Future-oriented Financial Statements (unaudited) For the year ended March 31, 2013

• Statement of Management Responsibility
• Future-Oriented Statement of Financial Position (Unaudited)
• Future-Oriented Statement of Operations and Agency Net Financial Position (Unaudited)
• Future-Oriented Statement of Change in Agency Net Debt (Unaudited)
• Future-Oriented Statement of Cash Flows (Unaudited)
• Notes to the Future-Oriented Financial Statements (Unaudited)
  1. Authority and objectives
  2. Methodology and Significant Assumptions
  3. Variations and Changes to the Forecast Financial Information
  4. Summary of Significant Accounting Policies
  5. Parliamentary authorities
  6. Accounts payable and accrued liabilities
  7. Employee future benefits
  8. Accounts receivable and advances
  9. Tangible capital assets
  10. Contractual obligations
  11. Contingent liabilities
  12. Related party transactions
  13. Segmented information
  14. Comparative information

Statement of Management Responsibility

Management of the Public Health Agency of Canada (the Agency) is responsible for these future-oriented financial statements, including responsibility for the appropriateness of the assumptions on which these statements are prepared. These statements are based on the best information available and assumptions adopted as at December 31, 2012 and reflect the plans described in the Report on Plans and Priorities.

Future-Oriented Statement of Financial Position (Unaudited)
As at March 31

Contractual obligations (note 10)
Contingent liabilities (note 11)

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012.
The accompanying notes form an integral part of these future-oriented financial statements.

Future-Oriented Statement of Operations and Agency Net Financial Position (Unaudited)
For the Year Ended March 31

Segmented information (note 13)

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012.
The accompanying notes form an integral part of these future-oriented financial statements.

Future-Oriented Statement of Change in Agency Net Debt (Unaudited)
For the Year Ended March 31

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012.
The accompanying notes form an integral part of these future-oriented financial statements.

Future-Oriented Statement of Cash Flows (Unaudited)
For the Year Ended March 31

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012.

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

Notes to the Future-Oriented Financial Statements (Unaudited)
For the Year Ended March 31

1. Authority and objectives

The Public Health Agency of Canada (the Agency) was created by Orders In Council on September 24, 2004. The Public Health Agency of Canada Act, assented to December 12, 2006, provides a statutory foundation for the Agency.

The Agency has the responsibility to:

• contribute to the prevention of disease and injury, and to the promotion of health;
• enhance the quality and quantity of surveillance data and expand the knowledge of disease and injury in Canada;
• provide federal leadership and accountability in managing public health emergencies;
• serve as a central point for sharing Canada's expertise with the rest of the world and for applying international research and development to Canada's public health programs; and
• strengthen intergovernmental collaboration on public health and facilitate national approaches to public health policy and planning.

The Agency has a sole strategic outcome: Protecting Canadians and empowering them to improve their health. The Agency delivers on its strategic outcome through its key programs described below.

Public Health Infrastructure – This program strengthens Canada's public health workforce capability, information exchange, federal/provincial/territorial networks, and scientific capacity. These infrastructure elements are necessary to support effective public health practice and decision-making in Canada. Working with federal, provincial and territorial stakeholders and within existing collaborative mechanisms, the program supports planning for and building consensus on strategic and targeted investments in public health infrastructure, including training, tools, best practices, standards, and mechanisms to facilitate information exchange and coordinated action. Public health laboratories provide leadership in research, technical innovation, reference laboratory services; surveillance; outbreak response capacity; and national laboratory coordination. Through these capacity-building mechanisms and scientific expertise, the Government of Canada facilitates effective coordination and timely public health interventions which are essential to having an integrated and evidence-based national public health system. Key stakeholders include local, regional, provincial and national public health organizations, practitioners and policy makers, researchers and academics, professional associations and non-governmental organizations.

Health Promotion and Disease Prevention – This Program aims to promote better overall health of the population–with additional focus on those that are most vulnerable–by promoting healthy development among children, adults and seniors, reducing health inequalities, and preventing and controlling chronic and infectious diseases. Working in collaboration with provinces and territories, the program develops and implements federal aspects of frameworks and strategies (e.g., Curbing Childhood Obesity: A Federal, Provincial and Territorial Framework for Action to Promote Healthy Weights, national approaches to addressing immunization, HIV/AIDS) geared toward promoting health and preventing disease. The program undertakes common primary public health functions of health promotion, surveillance, science and research on diseases and associated risk and protective factors to inform evidenced-based frameworks, strategies, and interventions. It also undertakes health promotion and prevention initiatives, working with stakeholders to prevent and mitigate chronic disease and injury, and to help prevent and control infectious disease.

