US (2009 World Bank data). It involves strategic assistance in a select number of middle-income countries, as well as programming with regional institutions addressing transboundary issues. These countries vary considerably in terms of their development needs. CIDA programming is tailored to respond to national priorities and development challenges to ensure basic services reach marginalized populations. Programming aims to build the foundation for sustainable and inclusive economic growth and accountable, democratic institutions.
  • Global engagement and strategic policy: This program activity focuses on achieving development and humanitarian results, and advancing Canadian priorities, by engaging with multilateral and global development organizations and by influencing partners' policies, planning, strategic directions, and organizational governance. It also shapes international development policy in Canada and globally in support of CIDA's strategic direction, and Canada's international assistance objectives and commitments.
  • Canadian engagement: This program activity focuses on enabling a wide range of Canadians and Canadian organizations to contribute to and support Canada's international development efforts. CIDA does this by co-investing through various delivery mechanisms. In turn, these organizations partner with developing-country counterparts to deliver programs and services in support of CIDA's strategic outcome. Public engagement in Canada is achieved through education and outreach activities that involves others such as Canadian civil society, academic institutions, and professional associations, as well as through CIDA's own efforts to inform Canadians.
  • Internal services: This program activity provides support services to CIDA programming for the delivery of the Canadian aid program. It includes governance and management support, resources-management services, and asset-management services.

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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:

(a) Parliamentary authorities

CIDA is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Agency do 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 authorities from Parliament. note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2011-2012 Report on Plans and Priorities. The planned results from the future-oriented financial statements for 2011-2012 have been restated to reflect the cost of operations net of the revenues earned on behalf of Government and expenses incurred on behalf of Government. This restatement resulted in a $17,427,000 increase in planned net cost of operations before government funding and transfers. In addition, the future-oriented financial statements will be reclassified to conform to the current year presentation.

(b) Net cash provided by Government

The Agency operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada.  All cash received by CIDA is deposited to the CRF, and all cash disbursements made by CIDA are paid from the CRF.  The net cash provided by Government is the difference between all cash receipts and all cash disbursements, including transactions between departments of the Government.

(c) Amounts due from the CRF

Amounts due from 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 CIDA is entitled to draw from the CRF without further authorities to discharge its liabilities.

(d) Revenues

Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.  CIDA's revenues mainly consist of foreign exchange gain on revaluation as well as interest and service fees on loans.

Revenues that are non-respendable are not available to discharge the Agency's liabilities. While the Deputy Head is expected to maintain accounting control, 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.

(e) Expenses

Expenses are recorded on the accrual basis.

Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses 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. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.

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, legal services and workers' compensation are recorded as operating expenses at their estimated cost.

Expenses related to assets that are not available to discharge the Agency's liabilities are considered to be incurred on behalf of the Government of Canada.

(f) Employee future benefits

  1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. CIDA's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Agency'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 entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. 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 receivable and advances

Accounts receivable and advances are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for receivables where recovery is considered uncertain. 

Accounts receivable and advances that are not available to discharge the Agency's liabilities are considered to be held on behalf of the Government of Canada.

(h) Loans receivable

Loans to developing countries and IFI for international development assistance and transfer payments recoverable are recorded at cost and are adjusted to reflect the concessionary terms of those loans made on a long-term, low interest or interest-free basis. The discount determined at the date of the issuance is amortized to revenue using a straight-line amortization. Any interest or service fees revenue is recognized with the passage of time and according to the terms of the loan agreement. However, when specific loan balances are deemed uncollectible, interest and service fees revenue ceases to be accrued on these loans.

An allowance for valuation is further used to reduce the carrying value of the loans to amounts that approximate their net realizable value. The allowance is determined based on the Government's identification and evaluation of countries that have formally applied for debt relief, estimated probable losses that exist on the remaining portfolio, and changes in the economic conditions of sovereign debtors.

