Future-Oriented Statement of Operations and Notes 2023-2024

Table of Contents

• Future-Oriented Statement of Operations (Unaudited)
• Notes to the Future-Oriented Statement of Operations (Unaudited)
  1. Methodology and Significant Assumptions
  2. Variations and Changes to the Forecast Financial Information
  3. Summary of Significant Accounting Policies
  4. Parliamentary Authorities
     • Reconciliation of net cost of operations to requested authorities
     • Authorities provided/requested

Future-Oriented Statement of Operations (Unaudited)

The accompanying notes form an integral part of the Future-Oriented Statement of Operations.

Notes to the Future-Oriented Statement of Operations (Unaudited)

1. Methodology and Significant Assumptions

The Future-Oriented Statement of Operations (“FOSO”) has been prepared based on government priorities and departmental plans as described in the Departmental Plan.

The information for fiscal year 2022-23 is based on actual results as at December 31, 2022 and on forecasts for the remainder of the fiscal year. Planned results for fiscal year 2023-24 are based on forecasts for the entire fiscal year.

The main assumptions underlying the forecasts are as follows:

• Global Affairs Canada’s (the “Department”) activities will remain substantially the same as in the previous year.
• Expenses and revenues, including the determination of amounts internal and external to the government, are based on experience. The general historical pattern is expected to continue.

These assumptions are made as at December 31, 2022.

2. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2022-23 and for 2023-24, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing this FOSO, the Department has made estimates and assumptions about the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are continually evaluated.

Factors that could lead to material differences between the FOSO and the historical statement of operations also include:

• the timing and amount of acquisitions and disposals of tangible capital assets, which may affect gains, losses and amortization expense;
• the implementation of new collective agreements, which may affect salaries and employee future benefits;
• economic conditions, which may affect both the amount of revenue earned and the collectability of loan receivables;
• interest rates in effect at the time of issue, which will affect the net present value of non-interest bearing loans;
• emergency response to possible natural disasters, hostile actions or civil unrest; and
• other changes to the operating budget, such as new initiatives or technical adjustments later in the fiscal year.

After the Departmental Plan is tabled in Parliament, the Department will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Results Report.

3. Summary of Significant Accounting Policies

The FOSO has been prepared using the Government of Canada’s accounting policies in effect for fiscal year 2022-23 and is 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) Expenses

Transfer payments are recorded as an expense in the year the transfer is authorized, and all eligibility criteria have been met by the recipient.

Other expenses are recorded on an accrual basis when goods are received or services are rendered and include expenses related to personnel, professional and special services, repair and maintenance, utilities, materials and supplies, as well as amortization of tangible capital assets. Provisions to reflect changes in the value of assets or liabilities, such as provisions for bad debts, loans, investments and advances, as well as utilization of prepaid expenses, and other are also included in other expenses.

(b) Revenues

Revenues from regulatory fees are recognized based on the services provided in the fiscal year.

Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred. Deferred revenue consists of amounts received in advance of the delivery of goods and rendering of services that will be recognized as revenue in a subsequent fiscal year as it is earned.

Other revenues are recognized in the period the event giving rise to the revenues occurred. Revenues that are non-respendable are not available to discharge the Department’s liabilities. Although the deputy head is expected to maintain accounting control, the person in this position has no authority over the disposition of non-respendable revenues. As a result, non-respendable revenues earned on behalf of the Government of Canada and are therefore presented as a reduction of the Department's gross revenues.

4. Parliamentary Authorities

The Department is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Department differs from financial reporting according to generally accepted accounting principles because authorities are based mainly on cash flow requirements. Items recognized in the FOSO in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the Department has different net cost of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables: