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Section III: Supplementary Information

Organizational Information

Governance

The following key committees oversee the Department's governance and decision-making processes:

Executive Committee

Chaired by the deputy minister, the Executive Committee includes the senior associate deputy minister and the assistant deputy minister of each branch. The Executive Committee is responsible for the overall stewardship of the Department and exercises decision-making authority over a variety of matters, including resource allocation and priority setting.

Departmental Coordinating Committee

Chaired by a director general on a rotating basis, this committee provides recommendations to the Executive Committee on policy-related issues that fall within the scope of the Department of Finance Canada's mandate. It has representation from each branch at the director general level.

Management Advisory Committee

This committee is co-chaired by the senior associate deputy minister and the assistant deputy minister, Corporate Services Branch. The Management Advisory Committee makes and reviews recommendations to the Executive Committee. Its mandate covers the examination of department-wide plans, strategies, policies, and issues related to key administrative matters within the Department.

Audit and Evaluation Committee

The Audit and Evaluation Committee (AEC) approves the internal audit plan and associated resources based on a sound assessment of risks facing the Department. The AEC also approves evaluation plans for the Department. At the end of each internal audit and evaluation engagement, the AEC reviews and approves the final reports and associated management action plans and ensures that the results of internal audits and evaluations are incorporated into departmental priority-setting, planning, and decision-making processes. This committee is chaired by the deputy minister and meets on a quarterly or as-needed basis.

Financial Performance

This section provides a summary of the Department's financial performance, which is reported against the Department's 10 program activities. Corporate administration is distributed among the other program activities' operating costs, based on the percentage share of the operating budget in 2006-07.

The majority of the financial tables present a comparison of "Main Estimates," "Planned Spending," "Total Authorities," and "Actual." "Main Estimates" figures indicate the resources requested by the Department at the beginning of the fiscal year in order to deliver the programs for which it is responsible. "Planned Spending" is the amount included in the 2006-07 RPP and indicates amounts planned for by the Department and will include known events since the tabling of the Main Estimates. "Total Authorities" include "Main Estimates" and all other authorities approved for the 2006-07 fiscal year. "Actual" reports on total spending during the year as presented in the 2006-07 Public Accounts of Canada.

The remaining tables in this section report on statutory and other requirements. They include the table on major regulatory initiatives, a report on the response to parliamentary committees, a summary of the sustainable development strategy, and a table on travel policies.

Table 1: Comparison of Planned to Actual Spending (including FTEs)

The following table provides a comparison of the "Main Estimates," "Planned Spending," "Total Authorities," and "Actual Spending" for 2006-07, as well as historical figures for "Actual Spending" for the past two fiscal years.

			2006-07
($ thousands)	2004–05 Actual	2005–06 Actual
			Main Estimates	Planned Spending	Total Authorities	Total Actual
Tax Policy1, 2	31,893	30,594	30,748	31,742	33,317	30,805
Economic and Fiscal Policy1	15,576	14,481	14,504	14,973	15,715	14,500
Financial Sector Policy1, 3, 4	20,725	20,993	20,444	21,105	173,561	101,443
Economic Development and Corporate Finance1	12,096	7,540	7,755	8,006	8,402	7,799
Federal-Provincial Relations and Social Policy1, 5	11,394	14,146	16,690	17,229	18,083	14,497
International Trade and Finance1	14,938	14,352	15,496	15,997	16,790	14,903
Public Debt6	33,869,946	33,535,120	34,395,000	34,395,000	34,108,504	34,108,504
Domestic Coinage7	63,993	127,811	83,100	83,100	135,602	135,602
Transfer Payments to Provinces and Territories8	37,746,615	44,160,692	38,330,000	38,631,828	38,441,221	38,441,221
International Financial Organizations9, 10	1,454,058	1,908,470	733,340	733,340	1,150,112	1,006,072
Total	73,241,234	79,834,199	73,647,077	73,952,320	74,101,307	73,875,346
Less: Non-respendable revenue11	6,755,020	3,694,155	N/A	185,148	N/A	4,639,937
Plus: Cost of services received without charge12	17,955	12,385	N/A	13,205	N/A	18,774
Total Departmental Spending*	66,504,169	76,152,430*	73,647,077	73,780,377	74,101,307	69,254,182
Full-time Equivalents13	833	813	N/A	901	N/A	790
* Due to rounding, figures may not add to totals shown.
Notes: 1.  Variances between "Total Authorities" and "Actual" includes $4.4 million in operating budget surpluses from Internal Services allocations primarily attributable to frozen funding of technical accounting adjustment for recovery of legal services by the Department of Justice Canada and advertising funds not required for Budget 2007. 2. Tax Policy program activity additional variances between "Total Authorities" and "Actual" are attributable to staff turnover and lower-than-expected costs in relation to the Expert Panel on Disability Savings and delayed negotiations on Aboriginal tax matters. 3. Financial Policy Sector program activity "Total Authorities" includes the following items not included in "Planned Spending": $69 million of Unused authority for payments to depositors of Canadian Commercial Bank, CCB Mortgage Investment Corporation, and Northland Bank pursuant to the Financial Institutions Depositors Compensation Act; $2 million for Payment of liabilities previously transferred to revenues; $5 million for Advances to the Financial Consumer Agency of Canada; and $76 million for Net loss on exchange in relation to re-evaluations of cross-currency swaps. 4. Financial Sector Policy program activity variance of "Total Authorities" to "Actual" is primarily attributable to the $69 million of Unused authority for payments to depositors of Canadian Commercial Bank, CCB Mortgage Investment, and Northland Bank and also includes variances for internal services surpluses an mentioned in 1. above and lower-than-expected costs for the final year of the Financial Action Task Force presidency. 5. Federal Provincial Relations and Social Policy program activity variance of "Total Authorities" to "Actual" is attributable in part to internal services surpluses as mentioned in 1. above and lower-than-expected costs to finalize the work of the Expert Panel on TTF and Equalization. 6. Public Debt program activity variance of "Planned Spending" to "Actual" is attributable to a larger-than-expected decline in the stock of interest-bearing debt. 7. Domestic coinage program activity variances from "Planned Spending" to "Total Authorities" and "Actual" are due to a higher demand for coinage from the economy and the associated higher cost to produce and distribute coinage to meet this higher demand. See Table 6 for a corresponding increase in revenues associated with the sale of domestic coinage. 8. The Transfer Payments to Provinces and Territories program activity "Planned Spending" primarily includes an additional amount not in the Main Estimates of $46,400 thousand for TFF due to data revisions and a $225,428 thousand increase in equalization transfer payments. Details on transfer payments can be found in Table 10 of this report. Variances between "Planned Spending" and "Total Authorities" and "Actual" is primarily attributable to an increase in Alternative Payments for Standing Programs of $182,016 thousand and an increase in Youth Allowances Recovery of $7,787 thousand. 9. The International Financial Organizations program activity "Total Authorities" includes adjustments for the following items not in "Planned Spending": $44,820 thousand for net loss on exchange for international payments;$63,648 thousand for funding available for use from previous years for Payments to the IMF's Proverty Reduction and Growth Facility; $318,270 thousand for issuance and payment of non-interest bearing, non-negotiable demand notes to the International Development Association in accordance with the Bretton Woods and Related Agreements Act; a reduction of $5,595 thousand for a transfer of Vote 5, Grants and Contributions, funding to Foreign Affairs and International Trade Canada; and finally statutory adjustments to reflect a reduction in actual authority required of $3,400 thousand for Payments to the IMF's Poverty Reduction and Growth Facility and $974 thousand for issuance of demand notes to the EBRD, Capital Subscriptions. 10. The International Financial Organizations program activity variance between "Total Authorities" and "Actual" is primary attributable to a lapse of $83,007 thousand in Vote 5, Grants and Contributions, and mainly due to heavily indebted poor countries not meeting the IMF program requirements as per multilateral debt relief initiatives agreed to at the Paris Club and $61,033 thousand of the funding available for use from previous years for Payments to the IMF's Poverty Reduction and Growth Facility. 11. Details of the Non-respendable revenue are listed in Table 6 of this report. 12. Details of the Cost of services received without charge are listed in Table 4 of this report. 13. FTEs has a variance of 111 FTEs from "Planned Spending" to "Actual." This variance is attributable in part to staff vacancies as a result of unexpected leaves (maternity and other), secondments, and employees leaving the Department for positions in the private sector or other departments. Additionally, there was a significant variance in the Public Debt program activity as a result of the Canada Investment and Savings transfer to the Bank of Canada.

Table 2: Resources by Program Activity

The following table details how resources are used in the 2006–07 fiscal year showing the budgetary and non-budgetary items by program activity.

2006–07 ($ thousands)
	Budgetary											Plus: Non-budgetary
Program Activity	Operating	Grants		Contribu- tions and Other Transfer Payments			Total:  Gross Budgetary Expen- ditures			Less: Respen- dable Revenue (1)	Total: Net Budgetary Expen- ditures	Loans, Investments,  and  Advances	Total
Tax Policy
Main Estimates	30,865	—			—		30,865			117	30,748	—	30,748
Planned Spending	31,859	—			—		31,859			117	31,742	—	31,742
Total Authorities	33,434	—			—		33,434			117	33,317	—	33,317
Actual Spending	30,805	—			—		30,805			—	30,805	—	30,805
Economic and Fiscal Policy
Main Estimates	14,559	—			—		14,559			55	14,504	—	14,504
Planned Spending	15,028	—			—		15,028			55	14,973	—	14,973
Total Authorities	15,770	—			—		15,770			55	15,715	—	15,715
Actual Spending	14,500	—			—		14,500			—	14,500	—	14,500
Financial Sector Policy
Main Estimates	20,521	—		—			20,521			77	20,444	—	20,444
Planned Spending	21,182	—		—			21,182			77	21,105	—	21,105
Total Authorities	168,638	—		—			168,638			77	168,561	5,000	173,561
Actual Spending	96,443	—		—			96,443			—	96,443	5,000	101,443
Economic Development and Corporate Finance
Main Estimates	7,784	—		—			7,784			29	7,755	—	7,755
Planned Spending	8,035	—		—			8,035			29	8,006	—	8,006
Total Authorities	8,431	—		—			8,431			29	8,402	—	8,402
Actual Spending	7,799	—			—	7,799		—			7,799	—	7,799
Federal—Provincial Relations and Social Policy
Main Estimates	16,753	—	—				16,753			63	16,690	—	16,690
Planned Spending	17,292	—	—				17,292			63	17,229		17,229
Total Authorities	18,146	—					18,146			63	18,083	—	18,083
Actual Spending	14,497	—					14,497			—	14,497	—	14,497
International Trade and Finance
Main Estimates	15,555	—	—				15,555	59			15,496	—	15,496
Planned Spending	16,056	—	—				16,056	59			15,997	—	15,997
Total Authorities	16,849	—					16,849	59			16,790	—	16,790
Actual Spending	14,903	—					14,903	—			14,903	—	14,903
Public Debt
Main Estimates	34,395,000	—	—				34,395,000	—			34,395,000	—	34,395,000
Planned Spending	34,395,000	—	—				34,395,000	—			34,395,000	—	34,395,000
Total Authorities	34,108,504	—	—				34,108,504	—			34,108,504	—	34,108,504
Actual Spending	34,108,504	—	—				34,108,504	—			34,108,504	—	34,108,504
Domestic Coinage
Main Estimates	83,100	—	—				83,100	—			83,100	—	83,100
Planned Spending	83,100	—	—				83,100	—			83,100	—	83,100
Total Authorities	135,602	—	—				135,602	—			135,602	—	135,602
Actual Spending	135,602	—	—				135,602	—			135,602	—	135,602
Transfer Payments to Provinces and Territories
Main Estimates	—	—			38,330,000		38,330,000		—		38,330,000	—	38,330,000
Planned Spending	—	—			38,631,828		38,631,828		—		38,631,828	—	38,631,828
Total Authorities	—	—			38,441,221		38,441,221		—		38,441,221	—	38,441,221
Actual Spending	—	—			38,441,221		38,441,221		—		38,441,221	—	38,441,221
International Financial Organizations
Main Estimates		349,200			376,669		725,869		—		725,869	7,471	733,340
Planned Spending		349,200			376,669		725,869				725,869	7,471	733,340
Total Authorities	44,820	332,018			448,505		825,343		—		825,343	324,768	1,150,112
Actual Spending	44,820	249,011			387,472		681,303		—		681,303	324,768	1,006,072

* Due to rounding, figures may not add to totals shown.

Note:

1. Respendable revenue for the Department includes amounts received for the sale of documents. During 2006–07, approximately $117 thousand was received and erroneously coded to non-respendable revenue.

See Table 1 for explanations of variances.

Table 3: Voted and Statutory Items

The following table explains the way Parliament votes resources to the Department, including vote appropriations and statutory authorities for both budgetary and non-budgetary items. Parliament approves the voted funding and statutory information is provided for information purposes.

		2006–07 ($ thousands)
Vote or Statutory Item	Truncated Vote or Statutory Wording	Main Estimates	Planned Spending	Total Authorities	Total Actual
1	Operating expenditures	93,135	96,551	102,606	89,286
5	Grants and contributions	404,200	404,200	398,605	315,598
10	Transfer payments to provinces and territories	0	—	0	—
(S)	Minister of Finance—Salary and motor car allowance	73	73	73	73
(S)	Contributions to employee benefit plans	12,429	12,429	11,761	11,761
(S)	Transfer payment to territorial governments	2,070,000	2,116,400	2,118,264	2,118,264
(S)	Payments to the International Development Association (IDA)	318,269	318,269	318,270	318,270
(S)	Payments to the IMF's Poverty Reduction and Growth Facility (PRGF)	3,400	3,400	63,648	2,615
(S)	Purchase of domestic coinage	83,100	83,100	135,602	135,602
(S)	Public debt—Interest and other costs	34,395,000	34,395,000	34,108,504	34,108,504
(S)	Statutory subsidies	32,000	32,000	31,821	31,821
(S)	Fiscal equalization	11,282,000	11,537,428	11,535,064	11,535,064
(S)	Canada Health Transfer	20,140,000	20,140,000	20,139,876	20,139,876
(S)	Canada Social Transfer	8,500,000	8,500,000	8,500,000	8,500,000
(S)	Youth allowances recovery	(699,000)	(699,000)	(706,788)	(706,788)
(S)	Alternative payments for standing programs	(2,995,000)	(2,995,000)	(3,177,016)	(3,177,016)
(S)	Payments pursuant to the Halifax Relief Commission Pension Commission Act	—		18	18
(S)	Payments to depositors of Canadian Commercial Bank, CB Mortgage Invt. Corp., and Northland Bank pursuant to the Financial Institutions Act	—		68,572	—
(S)	Payment of liabilities previously transferred to revenue	—		2,075	2,075
(S)	Spending of proceeds from the disposal of surplus Crown assets	—		28	—
(S)	Refunds of amounts credited to revenues in previous years	—		—	—
(S)	Net loss on exchange	—		120,555	120,555
(S)	Advances pursuant to section 13(1) of the Financial Consumer Agency Act	—		5,000	5,000
(L15)	Issuance and payment of demand notes to the IDA	0	—	318,270	318,270
(S)	Issuance of demand note to the EBRD—Capital subscriptions	—	—	—	—
(S)	Payments and encashments of notes to the EBRD—Capital subscriptions	7,471	7,471	6,498	6,498
(S)	Issuance of loans to the IMF's PRGF	—	—	—	—
	Total*	73,647,077	73,952,321	74,101,307	73,875,346

* Due to rounding, figures may not add to totals shown.

Table 4: Services Received Without Charge

The following table provides the cost of services received without the change for 2006–07 fiscal year.

($ thousands)	2006–07
Accommodation provided by Public Works and Government Services Canada	9,718
Contributions covering the employer's share of employees' insurance premiums and expenditures paid by the Treasury Board of Canada Secretariat (excluding revolving funds). Employer's contribution to employees' insured benefits plans and associated expenditures paid by the Treasury Board of Canada Secretariat	4,898
Salary and associated expenditures of legal services provided by the Department of Justice Canada	4,158
Total 2006–07 Services received without charge	18,774

Table 5: Loans, Investments, and Advances (Non-budgetary)

The following table provides details by program activity on non-budgetary items for which the Department is responsible.

			2006–07
($ thousands)	Actual 2004–05	Actual 2005–06	Main Estimates	Planned Spending	Total Authorities	Actual
International Financial Organizations
Issuance and payment of demand notes to the IDA	230,134	318,270	0	—	318,270	318,270
Issuance and payment of demand notes to the EBRD—Capital subscriptions	6,535	9,157	—	—	—	—
Payment and encashment of notes issued to the EBRD—Capital subscriptions	9,956	15,106	7,471	7,471	6,498	6,498
Issuance of loans to the IMF's PRGF	19,303	89,956	—	—	—	—
Financial Sector Policy
Advances pursuant to section 13(1) of the Financial Consumer Agency of Canada Act	6,000	4,500	—	—	5,000	5,000
Total*	271,928	436,990	7,471	7,471	329,768	329,768

* Due to rounding, figures may not add to totals shown.

Table 6: Sources of Respendable and Non-respendable Revenue

The following table identifies the sources of respendable and non-respendable revenue.

Respendable revenue

			2006–07
($ thousands)	Actual 2004–05	Actual 2005–06	Main Estimates	Planned Revenue	Total Authorities	Actual1
Tax Policy
Sale of departmental documents	118	—	117	117	117	—
Economic and Fiscal Policy
Sale of departmental documents	56	—	55	55	55	—
Financial Sector Policy
Sale of departmental documents	55	—	77	77	77	—
Economic Development and Corporate Finance
Sale of departmental documents	31	—	29	29	29	—
Federal-Provincial Relations and Social Policy
Sale of departmental documents	41	—	63	63	63	—
International Trade and Finance
Sale of departmental documents	58	—	59	59	59	—
Total Respendable Revenue*	359	—	400	400	400	—

*Due to rounding, figures may not add to totals shown.

Note:

1.  Respendable revenue for the Department includes amounts received for the sale of documents. During 2006–07, approximately $117 thousand was received and erroneously coded to non-respendable revenue.