Any loans written off or forgiven are presented as an expense in the Statement of Operations and Departmental Net Financial Position, under transfer payments, in the fiscal year during which the required Parliamentary authority is obtained and the Government of Canada writes off or forgives the loan amounts owing to CIDA. Should subsequent recoveries arise, they are presented as a revenue in the Statement of Operations and Departmental Net Financial Position, in the fiscal year during which the monies are received.

Loans receivable are not available to discharge the Agency's liabilities and are therefore considered to be held on behalf of the Government of Canada.

(i) Investments and advances to IFI

Investments and advances to IFI are recorded at cost.

Investments consist of subscriptions to the share capital of a number of IFI and are composed of both paid-in and callable capital. Subscriptions to international organizations do not provide a return on investment, but are repayable on termination of the organization or upon CIDA's withdrawal from the organization. Paid-in capital is made through a combination of cash payments and the issuance of non-interest bearing, non-negotiable notes payable to the organization. Callable share capital is composed of resources that are not paid to the banks but act as a guarantee to allow them to borrow on international capital markets to finance their lending program.

Advances are issued to IFI that use these funds to issue loans to developing countries at concessionary terms.

For these investments and advances to IFI, an allowance is established based on their estimated realizable value.

Investments and advances to IFI and related allowance are not available to discharge the Agency's liabilities and are therefore considered to be held on behalf of the Government of Canada.

(j) Canada Investment Fund for Africa (CIFA)

The Canada Investment Fund for Africa (CIFA) is designed to provide risk capital for private investments in Africa that generate growth. The CIFA is presented at cost.

The investment period ended on January 2009. Returns on investment generated by the CIFA are recorded as revenues while the return of capital and applicable management fees are capitalized in the investment. An allowance was established based on the estimated realizable value of the fund.

CIFA is not available to discharge the Agency's liabilities and is therefore considered to be held on behalf of the Government of Canada.

(k) Prepaid expenses

CIDA has the authority to make advance payments under CIDA's Terms and Conditions for contribution agreements before the expenditures are incurred. The portion of a payment which is intended to cover expenses to be incurred in a subsequent fiscal year is recorded as prepaid expenses.

(l) Contingent liabilities

Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded.  If the likelihood is not determinable or if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

(m) Foreign currency transactions

Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars using the rate of exchange in effect at year-end. Gains and losses resulting from foreign currency transactions are included in the gain on foreign exchange and loss on foreign exchange in the Statement of Operations and Departmental Net Financial Position.

(n) Tangible capital assets

All tangible capital assets having an initial cost of $10,000 or more are recorded at their acquisition cost. The Agency 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 tangible capital asset as follows:

Amortization of tangible capital assets
Asset ClassAmortization period
Communication equipment3 years
Computer equipment3-5 years
Computer software5 years
Other equipment5 years
Vehicles5 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.

(o) Notes payable to IFI

Notes payable to IFI represent non-interest bearing, non-negotiable demand notes for share capital subscriptions and advances that are later presented for encashment according to the terms of the agreement. Amounts pertaining to notes already issued and the related future encashment obligations are presented in the Statement of Financial Position under notes payable to IFI, while the amounts for notes payable that will be both issued and encashed under the terms of signed agreements are presented in note 14 on contractual obligations.

(p) 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 in determining the allowance for doubtful accounts, allowance for loans, useful life of tangible capital assets, contingent liabilities and liability for employee future benefits. 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.

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3. Parliamentary authorities

CIDA receives most of its funding through annual 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. Accordingly, CIDA 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)20122011
Net cost of operations before government funding and transfers3,654,2373,459,433
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets(2,209)(1,005)
Loss on disposal of tangible capital assets(45)-
Services provided without charge by other government departments(24,773)(23,900)
Bad debt expense309(266)
Refunds of prior years' expenditures7,79017,222
Discount and allowance related to loans(180,417)(30,469)
Decrease in notes payable to IFI-3,658
Decrease in accrued liability for Matching Fund program68,245104,275
Increase in accrued liabilities for workforce adjustment(14,192)-
Decrease (increase) in vacation pay and compensatory leave737(1,161)
Decrease (increase) in employee future benefits19,810(2,857)
Total items affecting net cost of operations but not affecting authorities(124,745)65,497
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets1,0524,463
Increase (decrease) in prepaid expenses(4,915)28,505
Advances / subscriptions to IFI107,870280,972
Transfer payments recoverable issued on behalf of Government300,000-
Pakistan's debt forgiveness on behalf of Government81,54648,791
Loss on foreign exchange on behalf of Government20,08932,027
Total items not affecting net cost of operations but affecting authorities505,642394,758
Current year authorities used4,035,1343,919,688
(b) Authorities provided and used
(in thousands of dollars)20122011
Authorities provided:
Budgetary
Vote 25 — Operating expenditures219,963222,174
Vote 30 — Grants and contributions3,319,1563,045,537
Vote 32c — Debt forgiveness384,595433,385
Statutory amounts355,638328,870
Total Budgetary4,279,3524,029,966
Non-Budgetary
Vote H168 — Issuance of notes to the Fund Accounts-245,482
Statutory amounts18,091,76319,867,630
Total Non-Budgetary18,091,76320,113,112
Total authorities provided22,371,11524,143,078
Less:
Authorities available for future years(18,281,880)(20,215,378)
Lapsed: Operating(8,472)(4,947)
Lapsed: Grants and contributions(45,629)(3,065)
Current year authorities used4,035,1343,919,688

4. Accounts payable and accrued liabilities

The following table presents details of CIDA's accounts payable and accrued liabilities:
(in thousands of dollars)20122011
Accounts payable — Other government departments and agencies2,2173,369
Accounts payable — External parties1,194,422623,353
Total accounts payable1,196,639626,722
Accrued liabilities36,34423,953
Total accounts payable and accrued liabilities1,232,983650,675

In Canada's Economic Action Plan 2012, the Government announced savings measures to be implemented by departments over the next three fiscal years starting in 2012-2013. As a result, the Agency has recorded at March 31, 2012 an obligation for termination benefits for an amount of $14.2 million as part of accrued liabilities to reflect the estimated workforce adjustment costs.

5. Notes payable to IFI

The following table presents details of notes payable to IFI:
(in thousands of dollars)20122011
Global Environment Facility Trust Fund2,5402,540
Total2,5402,540

During the year, note issuances amounted to $285,582,000 ($245,476,000 in 2010-2011) and note encashment amounted to $285,582,000 ($249,134,000 in 2010-2011).

6. Accrued liability for Matching Fund program

The Matching Fund program is an intiative committed by the Government of Canada to match donations in support for humanitarian crisis.

The following table presents CIDA's matching funds by initiative:
(in thousands of dollars)20122011
Haïti3,22571,470
Total3,22571,470

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7. Employee future benefits

(a) Pension benefits

CIDA's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. 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 the Canada/Quebec Pension Plans benefits and they are indexed to inflation.

Both the employees and the Agency contribute to the cost of the Plan. The 2011-2012 expense amounts to $19,476,000 ($19,010,000 in 2010-2011), which represents approximately 1.8 times (1.9 in 2010-2011) the contributions by employees.

CIDA'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:

CIDA 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.

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 2011-2012. 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.

Information about the severance benefits, measured as at March 31, is as follows:
(in thousands of dollars)20122011
Accrued benefit obligation — Beginning of year38,63535,778
Transferred to other government department, effective November 15, 2011 (note 17)(400)-
Subtotal38,23535,778
Expense for the year(2,732)5,632
Benefits paid during the year(17,078)(2,775)
Accrued benefit obligation — End of year18,42538,635

8. Other liabilities

Other liabilities consist of funds received from external organizations to carry out specific aid projects and to be administered by CIDA on their behalf.

