Copyright Board Canada
Canada

Copyright Board of Canada

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, 2016, and all information contained in these statements rests with the management of the Copyright Board of Canada (the Board). 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 Board’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Board’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 Board and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

The Board will be subject to periodic Core Control Audits performed by the Office of the Comptroller General and will use the results of such audits to adhere to the Treasury Board (TB) Policy on Internal Control.

In the interim, the Board has undertaken a risk-based assessment of the system of ICFR for the year ended March 31, 2016, in accordance with the TB Policy on Internal Control, and the action plan is summarized in the annex.

The financial statements of the Copyright Board have not been audited.

 
The paper version was signed by  
Deputy Head Claude Majeau Ottawa, Ontario
Chief Financial Officer Gilles McDougall Ottawa, Ontario

Copyright Board of Canada
Statement of Financial Position (Unaudited)
For the Year Ended March 31

(in dollars)    
  2016 2015
Liabilities    
Accounts payable and accrued liabilities (note 4) 258,045 420,018
Vacation pay and compensatory leave 132,422 106,373
Employee future benefits (note 5) 96,088 115,343
Total liabilities 486,555 641,734
Financial Assets    
Due from Consolidated Revenue Fund 172,709 388,893
Accounts receivable and advances (note 8) 85,337 31,125
Total gross financial assets 258,046 420,018
   
Financial assets held on behalf of Government    
Accounts receivable and advances (note 8) (85,337) (31,125)
Total financial assets held on behalf of Government (85,337) (31,125)
   
Total net financial assets 172,709 388,893
   
Departmental net debt 313,846 252,841
   
Non-financial assets    
Tangible capital assets (note 6) - -
Total non-financial assets - -
Departmental net financial position $ (313,846) $ (252,841)
 
Contractual obligations (note 7)
The accompanying notes form an integral part of these financial statements.

Copyright Board of Canada
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31

(in dollars)
2016 2016 2015
Planned Results
Expenses
Copyright Tariff Setting and Issuance of Licences $ 2,875,043 $ 2,595,878 $ 2,814,751
Internal Services 674,393 622,244 658,219
Total expenses 3,549,436 3,218,122 3,472,970
Net cost of operations before government funding and transfers 3,549,436 3,218,122 3,472,970
Government funding and transfers
Net cash provided by Government 2,961,519 2,802,988
Change in due from the Consolidated Revenue Fund (216,184) 294,419
Services provided without charge by other government departments (note 8) 411,782 388,251
Transfer of the transition payments for salary payments in arrears (note 9) - (51,847)
Net cost of operations after government funding and transfers 61,005 39,159
Departmental net financial position - Beginning of year (252,841) (213,682)
Departmental net financial position - End of year $ (313,846) $ (252,841)
The accompanying notes form an integral part of these financial statements. Segmented Information (Note 9).

Copyright Board of Canada
Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31

(in dollars)
2016 2015
Planned Results
Net cost of operations after government funding and transfers $ 61,005 $ 39,159
Change due to tangible capital assets
Amortization of tangible capital assets - (9,980)
Total change due to tangible capital assets - (9,980)
Net increase (decrease) in departmental net debt 61,005 29,179
Departmental net debt - Beginning of year 252,841 223,662
Departmental net debt - End of year $ 313,846 $ 252,841
The accompanying notes form an integral part of these financial statements.

Copyright Board of Canada
Statement of Cash Flows (Unaudited)
For the Year Ended March 31

(in dollars)
2016 2015
Operating activities
Net cost of operations before government funding and transfers $ 3,218,122 $ 3,472,970
Non-cash items:
Amortization of tangible capital assets - (9,980)
Services provided without charge by other government departments (note 8) (411,782) (388,251)
Transition payments for implementing salary payments arrears (note 9) - 51,847
Variations in Statement of Financial Position:
Increase in accounts payable and accrued liabilities 161,973 (265,204)
Decrease (increase) in vacation pay and compensatory leave (26,049) (18,366)
Decrease (increase) in future employee 19,255 (40,028)
Cash used in operating activities 2,961,519 2,802,988
Net cash provided by Government of Canada $ 2,961,519 $ 2,802,988
The accompanying notes form an integral part of these financial statements.

