Future-Oriented Statement of Operations for the CFIA
Years ending March 31, 2011 and March 31, 2012

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Statement of Management Responsibility

Agency's management is responsible for this future-oriented statement of operations, including responsibility for the appropriateness of the assumptions on which this statement is prepared. This statement is based on the best information available and assumptions adopted as at December 31, 2010 and reflects the plans described in the Report on Plans and Priorities.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate division of responsibilities, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the Agency.

Future-Oriented Statement of Operations

Year ending March 31 (In thousands of dollars)

Revenues

Program Activities	2012 Forecast	2011 Estimated Results
Food Safety Program	$32,598	$32,081
Animal Health and Zoonotics Program	3,155	3,105
Plant Resources Program	6,835	6,727
International Collaboration and Technical Agreements	9,990	9,831
Internal Services	583	411
Total revenues	$53,161	$52,155

 

Expenses

Program Activities	2012 Forecast	2011 Estimated Results
Food Safety Program	$370,294	$387,989
Animal Health and Zoonotics Program	149,686	153,371
Plant Resources Program	96,714	97,806
International Collaboration and Technical Agreements	50,231	41,117
Internal Services	149,662	166,266
Total expenses	$816,587	$846,549

 

Net Cost of Operations

Net Cost of Operations	$763,426	$794,394

1. Authority and Purposes

The Canadian Food Inspection Agency (the "Agency") was established, effective April 1, 1997, under the Canadian Food Inspection Agency Act. The Act consolidates all federally mandated food and fish inspection services and federal animal and plant health activities into a single agency.

The Agency is a departmental corporation named in Schedule II to the Financial Administration Act and reports to Parliament through the Minister of Agriculture and Agri-Food.

The mandate of the Agency is to enhance the effectiveness and efficiency of federal inspection and related services for food, animals and plants. The objectives of the Agency are to contribute to a safe food supply and accurate product information; to contribute to the continuing health of animals and plants; and to facilitate trade in food, animals, plants, and related products.

In delivering its mandate, the Agency operates under the following 4 program activities, supported by internal services:

1. Food Safety Program: The Food Safety Program aims to mitigate risks to public health associated with diseases and other health hazards in the food supply system and to manage food safety emergencies and incidents. The program achieves its objectives by promoting food safety awareness through public engagement and verification of compliance by industry with standards and science-based regulations. The program delivers initiatives to verify that consumers receive food safety and nutrition information and to mitigate unfair market practices targeting consumers and industry. Collaboration with other governments and stakeholders further enhances the Agency's ability to track, detect and mitigate risks associated with food and the food supply system, including food-borne illness. This program supports public health and instils confidence in Canada's food system.
2. Animal Health And Zoonotics Program: The Animal Health and Zoonotics Program aims to mitigate risks to Canada's animal resource base, animal feeds and animal products, which are integral to a safe and accessible food supply system as well as to public health. The program achieves its objectives by mitigating risks to Canada's animals (including livestock and aquatic animals) from regulated diseases, managing animal disease emergencies and incidents, mitigating and managing risks to livestock and derived food products associated with feed, promoting animal welfare and guarding against deliberate threats to the animal resource base. The program helps to mitigate risks associated with animal diseases that can be transmitted to humans by controlling diseases within animal populations. This program supports the health of Canada's animal resources and instils confidence in the safety of Canada's animals, animal products and by-products, and production systems.
3. Plant Resources Program: The Plant Resources Program aims to mitigate risks to Canada's plant resource base, which is integral to a safe and accessible food supply, as well as to public health and environmental sustainability. The program achieves its objectives by regulating agricultural and forestry products; mitigating risks to the plant resource base (including crops and forests) from regulated pests and diseases; regulating the safety and integrity of seeds, fertilizers and plant products; and managing plant health emergencies and incidents. The program also guards against deliberate threats to the plant resource base, facilitates the introduction of emerging plant technologies and protects the rights of plant breeders. Achieving the objectives of the program instils confidence in Canada's plants, plant production systems and plant products, and contributes to the health of Canada's plant resources.
4. International Collaboration And Technical Agreements: The CFIA's International Collaboration and Technical Agreements program contributes to a coherent, predictable, and science-based international regulatory framework that facilitates meeting regulatory requirements of importing countries' food, animals and plants, and their products, resulting in the facilitation of multi-billion dollar trade for the Canadian economy. The program achieves its objectives through actively participating in international fora for the development of international science-based rules, standards, guidelines and policies and, the management of sanitary and phytosanitary committees established under international agreements. The CFIA's active promotion of the Canadian science-based regulatory system with foreign trading partners and negotiations to resolve scientific and technical issues contribute to market access.
5. Internal Services: Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization.

   These groups are: Management and Oversight Services; Communication Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Security Management Services; Environmental Management Services; Material Management Services, Procurement Services; Travel and Other Administrative Services.

The Agency is responsible for the administration and enforcement of the following acts: Agriculture and Agri-Food Administrative Monetary Penalties Act, Canada Agricultural Products Act, Canadian Food Inspection Agency Act, Feeds Act, Fertilizers Act, Fish Inspection Act, Health of Animals Act, Meat Inspection Act, Plant Breeders' Rights Act, Plant Protection Act, and Seeds Act.