Information about the other liabilities, measured as at March 31, is as follows:
(in thousands of dollars)20122011
Other liabilities — beginning of year21,088
Amounts received during the year6024,468
Amounts disbursed during the year(65)(5,554)
Other liabilities — end of year5392

9. Accounts receivable and advances

The following table presents details of CIDA's accounts receivable and advances balances:
(in thousands of dollars)20122011
Restated (note 19)
Receivables — External parties6,1656,973
Receivables — Other Federal Government departments and agencies8128,399
Receivables — Inter-American Development Bank-227,300
Interest and service fees on loans566570
Employee advances650
Subtotal7,549243,292
Allowance for doubtful accounts on receivables from external parties and on interest and service fees on loans(2,648)(3,630)
Gross accounts receivable4,901239,662
Accounts receivable held on behalf of Government(566)(570)
Net accounts receivable4,335239,092

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10. Loans receivable

The following table presents details of CIDA's loans and transfer payments recoverable to developing countries and IFI:
(in thousands of dollars)20122011
(a) 30-year term, 7-year grace period, unsecured, 3.0 percent interest per annum, with the agreed final repayment in March 2005:
Cuba9,5479,547
(b) 35-year term, 4-year grace period, unsecured, 5.0 percent interest per annum, semi-annual interest repayments with first principal repayment due January 2017 and final repayment in July 2026:
Egypt44,99644,996
(c) 50-year term, 10-year grace period, unsecured, non-interest bearing, with final repayments between March 2015 and September 2035:
African Development Bank1,0941,219
Algeria4,8925,321
Andean Development Corporation1,4381,563
Argentina93112
Bolivia424466
Brazil146167
Central American Bank for Economic Integration421497
Chile539638
Colombia158184
Dominican Republic2,7062,942
Ecuador2,9323,237
Guatemala1,4811,581
Indonesia144,503153,725
Malaysia1,2311,294
Malta300325
Mexico1417
Morocco4,8645,450
Myanmar (Burma)8,3068,306
Pakistan301,023382,569
Paraguay90110
Peru2226
Philippines1,2581,355
Sri Lanka66,84871,174
Thailand14,55115,398
Tunisia38,69741,993
(d) 50-year term, 13-year grace period, unsecured, non-interest bearing, with the final repayment in March 2023:
Algeria13,69614,941
Subtotal666,270769,153
Less: unamortized discount(417,723)(486,862)
Less: allowance for valuation(120,641)(147,445)
Subtotal - Loans to developing countries and IFI127,906134,846
(e) Transfer payments recoverable300,000-
Less: unamortized discount(73,116)-
Subtotal - Transfer payments recoverable226,884-
Total loans receivable354,790134,846

The grace period refers to interval from date of issuance of the loan to first repayment of loan principal.

Final repayment on Cuba loan was due in March 2005. In default of payment, the country has been in arrears since that date. No repayment is anticipated. The allowance for valuation of loans is adjusted to reflect this situation.

The loan with the Philippines was issued in Canadian dollars. However, it is reimbursable in Philippine pesos in equivalent Canadian dollar semi-annual installments of $48,580 until September 2024. The installments are converted to Philippine pesos using the foreign exchange rate in effect at the time of repayment.

In 2006-2007, the Government of Canada, as represented by the CIDA, entered into an agreement with the Government of Pakistan to forgive its outstanding $447,500,000 loan. In order to expire its debt obligation, the Government of Pakistan is required to make education sector investments over an estimated period of five years that are equivalent to the current present value of its debt of $132,600,000. According to the agreement, Pakistan's debt is to be written down proportionally by CIDA as the investments are made. In 2011-2012, the Government of Pakistan invested in its education sector program. This investment permitted CIDA to forgive $81,546,000 of the Government of Pakistan's debt. Since 2009-2010, the Government of Pakistan's debt has been reduced by a total amount of $146,485,000.

Transfer payments recoverable relate to contributions made to outside parties which are repayable based on conditions specified in the contribution agreement that have come into being.