Health Security – This Program takes an all hazards approach to the health security of Canada's population, which provides the Government of Canada with the ability to prepare for and respond to public health issues and events. This program seeks to bolster the resiliency of the population and communities, thereby enhancing the ability to cope and respond. To accomplish this, its main methods of intervention include actions taken through partnerships with key jurisdictions and international partners. These actions are carried out through the implementation and maintenance of International Health Regulations and through the administration and enforcement of legislation, including the Emergency Management Act, the Quarantine Act, the Human Pathogens and Toxins Act and the Human Pathogens Importation Regulations.

Internal Services – This Program supports the Agency's strategic outcome and all of its Programs. 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, Communications Services, Legal Services, Human Resources Management Services, Financial Management Services, Information Management Services, Information Technology Services, Real Property Services, Materiel Services, Acquisition Services, and Travel and Other Administrative Services. Internal services include only those activities and resources that apply across the Agency and not those provided specifically to a program.

2. Methodology and Significant Assumptions

These future-oriented financial statements have been prepared on the basis of the government priorities and the plans of the Agency as described in the Report on Plans and Priorities.

The information in the estimated results for fiscal year 2012-13 is based on the actual results as at December 31, 2012 and forecasts for the remainder of the fiscal year. Estimated year end information for 2012-13 is used as the opening position for the 2013-14 planned results, and forecasts have been made for the planned results for the 2013-14 fiscal year.

The main assumptions underlying the forecasts are as follows:

• The Agency's activities will remain substantially the same as for the previous year.
• 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.
• Estimated results for 2012-13 are used as the opening position for the 2013-14 planned results.

These assumptions are adopted as at December 31, 2012.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2012-13 and for 2013-14, actual results achieved for both fiscal years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these future-oriented financial statements the Agency has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions 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 financial statements and the historical financial statements include:

• The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.
• Implementation of new collective agreements.
• Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, the 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

These future-oriented 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:

1. Parliamentary authorities - The Agency 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 Future-Oriented Statement of Operations and Agency Net Financial Position and in the Future-Oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a reconciliation between the bases of reporting.
2. 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 the Agency is deposited to the CRF, and all cash disbursements made by the Agency 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.
3. Amounts due from or to 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 the Agency is entitled to draw from the CRF without further authorities to discharge its liabilities.
4. Revenues:
   • Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.
   • Revenues that are non-respendable are not available to discharge the Agency's liabilities. While the Deputy Head is expected to maintain accounting control, he or 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 as a reduction of the entity's gross revenues.
5. 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 and employer contributions to the health and dental insurance plans are recorded as operating expenses at their estimated cost.
6. Employee future benefits
   1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The Agency's contributions to the Plan are charged to expenses in the year incurred and represent the total Agency 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.
7. Accounts receivable are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for accounts receivable where recovery is considered uncertain.
8. 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.
9. Tangible capital assets - All tangible capital assets and leasehold improvements 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 asset as follows:

   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.

5. Parliamentary authorities

The Agency receives most of its funding through annual parliamentary authorities. Items recognized in the Future-Oriented Statement of Operations and Agency Net Financial Position and the Future-Oriented Statement of Financial Position 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:

6. Accounts payable and accrued liabilities

The following table presents details of the Agency's accounts payable and accrued liabilities:

7. Employee future benefits

a) Pension benefits

The Agency'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 Canada/Québec Pension Plans benefits and they are indexed to inflation.

Both the employees and the Agency contribute to the cost of the Plan. The expense amounts, which represents approximately 1.7 times the contributions by employees are as follows:

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.

b) Severance benefits

The Agency 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 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:

8. Accounts receivable and advances

The following table presents details of the Agency's accounts receivable and advances balances:

9. Tangible capital assets

10. Contractual obligations

The nature of the Agency's activities can result in some large multi-year contracts and obligations whereby the Agency 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:

11. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown.

Claims and litigation

Claims have been made against the Agency 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.

12. Related party transactions

The Agency is related as a result of common ownership to all government departments, agencies, and Crown corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Agency has a Shared Services Partnership Framework Agreement with Health Canada related to the provision of internal services and corporate functions. 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, the Agency received services without charge from certain common service organizations, related to accommodation and the employer's contribution to the health and dental insurance plans. These services provided without charge have been recorded in the Agency's Future-Oriented Statement of Operations and Agency Net Financial Position as follows:

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 the Agency's Future-Oriented Statement of Operations and Agency Net Financial Position.

Expenses and revenues disclosed in (b) exclude common services provided without charges which are already disclosed in (a).

13. Segmented information

Presentation by segment is based on the Agency's program alignment 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 programs, by major object of expense and by major type of revenue. The segment results for the period are as follows:

14. Comparative information

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