In addition, the Agency is responsible for enforcement of the Consumer Packaging and Labelling Act and the Food and Drugs Act as they relate to food, except those provisions that relate to public health, safety, or nutrition.

The Minister of Health remains responsible for establishing policies and standards relating to the safety and nutritional quality of food sold in Canada. The Minister of Health is also responsible for assessing the effectiveness of the Agency's activities related to food safety.

Operating and capital expenditures are funded by the Government of Canada through parliamentary authorities. Compensation payments under the Health of Animals Act and the Plant Protection Act and employee benefits are authorized by separate statutory authorities. Revenues generated by its operations are deposited to the Consolidated Revenue Fund and are available for use by the Agency.

2. Significant assumptions

The future-oriented statement of operations has been prepared on the basis of the government priorities and the plans of the department as described in the Report on Plans and Priorities.

The main assumptions are as follows:

1. The Agency's activities will remain substantially the same as for the previous year.
2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
3. Estimated year end information for 2010-11 is used as the opening position for the 2011-12 forecasts.
4. The new structure of program activities effective in fiscal year 2011-12 is used in both years presented for better comparison.
5. The Agency's statutory authority for compensation payments per Main Estimates is used to estimate the total compensation payments for the fiscal year.

These assumptions are adopted as at December 31, 2010.

3. Variations and changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for the remainder of 2010-11 and for 2011-12, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing this statement of operations, the Canadian Food Inspection Agency has made estimates and assumptions concerning the future. These estimates and judgements may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the future-oriented statement of operations and the historical statement of operations include:

1. The timing and amounts of acquisitions and disposals of property, plant and equipment may affect the overall net cost as well as the gains/losses and amortization expense.
2. Economic conditions may affect the amount of revenue earned
3. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.
4. As a result of future events, the Agency's compensation payments could be higher than the amount established for this statutory item (Refer to note 2 e).

Once the Report on Plans and Priorities is presented, the Canadian Food Inspection Agency will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of Significant Accounting Policies

The Financial Statements are prepared in accordance with Treasury Board accounting policies and instructions issued by the Office of the Comptroller General which are consistent with Canadian generally accepted accounting principles for the public sector as required under Section 31 of the Canadian Food Inspection Agency Act.

Significant accounting policies related to the future-oriented statement of operations are as follows:

1. Parliamentary authorities

   The Agency is mainly financed by the Government of Canada through parliamentary authorities. 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 are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a high level reconciliation between the bases of reporting.

2. Revenues

   Revenues for fees, permits and certificates are recognized in the accounts based on the services provided in the year.

   Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. Revenue from external parties for specified purposes is recognized in the period in which the related expenses are incurred.

   Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.

3. Expenses

   Expenses are recorded on an accrual basis:

   • Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement.
   • Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
   • Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans and legal services are recorded as operating expenses at their estimated cost.
4. Employee future benefits
   1. Pension benefits:

      The Agency's eligible employees participate in the Public Service Pension Plan (Plan), a multi-employer plan administered by the Government of Canada. Both the employees and the Agency contribute to the cost of the Plan. The Agency's contributions are expensed during the year in which the services are rendered and represent the total pension obligation of the Agency. The Agency is not required under present legislation to make contributions with respect to actuarial deficits of the Plan.

   2. Severance benefits:

      Eligible employees are entitled to severance benefits, as provided for under labor contracts and conditions of employment. The cost of these benefits is 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.

   3. Other future benefit plans:

      The federal government sponsors a variety of other future benefit plans from which employees and former employees can benefit during or after employment or upon retirement. The Public Service Health Care Plan and the Pensioners' Dental Services Plan represent the two major future benefit plans available to the Agency's employees.

      The Agency does not pay for these programs as they fall under the federal government's financial responsibilities, but the Agency records its share of the annual benefits paid under these programs as a service provided without charge by other government departments. No amount is recorded in the Agency's financial statements with regard to either the actuarial liability of these programs at year end or the annual increase of such liabilities.

5. Parliamentary Authorities

The Agency receives most of its funding through annual Parliamentary authorities. Items recognized in the statement of operations in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the Agency 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:

1. Authorities requested (in thousands of dollars):

   Items	2012	2011
   Vote 30 - Operating expenditures	$563,049	$601,669
   Vote 35 - Capital expenditures	20,957	50,028
   Statutory contributions to employee benefits plans	81,395	77,486
   Statutory compensation payments	1,500	1,500
   authority for spending of revenues pursuant to section 30 of the CFIA Act*	52,158	NA
   Off-cycle re-profile of funds	0	(3,676)
   Forecast authorities available	$719,059	$727,007

   Forecast authorities requested for the year ending March 31, 2012 are the planned spending amounts presented in the 2011-12 Report on Plans and Priorities. Estimated authorities requested for the year ending March 31, 2011 include amounts presented in the 2010-11 Main Estimates and Supplementary Estimates (A) and (B); amounts planned for presentation in Supplementary Estimates (C); and, amounts allocated from Treasury Board central votes.