11. Investments and advances to IFI

The following table presents details of CIDA's investments and advances to IFI:
(in thousands of dollars)20122011
Investments
African Development Bank164,480106,892
Asian Development Bank229,686190,835
Caribbean Development Bank23,22519,404
Inter-American Development Bank193,309174,813
Subtotal - investments610,700491,944
Advances
African Development Fund2,324,1562,213,525
Asian Development Bank - Special27,02727,027
Asian Development Fund2,115,1252,067,435
Caribbean Development Bank - Agricultural Development Fund2,0002,000
Caribbean Development Bank - Commonwealth Caribbean Regional3,9903,878
Caribbean Development Bank - Special Development Fund266,909248,974
Global Environment Facility Trust Fund616,820562,070
Inter-American Development Bank - Fund for Special Operations337,162331,257
International Bank for Reconstruction and Development19,95019,392
International Fund for Agriculture Development341,883291,883
International Monetary Fund10,94210,636
Montreal Protocol Mutilateral Fund87,95683,378
Multilateral Investment Fund49,30846,124
Subtotal - advances6,203,2285,907,579
Subtotal - investments and advances6,813,9286,399,523
Less: allowance for valuation(6,813,928)(6,399,523)
Total--

The allowance for valuation reduces the net realizable value of the investments and advances to IFI to zero, as it is not expected that CIDA will recover these investments and advances in the future.

12. Canada Investment Fund for Africa

The Canada Investment Fund for Africa (CIFA) is a joint public-private sector initiative designed to provide risk capital for private investments in Africa that generate growth. The CIFA is a direct response to the New Partnership for Africa's Development (NEPAD) and the G8 Africa Action Plan. The main objectives of the CIFA are to optimize public-private investments in the Fund, to confer a beneficial development impact on Africa by way of increased foreign direct investments and to optimize the beneficial impact of the Fund's activities on Canadian interests.

The Government of Canada is a limited partner in the CIFA and its commitment towards the Fund was subject to matching mechanism of other investors and was to be equal to the lesser of: (i) $100 million or (ii) the aggregated commitments of all other limited partners of the partnership. The investment period in the CIFA ended January 1, 2009. From there on, and until the term of the partnership is reached on December 31, 2013, CIDA will only receive income and returns of capital. Since its inception, the Agency received capital reimbursement from CIFA amounting to $26.5 million ($13.2 million in 2010-2011) and investment income of $5.7 million ($5.2 million in 2010-2011).

The fair value of the CIFA has declined over the last five years. An allowance for valuation of $28.0 million was recorded en 2010-2011. The net residual value of the investment as of March 31, 2012 is $50.5 million.

The following table presents details of the CIFA:
(in thousands of dollars)20122011
CIFA opening balance91,00491,605
Returns of capital(13,240)(1,504)
Capitalized management fees732903
Subtotal78,49691,004
Less allowance for valuation(28,000)(28,000)
Total50,49663,004

13. Tangible capital assets

Tangible capital assets
(in thousands of dollars)CostAccumulated AmortizationNet Book Value
Capital Asset ClassOpening balanceAcquisitionsAdjustments Footnote 1Disposals and write-offsClosing balanceOpening balanceAmortizationAdjustment Footnote 2Disposals and write-offsClosing balance20122011
Communication equipment84518(50)671142845-(50)67112418-
Computer equipment13,37816(4,267)8,60652111,045434(2,486)8,561432892,333
Computer software1,360-7,815-9,1752931,733(2)-2,0247,1511,067
Other equipment1,58620(109)-1,4971,54222(109)-1,4554244
Vehicles179--2215712920-221273050
Assets under construction6,829998(7,827)--------6,829
Total24,1771,052(4,438)9,29911,49213,8542,209(2,647)9,2544,1627,33010,323

Footnotes

Footnote 1

Ajustments include assets under construction of $7,827,000 that were transferred to other categories upon completion of the assets.

Return to footnote 1 referrer

Footnote 2

Ajustments include assets under construction of $7,827,000 that were transferred to other categories upon completion of the assets.

Return to footnote 2 referrer

Effective November 15, 2011, the Agency transferred tangible capital assets with a net book value of $1,791,000 to Shared Services Canada (SSC). This transfer is included in the adjustment columns. Please refer to note 17 for further detail on the transfer to SSC.