1 - Authority and Objectives          

The Copyright Board of Canada (Copyright Board) is an independent administrative agency which has been conferred department status for purposes of the Financial Administration Act. Its mandate stems from the Copyright Act.

The Copyright Board’s principal mandate is to set royalties which are fair and equitable for both copyright owners and users of copyright-protected works, as well as issuing non-exclusive licences authorizing the use of works when the copyright owner cannot be located.

The Copyright Board has two program activities:

  • Copyright tariff setting and issues of licences; and
  • Internal services

The Act requires that the Board certify tariffs in the following fields: the public performance or communication of musical works and of sound recordings of musical works, the retransmission of distant television and radio signals, the reproduction of television and radio programs by educational institutions and private copying. In other fields where rights are administered collectively, the Board can be asked by a collective society to set a tariff; if not, the Board can act as an arbitrator if the collective society and a user cannot agree on the terms and conditions of a licence.

The Copyright Board reports annually to Parliament through the Minister of Industry.

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:

  • Parliamentary authorities – The Board is financed by the Government of Canada (GC) through Parliamentary authorities. Financial reporting of authorities provided to the Board 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 “Expenses” sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2015-16 Report on Plans and Priorities. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2015-16 Report on Plans and Priorities.
  • Net cash provided by Government – The Copyright Board operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Copyright Board is deposited to the CRF, and all cash disbursements made by the Copyright Board 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.
  • 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 Copyright Board is entitled to draw from the CRF without further authorities to discharge its liabilities.
  • 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 Board’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 GC and are therefore presented in reduction of the entity's gross revenues.

  • Expenses – Expenses are recorded on the accrual basis:
    • vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment; and
    • services provided without charge by other government departments for accommodation, and the employer’s contribution to the health and dental insurance plans are recorded as operating expenses at their estimated cost.
  • Employee future benefits
    • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government. The Copyright Board’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Copyright Board’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.
    • 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.
  • Accounts receivable are stated at the lower cost and net recoverable value. A valuation allowance is recorded for accounts receivable where recovery is considered uncertain.
  • Tangible capital assets – All tangible capital assets having an initial cost of $10,000 or more are recorded at their acquisition cost. The Copyright Board 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 assets as follows:

    Asset Class Amortization period
    Machinery and Equipment 10 years
    Computer Hardware 3 to 5 years


  • Measurement uncertainty – The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are the liability for employee severance benefits and the useful life of tangible capital assets. 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.

3 - Parliamentary Authorities

The Copyright Board 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, the Copyright Board 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

2016 2015
(in dollars)
Net cost of operations before government funding and transfers $ 3,218,122 $ 3,472,970
Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments (411,782) (388,251)
Amortization of tangible capital assets - (9,980)
Decrease (increase) in employee future 19,255 (40,028)
Adjustment of previous year's Accounts Payable 29,159 1,314
Decrease (increase) in vacation pay and compensatory (26,049) (18,366)
Transition payments for implementing salary payments in arrears (note 9) - 51,847
Total items affecting net cost of operations but not affecting authorities (389,417) (403,464)
Current year authorities used $ 2,828,705 $ 3,069,506

(b) Authorities provided and used

2016 2015
(in dollars)
Authorities Provided:
Vote 1 - Operating expenditures $ 2,960,198 $ 2,996,987
Statutory amounts 255,214 279,307
3,215,412 3,276,294
Less:
Lapsed authorities: Operating expenditures (386,707) (206,788)
Current year authorities used $ 2,828,705 $ 3,069,506

4. Accounts payable and accrued liabilities

The following table presents details of the Department's accounts payable and accrued liabilities.

2016 2015
(in dollars)
Accounts payable to other government departments and agencies 5,911 2,447
Accounts payable to external parties 170,895 256,053
Accrued salaries and wages 81,239 161,518
Total accounts payable and accrued liabilities $ 258,045 $ 410,018

5. Employee future benefits

  1. Pension benefits

    The Board’s employees participate in the Public Service Pension Plan (the “Plan”), which is sponsored and administered by the GC. Pension benefits accrue up to a maximum period of 35 years at a rate of two 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 Plan benefits and they are indexed to inflation.

    Both the employees and the Board contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

    The 2015-16 expense amounts to $226,375 ($247,103 in 2014-15). For Group 1 members, the expense represents approximately 1.25 times (1.41 times in 2014-15) the employee contributions and, for Group 2 members, approximately 1.24 times (1.39 times in 2014-15) the employee contributions.