Non-respendable revenue

			2006–07
($ thousands)	Actual 2004–05	Actual 2005–06	Main Estimates	Planned Revenue	Total Authorities	Actual
Tax Policy
Refunds of previous years' expenditures—Refund of salaries, goods, and services	21	31				6
Adjustments to prior year's payables	237	296				64
Sales of goods and services—Sale of other publications	26	11				35
Fees—Access to information	2	1				4
Other fees and charges—Sundries	104	—				—
Public Works and Government Services Canada—Consulting and Audit Canada Revolving Fund	26	—				11
Optional Services Revolving Fund	—	9				—
Proceeds from the disposal of surplus Crown assets	3	2				6
Ottawa Civil Service Recreational Association	0	0				—
Economic and Fiscal Policy
Refunds of previous years' expenditures—Refund of salaries, goods, and services	10	15				3
Adjustments to prior year's payables	111	143				30
Sales of goods and services—sale of other publications	12	5				16
Fees—Access to information	1	1				2
Other fees and charges—Sundries	49	—				—
Public Works and Government Services Canada—Consulting and Audit Canada Revolving Fund	12	—				5
Optional Services Revolving Fund	—	4				—
Proceeds from the disposal of surplus Crown assets	1	1				3
Ottawa Civil Service Recreational Association	0	0				—
Financial Sector Policy
Refunds of previous years' expenditures—Refund of salaries, goods, and services	10	16				4
Adjustments to prior year's payables	110	158				43
Sales of goods and services—Sale of other publications	12	6				23
Fees—Access to information	1	1				3
Other fees and charges—Sundries	48	—				—
Public Works and Government Services Canada—Consulting and Audit Canada Revolving Fund	12	—				8
Optional Services Revolving Fund	—	5				—
Proceeds from the disposal of surplus Crown assets	1	1				4
Ottawa Civil Service Recreational Association	0	0				—
Cash and accounts receivable—Cash—Chartered banks	15,827	27,120				46,004
Cash and accounts receivable—Cash—Short-term deposits	188,087	143,420				237,066
Cash and accounts receivable—Cash—Receiver General balance at the Bank of Canada	34,639	41,598				68,160
Foreign exchange accounts—International reserves held in the Exchange Fund Account—Transfer of profit	1,758,068	1,394,534				1,765,275
Foreign exchange accounts—International Monetary Fund—Subscriptions—Transfer of profit	69,541	49,895				22,753
Loans, investments, and advances—Bank of Canada—Transfer of profit	1,695,959	1,735,610				1,983,529
Loans, investments, and advances—Financial Consumer Agency of Canada	97	112				166
Miscellaneous non-tax revenues—Transfer from the following accounts that were unclaimed or outstanding for 10 years or more: Outstanding Imprest Account—Unclaimed cheques	32,909	31,057				25,929
Miscellaneous non-tax revenues—Unclaimed balances received from the Bank of Canada in respect of chartered banks	3,675	3,829				3,951
Miscellaneous non-tax revenues—Mortgage interest premium	7,171	8,836				10,517
Miscellaneous non-tax revenues—Sundries	134	1,551				215
Economic Development and Corporate Finance
Refunds of previous years' expenditures—Refund of salaries, goods, and services	5	8				2
Adjustments to prior year's payables	63	75				16
Sales of goods and services—Sale of other publications	7	3				9
Fees—Access to information	1	0				1
Other fees and charges—Sundries	27	—				—
Public Works and Government Services Canada—Consulting and Audit Canada Revolving Fund	7	—				3
Optional Services Revolving Fund	—	2				—
Proceeds from the disposal of surplus Crown assets	1	0				2
Ottawa Civil Service Recreational Association	0	0				—
Loans, investments, and advances—Canada Development Investment Corporation—Dividend	164,000	199,000				156,000
Loans, investments, and advances—Petro-Canada—Dividend	14,817	—				—
Miscellaneous non-tax revenues—Sale of real property to Canada Lands Company Limited	2,268	2,126				2,070
Miscellaneous non-tax revenues—Sale of Crown Corporations	2,561,657	—				—
Federal-Provincial Relations and Social Policy
Refunds of previous years' expenditures—Refund of salaries, goods, and services	7	13				3
Adjustments to prior year's payables	81	122				35
Sales of goods and services—Sale of other publications	9	5				19
Fees—Access to information	1	1				2
Other fees and charges—Sundries	36	—				—
Public Works and Government Services Canada—Consulting and Audit Canada Revolving Fund	9	—				6
Optional Services Revolving Fund	—	4				—
Proceeds from the disposal of surplus Crown assets	1	1				3
Ottawa Civil Service Recreational Association	0	0				—
International Trade and Finance
Refunds of previous years' expenditures—Refund of salaries, goods, and services	10	16				3
Adjustments to prior year's payables	115	152				32
Sales of goods and services—Sale of other publications	13	6				17
Fees—Access to information	1	1				2
Other fees and charges—Sundries	50	—				—
Public Works and Government Services Canada—Consulting and Audit Canada Revolving Fund	13	—				6
Optional Services Revolving Fund	—	5				—
Proceeds from the disposal of surplus Crown assets	2	1				3
Ottawa Civil Service Recreational Association	0	0				—
Public Debt
Miscellaneous non-tax revenues—Transfer from matured debt outstanding	4,617	4,965				2,463
Domestic Coinage
Domestic coinage	110,569	212,942		185,148		226,843
Transfer Payments to Provinces and Territories
Loans, investments, and advances—Federal-provincial fiscal arrangements	59	59				59
Loans, investments, and advances—Municipal Development and Loan Board	307	173				42
International Financial Organizations
Loans, investments, and advances—United Kingdom—United Kingdom Financial Agreement Act, 1946—Deferred Interest	1,767	1,013				335
Loans, investments, and advances—International Monetary Fund—Poverty Reduction and Growth Facility	17,393	16,874				13,679
Loans, investments, and advances—Thailand Financial Assistance Loan	—	—				—
Net gain on exchange	70,190	88,319				74,444
Total Non-respendable Revenue*	6,755,020	3,964,155		185,148		4,639,937

* Due to rounding, figures may not add to totals shown.

Table 7: Resource Requirements by Branch

The following table presents the distribution of resources to the Department by branch.

	2006–07 ($ thousands)
	Program Activities
Branch	Tax Policy	Economic and Fiscal Policy	Financial Sector Policy	Economic Development and Corporate Finance	Federal- Provincial Relations and Social Policy	International Trade and Finance	Public Debt	Domestic Coinage	Transfer Payments to Provinces and Territories	International Financial Organizations	Total
Tax Policy
Planned Spending	31,742										31,742
Actual Spending	30,805										30,805
Economic and Fiscal Policy
Planned Spending		14,973									14, 973
Actual Spending		14,500									14,500
Financial Sector Policy1
Planned Spending			21,105				34,395,000	83,100			34,499,205
Actual Spending			101,443				34,108,504	135,602			34,345,549
Economic Development and Corporate Finance
Planned Spending				8,006							8,006
Actual Spending				7,799							7,799
Federal-Provincial Relations and Social Policy2
Planned Spending					17,229				38,631,828		38,649,057
Actual Spending					14,497				38,441,221		38,455,718
International Trade and Finance3
Planned Spending						15,997				733,340	749,337
Actual Spending						14,903				1,006,072	1,020,975

* Due to rounding, figures may not add to totals shown.

Notes:

1. Financial Policy Sector Branch variance in the Financial Sector Policy program activity is $76 million for Net loss on exchange in relation to re-evaluations of cross-currency swaps in the Financial Sector Policy program activity. Public Debt program activity variance is attributable to a larger-than-expected decline in the stock of interest-bearing debt, as well as a lower-than-expected effective interest rate. The Domestic coinage program activity variance is due to a higher demand for coinage from the economy and the associated higher cost to produce and distribute coinage to meet this higher demand. See Table 6 for a corresponding increase in revenues associated with the sale of domestic coinage.

2. Federal-Provincial Relations and Social Policy Branch variances in the Transfer Payments to Provinces and Territories program activity are primarily attributable to an increase in Alternative Payments for Standing Programs of $182,016 thousand and an increase in Youth Allowances Recovery of $7,787 thousand.

3. The International Trade and Finance Branch variances between planned and actual numbers are attributable to unused Vote 5 funds of $88,602 thousand. Note that $5,594 thousand of this was transferred to Foreign Affairs and International Trade Canada. In addition the expenditure of $44,820 thousand for a net loss on exchange for international payments was not included in planned spending, nor was the non-budgetary vote L10 of $318,270 thousand for the issuance and payment of non-interest–bearing, non-negotiable demand notes to the International Development Association.

Table 8-A: User Fees Act

The following table reports on the user fees administered by the Department.

				2006–07
A. User Fee	Fee Type	Fee Setting Authority	Date Last Modified	Forecast Revenue ($000)	Actual Revenue ($000)	Full Cost ($000)	Performance Standard	Performance Results
Fees charged for the processing of access requests filed under the Access to Information Act	Other goods and services	Access to Information Act	1992	8	14	770	Framework under development by the Treasury Board of Canada Secretariat For more information, see http://laws.justice. gc.ca/en/a-1/8.html.	Statutory deadlines met 92% of the time

	Planning Years
Fiscal Year	Forecast Revenue ($000)	Estimated Full Cost ($000)
2007–08 2008–09 2009–10	14 14 14	972 971 971
B. Date Last Modified Not applicable.
C. Other Information It is the Department's practice to waive fees when the fee is less than $25. Exceptionally, when the circumstances warrant it, additional fees may be waived.

Table 8-B: Policy on Service Standards for External Fees

Supplementary information on the Policy can be found at
http://www.tbs-sct.gc.ca/rma/dpr3/06-07/index_e.asp.

Table 9: Major Regulatory Initiatives

Supplementary information on progress against the Department's regulatory plan can be found at http://www.tbs-sct.gc.ca/rma/dpr3/06-07/index_e.asp.

Table 10: Transfer Payment Programs (TPPs)

Supplementary information on TPPs can be found at http://www.tbs-sct.gc.ca/rma/dpr3/06-07/index_e.asp.

Table 11: Horizontal Initiatives

In 2006-07, the Department of Finance was the lead department on the following horizontal initiative: Anti-Money Laundering and Anti-Terrorist Financing Regime^[3]

Supplementary information on horizontal initiatives can be found at http://www.tbs-sct.gc.ca/rma/dpr3/06-07/index_e.asp.

Table 12: Department of Finance Canada Financial Statements (unaudited) for the year ended March 31, 2007

Statement of Management Responsibility for Financial Statements

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2007, and all information contained in this report rests with departmental management. These financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector.

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 fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Department's financial transactions. Financial information submitted to the Public Accounts of Canada and included in the Department's DPR is consistent with these financial statements.

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 through careful selection, training, and development of qualified staff, through organizational arrangements that provide appropriate divisions of responsibility, and through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the Department.

The system of internal control is augmented by Internal Audit, which conducts periodic audits and reviews of different areas of the Department's operations. In addition, the Chief Audit Executive has free access to the Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends the financial statements to the Deputy Minister of Finance.

The financial statements of the Department have not been audited.

 

The paper version was signed by		The paper version was signed by
Rob Wright, Deputy Minister Ottawa, Canada August 28, 2007		Coleen Volk, Senior Financial Officer Ottawa, Canada August 28, 2007

Department of Finance Canada
Statements of Operations (unaudited)
For the year ended March 31
($ thousands)

		2007	2006
Expenses (note 4)
	Transfer Payments to Provinces and Territories	41,674,221	40,175,192
	Public Debt	34,108,504	33,535,120
	International Financial Organizations (recovery)	190,802	(409,967)
	Domestic Coinage	128,035	125,729
	Financial Sector Policy	65,511	17,009
	Tax Policy	36,781	33,830
	International Trade and Finance	17,956	16,103
	Federal-Provincial Relations and Social Policy	17,719	15,522
	Economic and Fiscal Policy	17,325	16,121
	Economic Development and Corporate Finance	9,309	8,448
Total Expenses		76,266,163	73,533,107
Revenues (note 5)
	Transfer Payments to Provinces and Territories	205,063	209,105
	International Financial Organizations	36,768	613,691
	Domestic Coinage	226,843	212,943
	Financial Sector Policy	4,141,384	3,391,196
	Economic Development and Corporate Finance	158,070	201,126
Total revenues		4,768,128	4,628,061
Net cost of operations		71,498,035	68,905,046

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

Department of Finance Canada
Statements of Financial Position (unaudited)
As at March 31
($ thousands)

			2007	2006
Assets
Financial assets
		Accounts receivable (Note 6)	6,777,102	7,876,767
		Coin inventory	21,829	14,262
		Foreign exchange accounts (Note 7)	44,178,099	40,826,522
		Investment in Crown corporations (Note 8)	401,578	401,578
		Other loans, investments, and advances (Note 9)	5,052,538	5,262,273
			56,431,146	54,381,402
Non-financial assets
		Tangible capital assets (Note 10)	3,548	3,770
Total assets			56,434,694	54,385,172
Liabilities
		Accounts payable and accrued liabilities (Note 11)	4,056,295	4,683,538
		Taxes payable under tax collection agreements (Note 12)	6,422,333	6,012,377
		Interest payable (Note 13)	7,407,283	7,748,715
		Notes payable to international organizations (Note 14)	359,761	367,052
		Matured debt (Note 15)	108,961	126,175
		Unmatured debt (Note 16)	411,548,404	418,912,371
		Other liabilities (Note 17)	124,839	208,412
		Employee severance benefits (Note 18)	13,604	12,995
Total Liabilities			430,041,480	438,071,635
Equity of Canada (Note 19)			(373,606,786)	(383,686,463)
Total liabilities and equity of Canada			56,434,694	54,385,172
		Contingent liabilities (Note 20)
		Contractual obligations (Note 21)

The accompanying notes form an integral part of these financial statements

Department of Finance Canada
Statements of Equity of Canada (unaudited)
For the year ended March 31
($ thousands)

	2007	2006
Equity of Canada, beginning of year	(393,139,722)	(395,958,378)
Net cost of operations	(68,905,046)	(70,444,533)
Current year appropriations used (Note 3)	79,834,200	73,241,234
Revenue not available for spending	(5,173,025)	(6,835,610)
Change in net position in the Consolidated Revenue Fund (Note 3)	3,680,289	6,839,611
Services provided without charge by other government departments (Note 22)	16,841	17,954
Equity of Canada, end of year	(373,606,786)	(383,686,463)

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

Department of Finance Canada
Statements of Cash Flow (unaudited)
For the year ended March 31
($ thousands)

							2007	2006
Operating activities
	Net cost of operations						71,498,035	68,905,046
	Non-cash items:
				Amortization of tangible capital assets			(1,472)	(1,488)
				Amortization of loan discounts			207,031	210,600
				Amortization of debt discounts and premiums			(6,153,043)	(5,289,353)
				Concessionary portion of other loans, investments, and advances			(241,856)	(245,640)
				Gain on disposition of securities			1,715	1,740
				Gain on disposal of tangible capital assets			8	-
				Unrealized foreign exchange gains and losses			(4,658)	(793,466)
				Realized foreign exchange gains and losses			-	1,000,000
				Services provided without charge			(18,774)	(16,841)
	Variations in assets and liabilities:
				(Decrease) increase in accounts receivable			(1,099,665)	3,496,740
				Increase in coin inventory			7,567	2,082
				Decrease in accounts payable and accrued liabilities			626,634	2,000,088
						Accounts payable and accrued liabilities	626,923	2,000,053
					Vacation pay and compensatory leave		320	1,101
					Employee severance benefits		(609)	(1,066)
				Decrease in interest payable			341,432	201,524
				Increase in taxes payable under tax collection agreements			(409,956)	(2,316,393)
				Decrease (increase) in other liabilities			83,573	(86,551)
Cash used in operating activities							64,836,571	67,068,088
Capital investment activities
					Acquisition of tangible capital assets		1,808	3,172
					Proceeds from disposal of tangible capital assets		(566)	(5)
				Cash used by capital investment activities			1,242	3,167
Investing activities
				Net advances to (settlements from) the Exchange Fund Account			2,469,709	3,638,475
				Issuance of notes payable to the International Monetary Fund			(1,680,585)	(2,645,000)
				Encashment of notes payable to the International Monetary Fund			1,267,000	587,000
				Payment of subscriptions to international financial institutions			-	6,043
				Issuance of loans receivable			1,375,401	1,586,545
				Repayment of loans receivable			(1,554,892)	(1,699,985)
Cash used by investing activities							1,876,633	1,473,078
Financing activities
				Encashment of notes payable to international organizations			324,768	248,898
				Issuance of note payable to international organizations			(318,270)	(318,270)
				Net proceeds from cross-currency swaps			(183,919)	102,487
				Issuance of debt			(355,819,562)	(359,223,747)
				Repayment of debt			370,841,475	368,987,763
				Net cash provided by the Government of Canada			(81,558,938)	(78,341,464)
Cash used in (provided by) financing activities							(66,714,446)	(68,544,333)

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

1. Authority and objectives

The Department of Finance Canada is established under the Financial Administration Act as a department of the Government of Canada.

The Department is headed by the Minister of Finance who has broad responsibility for the management and direction of the Department, the management of the Consolidated Revenue Fund (CRF), and the supervision, control, and direction of all matters relating to the financial affairs of Canada not by law assigned to the Treasury Board or to any other minister.

The goal of the Department of Finance Canada is to foster strong and sustainable economic growth, resulting in higher standards of living and an improved quality of life for Canadians. The core business of the Department is organized into the following program activities:

Transfer Payments to Provinces and Territories: Administers the transfer payments pursuant to statutes and agreements with provinces and territories.

Public Debt: Manages the funding of interest and service costs of the public debt and the issuing costs of new borrowing.

Domestic Coinage: Responsible for the payment of the production and distribution costs for domestic circulating coinage.

International Financial Organizations: Administers international financial obligations and subscriptions.

Tax Policy: Develops and evaluates federal taxation policies and legislation, and provides advice and recommendations for changes aimed at improving the tax system while raising the required amount of revenue to finance government priorities. This program focusses on the following areas: personal income tax, business income tax, and sales and excise tax. The program is also involved with negotiating tax treaties, tax policy research and evaluation, as well as federal-provincial-territorial and federal-Aboriginal tax coordination.

Financial Sector Policy: Provides policy analysis on Canada's financial sector and on the regulation of federally chartered financial institutions; manages the federal government's borrowing program; and provides support regarding Crown corporation and financial market and exchange rate policy.

Economic and Fiscal Policy: Analyzes Canada's economic and fiscal situation, advises on fiscal matters, and provides analytical support on a wide range of economic and financial issues related to the government's macroeconomic policies.

International Trade and Finance: Manages the Department of Finance Canada's participation in international financial institutions (including the IMF, the World Bank Group, the Organisation for Economic Co-operation and Development, and the European Bank for Reconstruction and Development), international groups such as the G7, G20, and the Asia–Pacific Economic Cooperation forum, as well as trade and investment policy issues.

Federal-Provincial Relations and Social Policy: Provides policy and advice on federal-provincial-territorial relations and social policy issues and their economic and fiscal implications.

Economic Development and Corporate Finance: Provides policy and advice regarding financial implications of the government's microeconomic policies and programs, proposals for funding of programs, sectoral policy analysis, and corporate restructuring regarding Crown corporations and other corporate holdings.

2. Significant Accounting Policies

The financial statements have been prepared in accordance with accounting standards issued by the Treasury Board of Canada Secretariat, which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

a)  Parliamentary appropriations

The Department is financed by the Government of Canada through parliamentary appropriations. Appropriations provided to the Department do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and in the Statement of Financial Position are not necessarily the same as those provided through appropriations from Parliament. Note 3 to these financial statements provides a high-level reconciliation between the two bases of reporting.

b)  Consolidation

These financial statements include the accounts of Canada Investment and Savings, a special operating agency that administers retail debt. The accounts of Canada Investment and Savings have been consolidated with those of the Department of Finance Canada and all interorganizational balances and transactions have been eliminated.

The Government of Canada announced the winding up of Canada Investment and Savings as of the end of the fiscal year, March 31, 2007.

Investments in government business enterprises are recorded at cost and are not consolidated.

c)  Net cash provided by the Government of  Canada

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

d)  Change in net position in the CRF

Change in net position in the CRF is the difference between net cash provided by the government and appropriations used in a year, excluding the amount of non-respendable revenue recorded by the Department. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.

e)  Special drawing rights and foreign currency transactions

A special drawing right (SDR) is an international reserve asset created by the IMF to supplement existing official international reserves of member countries. The value of a SDR is based on a basket of four major currencies: the euro, Japanese yen, pound sterling, and United States (U.S.) dollar. The composition of the basket is reviewed every five years to ensure that it is representative of the currencies used in international transactions and that the weights assigned to the currencies reflect their relative importance in the world's trading and financial systems.

Transactions involving foreign currencies and SDRs are translated into Canadian-dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in foreign currencies, and SDRs are translated into Canadian dollars at the exchange rate in effect at the balance sheet date.

Net losses resulting from foreign currency transactions are included in expenses—International Financial Organizations—in the statement of operations.

f)  Revenues

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

• Interest on Receiver General bank deposits is recognized as revenue when earned.
• Uncashed Receiver General cheques and warrants and bank account cheques for all departments and agencies are recognized as revenue of the Department of Finance Canada if they remain outstanding 10 years after the date of issue.
• Unclaimed matured bonds are recognized as revenue if they remain unredeemed 15 years after the date of call or maturity, whichever is earlier.
• Unclaimed bank balances are recognized as revenue when there has been no owner activity in relation to the balance for a period of 20 years.

g)  Expenses

Expenses are recorded on the accrual basis:

• Transfer payments are recorded as expenses when the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement or, in the case of transactions that do not form part of an existing program, 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.
• Public debt charges are recognized when incurred and include interest, amortization of debt discounts, premiums and commissions, and servicing and issue costs.
• 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 contributions to health and dental insurance plans, and legal services are recorded as operating expenses at their estimated cost.

h)  Employee future benefits

Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer defined benefit pension plan administered by the Government of Canada. The Department's contributions to the Plan are expensed as incurred and represent the total departmental obligation to the Plan. Current legislation does not require the Department to make contributions for any actuarial deficiencies of the Plan.

Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are 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 of Canada as a whole.

i)  Accounts receivable

Accounts receivable are stated at the amounts expected to be ultimately realized. A provision is made for accounts receivable where the ultimate recovery is considered uncertain.

j)  Inventory

Coin inventory is valued at the lower of cost and net realizable value, cost being determined by the average cost method.

k)  Foreign exchange accounts

Short-term deposits, marketable securities, and special drawing rights held in the Foreign Exchange Accounts are recorded at cost. Marketable securities are adjusted for amortization of purchase discounts and premiums. Purchases and sales of securities are recorded at the settlement date. Write-downs to reflect other than temporary impairment in the fair value of securities are included in foreign exchange revenues on the Statement of Operations and Accumulated Deficit. Canada's subscriptions to the capital of the International Monetary Fund are recorded at cost.

l)  Investments in Crown corporations

Investments in the Canada Development Investment Corporation are at cost.

Income from investments in Crown corporations includes dividends from the Bank of Canada and the Canada Development Investment Corporation, which is recognized when declared.

m)  Other loans, investments, and advances

Subscriptions and contributions are recorded at cost net of allowances.

The Department of Finance Canada does not make a return on investment and does not expect a return of capital unless it withdraws from an institution, which is unlikely. Since the terms of the subscriptions and contributions are so concessionary that the substance of the transaction is that all or a part of the investment is more in the nature of a grant, the entire investment is recognized, through an allowance, as an expense at the time the investment is made.

Loans and advances are initially 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 and the portion of the loans that are expected to be repaid from future appropriations.

An allowance for valuation is further used to reduce the carrying value of loans, investments, and advances to amounts that approximate their net realizable value.

For loans to national governments, including developing countries, the allowance is determined based on the government's identification and evaluation of countries that have formally applied for debt service relief, on estimated probable losses that exist on the remaining portfolio, and on changes in the economic conditions of sovereign debtors.

For loans and advances to international organizations, an allowance is established based on their concessionary terms and their collectibility.

n)  Derivative financial instruments

The Department of Finance Canada enters into interest rate and cross-currency swaps to facilitate the management of its debt structure.

Interest rate swaps are agreements where counterparties exchange fixed- and floating-rate interest payments based on notional principal amounts of a single currency. Cross-currency swaps are agreements where counterparties exchange fixed- or floating-rate interest payments and principal amounts in different currencies.

Interest rate swaps are used to convert fixed-rate debt into variable rates tied to the Banker's Acceptance rates or London Interbank Offered Rates. Cross-currency swaps are primarily used to convert domestic debt to foreign debt to fund foreign currency advances to the Exchange Fund Account. In certain cases, cross-currency swaps are used to convert foreign debt into U.S. dollar debt.

Cross-currency swaps are initially recorded at cost and are translated into Canadian dollars at the exchange rate in effect at the balance sheet date. For cross-currency swaps where domestic debt has been converted into foreign debt, any exchange gains or losses are offset by the exchange gains or losses on foreign currency advances to the Exchange Fund Account. For cross-currency swaps where foreign debt has been converted into U.S. dollar debt, any exchange gains or losses are offset by the exchange gains or losses on the applicable foreign debt.

Interest paid and payable, and interest received and receivable on all derivative financial instruments is included in interest on unmatured debt.

o)  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. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

Asset class	Amortization period
Machinery and equipment	3 to 5 years
Motor vehicles	3 years
Leasehold improvements	Lesser of the remaining term of the lease or useful life of the improvement
Assets under construction	Once in service, in accordance with asset class

p)  Taxes receivable and taxes payable under tax collection agreements

Pursuant to various tax collection agreements, the Canada Revenue Agency administers and collects personal income taxes, corporate income taxes, Harmonized Sales Tax, First Nations Sales Tax, and First Nations Goods and Services Tax on behalf of certain provincial, territorial, and Aboriginal governments and the Department of Finance Canada remits those taxes to the applicable government.

Taxes receivable include taxes collectible by the Canada Revenue Agency on behalf of provincial, territorial, or Aboriginal governments that have not yet been remitted to the Department and are included in Accounts Receivable in the Statement of Financial Position. Taxes payable include taxes that have not yet been remitted by the Department to the applicable provincial, territorial, or Aboriginal government.

Taxes receivable and taxes payable include amounts assessed by the Canada Revenue Agency and estimates of amounts not assessed based on cash received, and include adjustments between estimated taxes receivable and taxes payable from previous years and actual amounts, as well as adjustments from reassessments.

q)  Unmatured debt

Premiums and discounts on public debt are amortized on a straight line basis over the term to maturity of the respective debt instrument. The corresponding amortization is recorded as part of public debt charges.

r)  Other liabilities

Deposits from Crown corporations that are non-interest bearing and repayable are recorded in "Other liabilities."

The common school funds account was established under 12 Victoria 1849,Chapter 200, to record the proceeds from the sale of lands set apart for the support and maintenance of common schools in Upper and Lower Canada, now Ontario and Quebec.

The foreign claims fund account was established by Vote 22a, Appropriation Act No. 9, 1966 to record the money received from the Custodian of Enemy Property.

The War Claims Fund—World War II account was established by Vote 696, Appropriation Act No. 4, 1952 to record moneys received from the Custodian of Enemy Property or from other sources.

s)  Loan guarantees

The allowance for losses on the guarantees of the Canadian Wheat Board and Export Development Canada 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.

t)  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 is recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the Notes to the financial statements.

u)  Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amount 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 contingent liabilities, valuation allowances for loans receivable, discounts on loans receivable, transfer payments to provinces and territories, the liability for employee severance benefits and accruals of taxes receivable, and taxes payable under tax collection agreements. Actual results could 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 Appropriations

The Department receives most of its funding through annual parliamentary appropriations. Items recognized in the Statement of Operations and the Statement of Financial Position in one year may be funded through parliamentary appropriations in prior, current, or future years. Accordingly, the Department 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 appropriations used:

							2007	2006
							($ thousands)
Net cost of operations							71,498,035	68,905,046
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (Less):
				Revenue not available for spending			4,844,881	5,173,025
				Allowance set-up (reversal) for bad debt expenses			76,414	(5,899)
				Services provided without charge			(18,774)	(16,841)
				Inventory charged to program expense			7,567	2,082
				Amortization of tangible capital assets			(1,472)	(1,488)
				Employee severance benefits			(609)	(1,066)
				Adjustment of allowance on loan guarantees			372,463	1,349,527
				Adjustment of allowance			—	3,960
				Other expenses not being charged to appropriations:
						Transfer payment pursuant to the Budget Implementation Act, 2007	(3,233,000)	—
					Transfer payment pursuant to the Budget Implementation Act, 2006			3,985,500
				Other			(785)	2,926
							2,046,685	10,491,726
Adjustments for items not affecting net cost of operations but affecting appropriations:
Add (Less):
				Issuance of Notes payable for subscriptions and contributions to the International Development Association			318,270	318,270
				Issuance of loans to the International Monetary Fund's Poverty Reduction and Growth Facility			—	89,956
				Encashment of notes payable to the European Bank for Reconstruction and Development			6,498	15,106
				Issuance of notes payable for subscriptions to the European Bank for Reconstruction and Development			—	9,157
				Advances to the Financial Consumer Agency of Canada			5,000	4,500
				Acquisitions of tangible capital assets			883	460
				Accountable advances			(26)	(21)
							330,625	437,428
Current year appropriations used							73,875,345	79,834,200

b) Appropriations provided and used:

			2007	2006
			($ thousands)
Appropriations provided:
	Vote 1—Operating expenditures		102,606	92,332
	Vote 5—Grants and contributions		398,605	995,200
	Vote 10—Transfer payments to territorial governments		—	1,800,000
			501,211	2,887,532
Statutory authorities:
	Transfer payments to provinces and territories		38,441,221	44,160,692
	Public debt charges		34,108,504	33,535,120
	Issuance of notes payable for subscriptions and contributions to the International Development Association		318,270	318,270
	Encashment of notes payable to the International Development Association		318,270	239,741
	Purchases of coins		135,602	127,811
	Foreign exchange losses		120,555	542,320
	Contributions to employee benefit plans		11,761	12,445
	Issuance of notes payable for subscriptions to the European Bank for Reconstruction and Development		—	9,157
	Advances to the Financial Consumer Agency of Canada		5,000	4,500
	Transfer payments to international organizations		2,615	29,293
	Other statutory authorities		2,166	1,690
	Issuance of loans to the International Monetary Fund's Poverty Reduction and Growth Facility		—	89,956
	Encashment of notes payable to the European Bank for Reconstruction and Development		6,498	15,106
			73,470,462	79,086,101
Lapsed appropriations:
		Vote 1—Operating expenditures	(13,320)	(8,880)0
		Vote 5—Grants and contributions	(83,008)	(330,553)
		Vote 10—Transfer payments to territorial governments	—	(1,800,000)
		Vote 15—Transfer payments to territorial governments	—	—
			(96,328)	(2,139,433)
Current year appropriations used			73,875,345	79,834,200

c) Reconciliation of net cash provided by government to current year appropriations used:

							2007	2006
							($ thousands)
Net cash provided by government							81,558,938	78,341,464
Revenue not available for spending							4,844,881	5,173,025
Change in net position in the Consolidated Revenue Fund:
	Variation in assets and liabilities:
						Unmatured debt	(7,363,967)	(6,456,404)
					Foreign exchange accounts		(3,351,577)	44,496
					Accounts receivable		1,099,665	(3,496,740)
					Accounts payable and accrued liabilities		(626,634)	(2,000,088)
					Taxes payable under tax collection agreements		409,956	2,316,393
					Interest payable		(341,432)	(201,524)
					Other loans, investments, and advances		209,735	208,536
					Matured debt		(17,214)	(27,510)
					Coin inventory		(7,567)	(2,082)
					Notes payable to international organizations		(7,291)	76,792
					Tangible capital assets		222	(1,679)
					Other liabilities		(83,573)	86,551
	Other adjustments:
				Issuance of notes payable for subscriptions to the International Developments Association			318,270	318,270
				Allowance set-up (reversal) for bad debt expenses			76,414	(5,899)
				Issuance of loans to the IMF's Poverty Reduction Growth Facility			—	89,956
				Allowance reversal for loan guarantees			372,463	1,349,527
	Other expenses not being charged to appropriation at the same time:
				Transfer payment pursuant to the Budget Implementation Act, 2007			(3,233,000)	—
				Transfer payment pursuant to the Budget Implementation Act, 2006				3,985,500
				Other adjustments			17,056	35,616
				Total change in the Consolidated Revenue Fund			12,528,474	3,680,289
Current year appropriations used							73,875,345	79,834,200

4. Expenses

The following table presents expense details by category:

		2007	2006
		($ thousands)
Transfer payments:
	Provinces and territories (Note 4a)	41,674,221	40,175,192
	International organizations (Note 4b)	560,069	939,560
	Allowance on loan guarantees	(372,463)	(1,349,527)
	Non-profit institutions and organizations	—	20
Total transfer payments		41,861,827	39,765,245
Public debt charges:
	Interest on unmatured debt (Note 4c)	21,182,870	21,130,905
	Interest on other liabilities (Note 4d)	12,831,346	12,303,426
	Other public debt charges	94,288	100,789
Total public debt charges		34,108,504	33,535,120
Cost of domestic coinage sold		128,035	125,729
Operating expenses (Note 4e)		121,483	110,953
Net foreign currency loss		46,112	—
Other expenses		202	20
Bad debt allowance (recovered)		—	(3,960)
Total Expenses		76,266,163	73,533,107

a)  Transfer payments to provinces and territories

Transfer payments to provinces and territories are paid pursuant to the Federal-Provincial Fiscal Relations Act, Budget Implementation Acts, and other statutory authorities.

For the year ended March 31, transfer payments to provinces and territories included the following:

	2007	2006
	($ thousands)
Fiscal equalization payments	11,535,064	10,917,000
Territorial financing	2,118,264	2,029,000
Canada Health Transfer	20,139,876	19,000,000
Canada Social Transfer	8,500,000	8,225,000
Bill C-52 (An Act to implement certain provisions of the budget tabled in    Parliament on March 19, 2007)
Clean Air and Climate Change Trust Fund	1,519,000	—
Transitional Trust Fund	614,100	—
Patient Wait Time Guarantee Trust Fund	612,000	—
Payment to Northwest Territories	54,400	—
Payment to Ontario	400,000	—
British Columbia Spirit Bear Rainforest	30,000	—
Payment to Yukon	3,500	—
Alternative payments for standing programs	(3,177,016)	(2,731,180)
Youth Allowances Recovery	(706,788)	(596,447)
Statutory subsidies	31,821	31,819
Bill C-48 (An Act to authorize the Minister of Finance to make certain payments)
Public Transit Capital Trust	—	900,000
Post-secondary Education Infrastructure Trust	—	1,000,000
Affordable Housing Trust	—	1,400,000
Total Transfer payments to provinces and territories	41,674,221	40,175,192

b)  Transfer payments to international organizations

Transfer payments to international organizations consists of:

• subscriptions and contributions to the International Development Association;
• contributions to the International Monetary Fund's Poverty Reduction Growth Facility; and
• grants and contributions to compensate Canadian creditor agencies whose scheduled receipts from debtor countries have been reduced by Canadian participation in the Paris Club debt or debt service reduction agreements and to contribute to international efforts to relieve the debt burdens of the world's poorest countries.

c)  Interest on unmatured debt

Interest on unmatured debt includes interest incurred, amortization of debt discounts, and premiums and net interest on cross-currency and interest rate swaps.

		2007	2006
		($ thousands)
Interest on domestic debt:
	Treasury bills	4,691,568	3,443,821
	Marketable bonds	15,031,258	16,132,630
	Retail debt	719,613	651,554
	Non-marketable bonds	214,531	322,831
	Promissory notes	205	824
		20,657,175	20,551,660
Interest on foreign debt:
	Marketable bonds (U.S. and euro)	337,743	417,008
	Canada notes (yen)	9,267	13,182
	Canada bills (U.S.)	105,711	80,074
	Euro medium-term notes (U.S. and euro)	72,974	68,981
		525,695	579,245
Total Interest on unmatured debt		21,182,870	21,130,905

d)  Interest on other liabilities

The Department funds interest on interest-bearing specified purpose accounts established by all departments and agencies, including superannuation accounts and Retirement Compensation Arrangement accounts established for the benefit of public service employees and members of the Royal Canadian Mounted Police and the Canadian Forces, the CPP Account, the Employment Insurance Fund, and other accounts.

Interest on other liabilities includes interest incurred on specified purpose accounts and interest on special drawing rights allocations.