   * Effective 2012, revenues collected by the Agency will be deposited to the Consolidated Revenue Fund and expenditures against these revenues will be recorded as statutory items. This is in accordance with Section 30 of the Canadian Food Inspection Agency Act which gives the Agency the authority to re-spend the revenue it collects. For fiscal years 2011 and prior, the Agency has re-spent its collected revenue from its voted appropriation.

2. Reconciliation of net cost of operations to requested authorities (in thousands of dollars) :

   Items	2012	2011
   Net cost of operations	$763,426	$794,394
   Adjustments for items affecting net cost of operations but not affecting authorities: Add (less): Services provided without charge by other government departments	(78,985)	(76,742)
   Amortization of tangible capital assets	(28,524)	(27,408)
   Revenue not available for spending	616	615
   Revenue available for spending not credited to the vote	52,158	NA
   Net changes in future funding requirements	(5,871)	(5,979)
   Low value assets funded by other government departments	(150)	(164)
   Loss on disposal of tangible capital assets	(2,010)	(2,095)
   Post-capitalization of tangible capital assets	439	1,000
   Sub-total	(62,327)	(110,773)
   Adjustments for items not affecting net cost of operations but affecting authorities: Add (less): Acquisition of tangible capital assets	18,325	43,745
   Proceeds from disposal of tangible capital assets	(365)	(359)
   Total	17,960	43,386
   Requested authorities	$719,059	$727,007

6. Services provided without charge by other government departments

During the year, the Agency received without charge from other departments, the employer's contribution to the health and dental insurance plans, accommodation, and legal services. These services without charge have been recognized in the Agency's statement of operations as follows:

Services provided without charge by other government departments (in thousands of dollars)

Items	2012	2011
Employer's contribution to the health and dental insurance plans	$47,609	$45,341
Accommodation	29,922	29,914
Legal services	1,454	1,487
Total	$78,985	$76,742

7. Segmented information

Presentation by segment is based on the Agency's program activities architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 4. 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 segmented results for the period are as follows:

Revenues (in thousands of dollars)

Revenues	2012						2011
	Food Safety Program	Animal Health and Zoonotics Program	Plant Resources Program	International Collaboration and Technical Agreements	Internal Services	Total	Total
Inspection fees	$23,244	$2,250	$4,875	$7,123	$0	$37,492	$36,366
Registrations, permits, certificates	5,849	566	1,226	1,792	0	9,433	10,018
Miscellaneous fees and services	2,310	224	484	708	0	3,726	3,349
Establishment license fees	1,069	103	224	328	0	1,724	1,782
Grading	126	12	26	39	0	203	229
Administrative monetary penalties	0	0	0	0	537	537	350
Interest	0	0	0	0	46	46	61
Total Revenues	$32,598	$3,155	$6,835	$9,990	$583	$53,161	$52,155

 

Operating Expenses (in thousands of dollars)

Operating Expenses	2012						2011
	Food Safety Program	Animal Health and Zoonotics Program	Plant Resources Program	International Collaboration and Technical Agreements	Internal Services	Total	Total
Salaries and employee benefits	$269,465	$108,383	$69,835	$36,554	$109,189	$593,426	$618,313
Professional and special services	32,965	13,259	8,543	4,472	13,358	72,597	75,641
Travel and relocation	9,899	3,981	2,565	1,343	4,011	21,799	22,714
Amortization	12,952	5,210	3,357	1,757	5,248	28,524	27,408
Accommodation	16,439	6,612	4,260	2,230	6,661	36,202	36,159
Utilities, materials and supplies	9,110	3,664	2,361	1,236	3,691	20,062	20,904
Furniture and equipment	4,622	1,859	1,198	627	1,873	10,179	10,605
Communications	5,399	2,171	1,399	732	2,188	11,889	12,388
Repairs	4,358	1,753	1,129	591	1,766	9,597	10,000
Equipment rentals	1,112	447	288	151	450	2,448	2,550
Information	1,713	689	444	232	694	3,772	3,931
Loss on disposal of assets	916	368	237	124	371	2,016	2,101
Miscellaneous	401	161	104	54	162	882	920
Total Operating Expenses	$369,351	$148,557	$95,720	$50,103	$149,662	$813,393	$843,634

 

Transfer Payments (in thousands of dollars)

Transfer Payments	2012						2011
	Food Safety Program	Animal Health and Zoonotics Program	Plant Resources Program	International Collaboration and Technical Agreements	Internal Services	Total	Total
Compensation payments		$750	$750			$1,500	$1,500
Other	943	379	244	128		1,694	1,415
Total Transfer Payments	$943	$1,129	$994	$128	$0	$3,194	$2,915

 

Operations	2012						2011
	Food Safety Program	Animal Health and Zoonotics Program	Plant Resources Program	International Collaboration and Technical Agreements	Internal Services	Total	Total
Total Expenses	$370,294	$149,686	$96,714	$50,231	$149,662	$816,587	$846,549
Net Cost of Operations	$337,696	$146,531	$89,879	$40,241	$149,079	$763,426	$794,394