    The Board’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the GC, as the Plan’s sponsor.

  2. Severance benefits

    The Board 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. Information about the severance benefits, measured as at March 31, is as follows:

    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.

    2016 2015
    (in dollars)
    Accrued benefit obligation - Beginning of year $ 115,343 $ 75,315
    Expense for the year (19,255) 40,028
    Benefits paid during the year - -
    Accrued benefit obligation - End of year $ 96,088 $ 115,343

6. Tangible Capital Assets

(in dollars)

Cost
Capital asset class Opening balance Closing balance
Machinery and equipment 43,536 43,536
Computer hardware 115,291 115,291
Total $ 158,827 $ 158,827
Accumulated Amortization
Capital asset class Opening balance Amortization Closing Balance
Machinery and equipment 43,536 43,536
Computer hardware 115,291 - 115,291
Total $ 158,827 $ - $ 158,827
Net Book Value
Capital asset class 2016 2015
Machinery and equipment - -
Computer hardware - -
Total $ - $ -

7. Contractual Obligations

The nature of the Board’s activities can result in some large multi-year contracts and obligations whereby the Board will be obligated to make future payments when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

Other goods and services 2017 2018 2019 2020 2021 and
thereafter
Total
(in dollars)
1,289,123 25,452 - - - 1,314,575
$ 1,289,123 $ 25,452 $ - $ - $ - $ 1,314,575

8. Related party transactions

The Board is related as a result of common ownership to all government departments, agencies, and Crown corporations. The Board enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the Board 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 Board received 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 Board’s Statement of Operations and Departmental Net Financial Position as follows:

2016 2015
(in dollars)
Accommodation $ 284,072 $ 252,803
Employer's contribution to the health and dental insurance plans 127,710 135,448
Total $ 411,782 $ 388,251

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 Copyright Board’s Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties:

2016 2015
(in dollars)
Accounts receivable - Other Government departments and agencies 85,337 31,125
Expenses - Other Government departments and agencies 659,413 659,840

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

9. Transfer of the transition payments for implementing salary payments in arrears

Introduction

The GC implemented salary payments in arrears in 2014-15. As a result, a one-time payment was issued to employees and will be recovered from them in the future. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the Department. However, it did result in the use of additional spending authorities by the Department. Prior to year-end, the transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Works and Government Services Canada, who is responsible for the administration of the Government pay system..

10. Segmented Information

Introduction

Presentation by segment is based on the Board 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 2. The following table presents the expenses incurred and revenues generated for the main program, by major object of expense and by major type of revenue. The segment results for the period are as follows:

(in dollars) Copyright Tariff Setting and Issuance of Licences Internal Services 2016 Total 2015 Total
Operating expenses
Salaries and employee benefits $ 1,552,515 $ 377,462 $ 1,929,977 $ 2,174,496
Professional and special services 444,382 104,238 548,620 510,636
Accommodation 230,098 53,974 284,072 252,803
Travel 36,888 8,653 45,540 60,009
Communication 133,280 31,263 164,543 307,489
Rental 71,179 16,696 87,875 72,870
Utilities, materials and supplies 41,548 9,746 51,294 39,296
Furniture and equipment 59,991 14,072 74,063 34,647
Amortization - - - 9,980
Postage and freight 714 168 882 1,041
Equipment repair and maintenance 25,634 6,013 31,647 11,077
Other operating expenses (351) (41) (392) (1,374)
Total expenses 2,595,878 622,244 3,218,122 3,472,970
Revenues
Sales of services 15 15
Revenues earned on behalf of Government (15) (15)
Total Revenues - - - -
Net cost of operations $ 2,595,878 $ 622,244 $ 3,218,122 $ 3,472,970

11. Correction of Error in Prior Period Financial Statements

The 2014-15 financial statements omitted accounts payable to other government departments and agencies, an account in the departmental trail balance which amounted to $2,447. While immaterial in amount and effect on the statements as a whole, it has been added to maintain reporting consistency going forward and to provide comparability in these statements.

2015 as previously stated Effect of Change 2015 Restarted
Statement of Financial Position:
Accounts payable and accrued $ 417,571 $ 2,447 $ 420,018