For the year ended March 31, interest on other liabilities included interest on:

		2007	2006
		($ thousands)
Superannuation accounts		10,446,077	10,500,352
Employment Insurance fund		1,912,249	1,323,562
Other specified purpose accounts		296,846	307,206
Retirement Compensation Arrangement accounts		115,416	113,160
Special drawing rights allocations		51,758	37,994
CPP account		9,000	21,152
Total Interest on other liabilities		12,831,346	12,303,426

e)  Operating expenses

		2007	2006
		($ thousands)
Salaries and wages		70,817	66,431
Contributions to employee benefit plans (Note 18)		11,761	12,446
Professional and special services		14,813	13,135
Accommodation		9,718	9,762
Transportation and telecommunications		4,972	5,079
Machinery and equipment		3,081	615
Amortization of tangible capital assets		1,472	1,488
Information services		3,747	920
Repairs and maintenance		542	598
Rentals		560	479
Total Operating expenses		121,483	110,953

5. Revenues

		2007	2006
		($ thousands)
Investment income:
	Dividends from the Bank of Canada	1,983,529	1,735,610
	Dividends from Canada Development Investment Corporation	156,000	199,000
	Exchange Fund Account	1,765,275	1,394,534
	Interest on Subscriptions to the International Monetary Fund (IMF)	22,753	49,896
	Loan interest	219,243	227,105
Total investment income		4,146,800	3,606,145
Net foreign currency gain		—	545,999
Sales of domestic coinage		226,843	212,942
Interest on bank deposits		351,230	212,138
Other revenue		41,182	48,711
Loan interest—Canada Lands Company Ltd.		2,073	2,126
Total revenues		4,768,128	4,628,061

6. Accounts receivable

The following table presents details of accounts receivable:

	2007	2006
	($ thousands)
Accounts receivable—external	46	67
Accounts receivable—other government departments and agencies	27,012	20,725
Accrued investment income	400,266	384,733
Deposits in transit to the Receiver General	4	373
Taxes receivable under tax collection agreements	6,349,774	7,470,869
Total Accounts Receivable	6,777,102	7,876,767

7. Foreign exchange accounts

The foreign exchange accounts represent the largest component of the official international reserves of the Government of Canada and consist of the following:

	2007	2006
	($ thousands)
Investments held in Exchange Fund Account	42,907,495	39,202,354
Accrued net revenue from Exchange Fund Account	1,765,245	1,733,853
Total investments held in Exchange Fund Account (Note 7a)	44,672,740	40,936,207
Subscriptions to the International Monetary Fund (Note 7b)	11,105,783	10,672,893
Notes payable to the International Monetary Fund (Note 7c)	(10,241,599)	(9,471,102)
Special drawing rights allocations (Note 7d)	(1,358,825)	(1,311,476)
Total Foreign Exchange Accounts	44,178,099	40,826,522
Market Value	44,058,945	40,765,334

a)  Exchange Fund Account

The Exchange Fund Account is an actively managed portfolio of liquid foreign currency assets maintained to provide foreign currency liquidity for the Government of Canada and to provide the funds needed to help promote orderly conditions for the Canadian dollar in foreign exchange markets. It is governed by Part II of the Currency Act. Assets include cash and short-term deposits, marketable securities, special drawing rights, and gold.

The advances are limited to $60 billion by Order in Council dated April 25, 2001. Foreign currency is funded by the proceeds of foreign debt issued and domestic debt converted to foreign debt through cross-currency swaps.

The following table presents the balances of the foreign exchange accounts:

	2007	2006
	($ thousands)
Cash and short-term deposits	1,925,167	4,238,533
Deposits held under repurchase agreements	2,540,120	2,277,600
Marketable securities	38,462,632	32,855,313
Special drawing rights	1,126,655	1,064,960
Gold	6,653	6,421
Accrued interest and other receivables	611,513	493,380
Total Investments held in Exchange Fund Account	44,672,740	40,936,207

b)  Subscriptions to the International Monetary Fund (IMF)

The International Monetary Fund (IMF) is an international organization of 184 member countries that operates in accordance with its Articles of Agreement. It has a large pool of liquid assets, or resources, comprising convertible national currencies, special drawing rights, and other widely used international currencies provided by its members that it makes available to help members finance temporary balance of payments problems.

Upon joining the IMF and following periodic quota reviews, member countries are assigned a quota, based broadly on their relative size in the world economy.

Quotas are denominated in special drawing rights and determine a country's subscription, voting power, access to financing from the IMF, and share of special drawing rights (SDRs) allocations. The subscription is equal to the quota and is payable in full to the IMF. Up to one quarter of the subscription is paid in the form of widely accepted foreign currencies (such as the U.S. dollar, the euro, the Japanese yen, or the pound sterling) or SDRs. The remaining three quarters is paid in the country's own currency.

c)  Notes payable to the International Monetary Fund

At least 25 per cent of Canada's quota is held by the IMF in a Canadian-dollar cash deposit at the Bank of Canada. The IMF's remaining Canadian-dollar holdings are in the form of non-negotiable, non-interest-bearing demand notes that are cashed by the IMF subject to its requirements for Canadian currency.

d)  Special drawing rights allocations

The IMF allocates SDRs to countries that participate in the IMF's Special Drawing Rights Department.

SDR allocations are repayable to the IMF if they are cancelled by the IMF's Board of Governors, the Special Drawing Rights Department is liquidated, the IMF is liquidated, or if Canada chooses to withdraw from the IMF or terminate its participation in the Special Drawing Rights Department.

Canada's SDR allocations are SDR779.3 million.

8.  Investment in Crown corporations

Finance Canada wholly owns two Crown corporations: the Bank of Canada and the Canada Development Investment Corporation.

At March 31, the investment, at cost, is as follows:

	2007	2006
	($ thousands)
Bank of Canada (note 8a)	5,920	5,920
Canada Development Investment Corporation (note 8b)	395,658	395,658
Total Investment in Crown corporations	401,578	401,578

a)  Bank of  Canada

The Bank of Canada is a wholly-owned Crown corporation established by the Bank of Canada Act as the central bank in Canada to regulate credit and currency in the best interests of the economic life of the nation; to control and protect the external value of the national monetary unit; to mitigate by its influence fluctuations in the general level of production, trade, prices, and employment, so far as may be possible within the scope of monetary action; and to generally promote the economic and financial welfare of Canada.

The Bank of Canada has responsibilities for Canada's monetary policy, bank notes, financial system, funds management, and retail debt and, pursuant to the Bank of Canada Act, is the fiscal agent of the Government of Canada.

The Department of Finance Canada owns 100,000 shares with a par value of $50 each. The remaining balance of $920,000 represents premiums paid in respect of the acquisition, in 1938, of shares held by the public.

b)  Canada Development Investment Corporation

The Canada Development Investment Corporation is a wholly-owned Crown corporation incorporated pursuant to the Canada Business Corporations Act. The Corporation's current mandate is to wind down its operations by divesting of its remaining assets in an orderly fashion and to ready the corporation for eventual wind up. The Corporation wholly owns Canada Eldor Inc. and the Canada Hibernia Holding Corporation.

The Department of Finance Canada owns 101 common shares with nominal value. The remaining balance of the investment represents the Department's contributed surplus of the Canada Hibernia Holding Corporation.

c)  CPPIB

The Corporation was incorporated under the CPPIB Act, S.C., 1997, C.40, to invest the assets of the CPP in order to meet the obligation to contributors and beneficiaries under the CPP.

The Department of Finance Canada has purchased 10 shares of the Corporation at $10 per share, which represents 100 per cent of the outstanding shares.

9.  Other loans, investments, and advances

Other loans, investments, and advances by category are as follows:

	Face  value	Discounts	Allowance	Net book  value 2007	Net book  value 2006
	($ thousands)
Government business enterprises
Notes receivable from Canada Lands Company CLC Limited (Note 9a)	63,604	(16,210)	—	47,394	38,864
Note receivable from Parc Downsview Park Inc.	19,000	(17,304)	—	1,696	1,604
	82,604	(33,514)	—	49,090	40,468
Provincial and territorial governments
Recoverable overpayments of transfer payments (Note 9b)	4,514,185	(681,010)	—	3,833,175	4,023,328
Recoverable overpayments of taxes payable under tax collection agreements (Note 9c)	994,639	(190,329)	—	804,310	896,125
Loans to Municipal Development Loan Boards (Note 9d)	648	—	—	648	1,809
Loans for the Winter Capital Projects Fund (Note 9e)	2,900	—	(2,900)	-	—
	5,512,372	(871,339)	(2,900)	4,638,133	4,921,262
International organizations
Subscriptions to the European Bank for Reconstruction and Development (Note 9f)	249,622	—	(249,622)	—	—
Subscriptions to the International Bank of Reconstruction and Development (Note 9g)	385,453	—	(385,453)	—	—
Subscriptions to the International Finance Corporation (Note 9h)	93,917	—	(93,917)	—	—
Subscriptions to the Multilateral Investment Guarantee Agency (Note 9i)	12,391	—	(12,391)	—	—
Loans to the International Monetary Fund's Poverty Reduction and Growth Facility (Note 9j)	365,315	—	—	365,315	300,543
Advances to the Global Environment Facility (Note 9k)	10,000	—	(10,000)	—	—
Subscriptions and contributions to the International Development Association (Note 9l)	7,493,378	—	(7,493,378)	—	—
	8,610,076	—	(8,244,761)	365,315	300,543
Other organizations
Investment in loan portfolio acquired from the Canadian Commercial Bank (Note 9m)	43,132	—	(43,132)	—	—
	43,132	—	(43,132)	—	—
Total Other loans, investments, and advances	14,248,184	(904,853)	(8,290,793)	5,052,538	5,262,273

a)  Canada Lands Company Ltd

Canada Lands Company Ltd. (CLC) was incorporated under the Companies Act in 1956 and was continued under the Canada Business Corporations Act. CLC has acquired an interest in a number of real properties from the government in consideration for the issuance of promissory notes, which bear no interest and are repayable from the proceeds of the sale of the properties in respect of which they were issued. The notes were discounted using the Consolidated Revenue Fund lending rate applicable to Crown corporations and recorded at their discounted value.

b)  Recoverable overpayments of transfer payments

These amounts represent underpayments and overpayments in respect of provincial equalization entitlements under the Constitution Act, 1867 and the Constitution Act, 1982, the Federal-Provincial Fiscal Arrangements Act, and other statutory authority. The underpayments are non-interest bearing and are paid in subsequent years.

c)  Recoverable overpayments of taxes payable under tax collection agreements

These amounts represent overpayments made to provinces under tax collection agreements for the tax years 1997 to 1999 stemming from the misclassification of mutual fund trust capital gains refunds. Recoveries are non-interest bearing and will take place over a 10-year period, which started in 2004–05.

d)  Municipal Development and Loan Board

Loans have been made to provinces and municipalities to augment or accelerate municipal capital works programs. The loans bear interest at rates from 5.25 per cent to 5.625 per cent per annum and are repayable in annual or semi-annual instalments over 15 to 50 years, with final instalments between April 1, 2007, and July 1, 2008.

e)  Winter capital projects fund

Loans have been made to provinces, provincial agencies, and municipalities to assist in the creation of employment. The loans bear interest at rates from 7.4 per cent to 9.5 per cent per annum and are repayable either in annual instalments over 5 to 20 years, or at maturity. The loans are fully provisioned.

f)  European Bank for Reconstruction and Development

At year-end, Canada subscribed to 68,000 shares of the European Bank for Reconstruction and Development's authorized capital valued at U.S.$828.6 million. Only U.S.$216.2 million, or about 26 per cent of Canada's share subscription is "paid in." The balance is callable, meaning the institution can request the resources in the unlikely event that it requires them to meet its financial obligations to bondholders. Payments for the share subscription are authorized by the Act. Each payment to the EBRD is comprised of cash and a promissory note.