14. Contractual obligations

The nature of CIDA's activities can result in some large multi-year contracts and obligations whereby CIDA will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received.  Significant contractual obligations that can be reasonably estimated are summarized as follows:

Contractual obligations
(in thousands of dollars)20132014201520162017 and
thereafter
Total
Transfer payments1,591,342980,879611,447198,754114,2513,496,673
Professional services4,66912019--4,808
Encashment of notes by IFI324,413256,59892,61545,1743,442722,242
Total1,920,4241,237,597704,081243,928117,6934,223,723

15.  Contingent liabilities

(a) Callable share capital:

CIDA is liable for callable share capital in certain international organizations that could require future payments to those organizations.  Callable share capital is composed of resources that are not paid to the organizations but act as a guarantee to allow them to borrow on international capital markets to finance their lending program.  Callable share capital would only be utilized in extreme circumstances to repay unrecoverable loans, should the organization's reserves not be sufficient. Callable share capital has never been drawn on by the organizations. For this reason, despite the difficult international economic environment, these contingent liabilities represent no additional risk to the Agency. As at March 31, 2012, the callable share capital is valued at $18.0 billion ($19.8 billion in 2011) and no provision was recorded for any part of this amount.

Also, different methods are used by CIDA and by the Asian Development Bank (ADB) to calculate the value of CIDA's callable shares for disclosure as a contingent liability. CIDA uses the US foreign exchange rate at the time of the investments and revalues its shares at the end of every fiscal year using the year-end US exchange rate. On the basis of this method, CIDA's valuation of its ADB callable shares is $6,402,582,038 as at March 31, 2012 ($6,240,199,681 in 2011).  However, ADB decided to use the Special Drawing Right (SDR) for purposes of denominating its capital in lieu of the US dollar. The value of the SDR against the US and Canadian dollar exchange rates at the time of inception was used to establish the par value of SDR. This par value of CIDA's callable shares is then translated using the latest exchange rate of SDR against the US and Canadian dollar exchange rates.  Valuation of these callable shares on this basis amounts to $8,163,909,981 ($8,127,513,171 in 2011) representing a difference of $1,761,327,943 with CIDA's own valuation as at March 31, 2012 ($1,887,313,490 in 2011).

(b) Claims and litigation:

Claims have been made against CIDA in the normal course of operations. These claims include items with pleading amounts and other for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. The Agency has recorded an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $13,691,000 at March 31, 2012 ($5,326,000 in 2011).

16.  Related party transactions

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

Common services provided without charge by other government departments
(in thousands of dollars)20122011
Employer's contribution to the health and dental insurance plans14,49613,730
Accommodation9,5259,440
Legal services691670
Workers' compensation6160
Total24,77323,900

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 are not included in CIDA's Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties

Other transactions with related parties
(in thousands of dollars)20122011
Expenses - Other Government departments and agencies133,671147,629

These expenses exclude common services provided without charge, which are already disclosed in (a).

17. Transfers to other government departments

Effective November 15, 2011, CIDA transferred the responsibility for the email, data centre and network services to Shared Services Canada (SSC) in accordance with Order-in-Council P.C 2011-0877 and 2011-1297, including the stewardship responsibility for the related assets and liabilities. Accordingly, the Agency transferred the following assets and liabilities to SSC on November 15, 2011:

Transferred assets and liabilities to SSC on November 15, 2011 (in thousands of dollars)
Assets
Tangible capital assets (net book value) (note 13)1,791
Total assets transferred1,791
Liabilities
Accrued Salaries12
Vacation pay and compensatory leave61
Accounts payable394
Employee future benefits (note 7)400
Total liabilities transferred867
Adjustment to the departmental net financial position924

The 2011 comparative figures and planned results have not been reclassified on the Statement of Operations and Departmental Net Financial Position to present the revenues and expenses of the transferred operations. These amounts could not be determined within a reasonable level of effort considering the timeframe and resources available.

During the transition period, the Agency continued to administer the transferred activities on behalf of SSC. The administered expenses and acquisitions of capital assets amounted to $4,255,230 for the year and are not recorded in these financial statements.

18.  Segmented information

Presentation by segment is based on CIDA's program activity 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 program activities, by major object of expenses and by major type of revenues.  The segment results for the period are as follows:

Expenses and revenues presented by segment
(in thousands of dollars)Global engagement and strategic policyLow-income countriesFragile countries and crisis- affected communitiesMiddle-income countriesCanadian engagementInternal services2012
Total
2011
Total
Restated
(note 19)
Transfer payments
Other countries and international organizations1,414,907773,255698,020278,401231,755-3,396,3383,191,617
Operating expenses
Salaries and employee benefits21,53041,70420,37821,82315,80387,047208,285206,458
Loss on foreign exchange20,1581----20,15932,027
Professionnal and special services8601,8591,27991350715,79321,21127,769
Travel1,4493,3931,2441,2764741,7359,57113,034
Accommodation1,0451,9211,0769987226,17511,93712,236
Repair and maintenance7135-13,2083,2524,607
Communication17361821256567731,850
Amortization of tangible capital assets-----2,2092,2091,005
Other356557181713859128,857
Expenses incurred on behalf of Government(20,089)-----(20,089)(60,027)
Total operating expenses25,33348,92024,08725,04917,549116,961257,899267,816
Total expenses1,440,240822,175722,107303,450249,304116,9613,654,2373,459,433
Revenues
Gain on foreign exchange22,057-----22,057259,318
Amortization of discount on loans7918-13,730--13,82713,827
Miscellaneous revenues245912,4747993,0243,244
Revenues earned on behalf of Government(22,138)(477)(1)(16,204)(79)(9)(38,908)(276,389)
Total revenues--------
Net cost of operations1,440,240822,175722,107303,450249,304116,9613,654,2373,459,433

19. Accounting changes

During 2011, amendments were made to Treasury Board Accounting Standard 1.2—Departmental and Agency Financial Statements to improve financial reporting by government departments and agencies. The amendments are effective for financial reporting of fiscal years ending March 31, 2012, and later. The significant changes to CIDA's financial statements are described below. These changes have been applied retroactively, and comparative information for 2010-2011 has been restated.

Net debt (calculated as liabilities less financial assets) is now presented in the Statement of Financial Position. Accompanying this change, the Agency now presents a Statement of Change in Net Debt and no longer presents a Statement of Equity.

Revenues earned and expenses incurred on behalf of the government are now presented distinctly in the Statement of Operations and Departmental Net Financial Position, as are the financial assets held on behalf of the government in the Statement of Financial Position. The effect of this change was to increase the net cost of operations after government funding and transfers by $18,819,000 for 2011-2012 ($216,362,000 for 2010-2011) and decrease total financial assets by $405,852,000 for 2011-2012 ($198,420,000 for 2010-2011).

Government funding and transfers, as well as the credit related to services provided without charge by other government departments, are now recognized in the Statement of Operations and Departmental Net Financial Position below "Net cost of operations before government funding and transfers." In previous years, the Agency recognized these transactions directly in the Statement of Equity of Canada. The effect of this change was to decrease the net cost of operations after government funding and transfers by $3,430,083,000 for 2011-2012 ($3,716,593,000 for 2010-2011).

Accounting changes
(in thousands of dollars)2011
As previously stated
Effect of change2011
Restated
Statement of Financial Position:
Assets held on behalf of Government-(198,420)(198,420)
Departmental net financial position601,876(198,420)403,456
Statement of Operations and Departmental Net Financial Position:
Revenues276,389(276,389)-
Expenses3,519,460(60,027)3,459,433
Net cost of operations before government funding and transfers3,243,071216,3623,459,433
Government funding and transfers
Net cash provided by Government-4,023,1204,023,120
Change in due from Consolidated Revenue Fund-(330,427)(330,427)
Services provided without charge by other government departments-23,90023,900

20. Comparative information

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