As at March 31, 2007, Canada had paid-in shares valued at U.S.$216,197,668 (U.S.$216,197,668 in 2006). Canada's contingent liability for the callable portion of its shares is U.S.$612,420,000.

g)  International Bank for Reconstruction and Development (World Bank)

This account records Canada's subscriptions to the capital of the International Bank for Reconstruction and Development, as authorized by the Bretton Woods and Related Agreements Act and various appropriation acts.

As at March 31, 2007, Canada subscribed to 44,795 shares. The total value of these shares is U.S.$5,403.8 million, of which U.S.$319.6 million plus U.S.$16.4 million has been paid in. The remaining portion is callable. The callable portion is subject to call by the Bank under certain circumstances. Canada's contingent liability for the callable portion of its shares is U.S.$5,069 million.

h)  International Finance Corporation

This account records Canada's subscriptions to the capital of the International Finance Corporation, which is part of the World Bank Group, as authorized by the Bretton Woods and Related Agreements Act and various appropriation acts.

As at March 31, 2007, Canada subscribed to 81,342 shares. These shares have a total value of U.S.$81.3 million, all of which has been paid in.

i)  Multilateral Investment Guarantee Agency

This account records Canada's subscriptions to the capital of the Multilateral Investment Guarantee Agency, as authorized by the Bretton Woods and Related Agreements Act and various appropriation acts.

As at March 31, 2007, Canada subscribed to 5,225 shares. The total value of these shares is U.S.$56.5 million, of which U.S.$10.7 million is paid in and the remaining portion is callable. The callable portion is subject to call by the Agency under certain circumstances. Canada's contingent liability for the callable portion of its shares is U.S.$45.8 million.

j)  International Monetary Fund—Poverty Reduction and Growth Facility

This account records the loan to the International Monetary Fund in order to provide assistance to debt-distressed, low-income countries, as authorized by the Bretton Woods and Related Agreements Act and various appropriation acts. The total loan authority pursuant to the Bretton Woods and Related Agreements Act was set at $550 million or such greater amount as may be fixed by the Governor in Council. The Governor in Council subsequently increased the limit to SDR700 million.

As at March 31, 2007, Canada had lent a total of SDR700,000,000 (SDR700,000,000 in 2006) to the Poverty Reduction and Growth Facility. Of this amount, SDR490,490,901 (SDR481,008,625 in 2006) has been repaid. The outstanding balance of SDR209,509,099 (SDR218,991,375 in 2006) was translated into Canadian dollars at the year-end closing rate of exchange (1 SDR = C$1.74367).

k)  Global Environment Facility

This account records the funding of a facility for environmental funding in developing countries in the areas of ozone, climate change, biodiversity, and international waters, as authorized by the Bretton Woods and Related Agreements Act and various appropriation acts. Advances to the Global Environment Facility (GEF) are made in non-negotiable, non-interest-bearing demand notes that are later encashed.

As at March 31, 2007, advances to the GEF amounted to C$10,000,000.

l)  International Development Association

This account records Canada's contributions and subscriptions to the International Development Association (IDA), as authorized by the Bretton Woods and Related Agreements Act and various appropriation acts. The contributions and subscriptions to the Association, which is part of the World Bank Group, are used to lend funds to the poorest developing countries for development purposes, on highly favourable terms (no interest, a 35- to 40-year maturity, and 10 years of grace). Contributions and subscriptions to IDA are made in non-negotiable, non-interest-bearing demand notes that are later encashed. During the year, transactions included participation through the issuance of notes payable.

As at March 31, 2007, Canada's total participation in IDA amounted to C$7,493.3 million (C$7,175.1 million in 2006).

m)  Canadian Commercial Bank

Advances have been made to the Canadian Commercial Bank representing the government's participation in the support group as authorized by the Canadian Commercial Bank Financial Assistance Act. These funds represent the government's participation in the loan portfolio that was acquired from the Bank and the purchase of outstanding debentures from existing holders.

n)  Advances to the Financial Consumer Agency of  Canada

Interest-bearing advances have been made to defray the cost of operation of the Agency pursuant to subsection 13(1) of the Financial Consumer Agency of Canada Act. During the year, the advances were repaid in full.

10. Tangible capital assets

		Opening balance	Acquisitions	Transfers-in	Disposals  and write-offs	Closing  balance
		($ thousands)
Machinery and equipment		10,379	1,705	79	(837)	11,326
Motor vehicles		127	24	—	(50)	101
Leasehold improvements		1,150	—	—	(911)	239
Assets under construction		889	—	—	(495)	394
		12,545	1,729	79	(2,293)	12,060

		Accumulated Amortization
		Opening balance	Amortization	Transfers	Disposals  and write-offs	Closing  balance
		($ thousands)
Machinery and equipment		8,063	1,110	6	(973)	8,206
Motor vehicles		88	16	—	(37)	67
Leasehold improvements		624	346	—	(731)	239
Assets under construction		—	—	—	—	—
		8,775	1,472	(6)	(1,741)	8,512

		Net book  value  2007	Net book  value  2006
		($ thousands)
Machinery and equipment		3,120	2,316
Motor vehicles		34	39
Leasehold improvements		—	526
Assets under construction		394	889
		3,548	3,770

The amortization expense for the year ended March 31, 2007, is $1,472 thousand ($1,488 thousand in 2006).

11. Accounts payable and accrued liabilities

		2007	2006
		($ thousands)
Accounts payable—external		3,266,715	3,353,963
Allowance for guarantees (Note 20)		500,037	872,500
Accounts payable—other government departments and agencies		284,829	452,041
Accrued vacation pay		4,714	5,034
Total Accounts payable and accrued liabilities		4,056,295	4,683,538

12. Taxes payable under tax collection agreements

At March 31, 2007, taxes payable to provinces, territories, and Aboriginal governments in respect of taxes collectible under tax collection agreements is as follows:

	2007	2006
	($ thousands)
Personal income taxes	3,392,512	3,908,207
Corporate income taxes	2,626,344	1,812,314
Harmonized Sales Tax	402,494	291,092
First Nations Sales Tax	613	423
First Nations Goods and Services Tax	370	341
Total Taxes payable under tax collection agreements	6,422,333	6,012,377

13. Interest payable

	2007	2006
	($ thousands)
Retail debt	2,974,153	3,250,827
Domestic bonds	4,183,917	4,259,781
Foreign bonds	249,213	238,107
Total Interest payable	7,407,283	7,748,715

14. Notes payable to international organizations

Non-interest bearing demand notes are issued in lieu of cash in respect of subscriptions and contributions to international organizations. The notes are presented for encashment according to their terms of agreement.

At March 31, 2007, the amount outstanding is:

	2007	2006
	($ thousands)
European Bank for Reconstruction and Development—USD (Note 9f)	10,097	17,023
International Bank of Reconstruction and Development—USD (Note 9g)	27,690	28,012
Multilateral Investment Guarantee Agency—USD (Note 9i)	3,704	3,747
International Development Association (Note 9l)	318,270	318,270
Total Notes payable to international organizations	359,761	367,052

15. Matured debt

Matured debt consists of debt that has matured but has not yet been redeemed. Matured debt that has not been redeemed fifteen years after the date of maturity or five years after the date of the call is recognized as revenue in the Statement of Operations.

At March 31, 2007, the amount outstanding is:

	2007	2006
	($ thousands)
Treasury bills (matured from 1977 to 1996)	591	591
Marketable bonds (matured from 1992 to 2007)	17,049	17,514
Retail debt (matured from 1992 to 2007)	91,321	108,070
Total Matured debt	108,961	126,175

16. Unmatured Debt and Other Financial Instruments

i. Unmatured debt

The Department borrows in both domestic and international markets on behalf of the Government of Canada.

Domestic debt consists of Treasury bills, marketable bonds, retail debt, and non-marketable bonds issued to the CPPIB.

Foreign debt consists of marketable bonds issued in U.S. dollars and euro; Canada notes issued in Japanese yen; Canada bills issued in U.S. dollars; and euro medium-term notes issued in U.S. dollars, Japanese yen, and euro. Marketable bonds include bonds assumed by the Department on February 5, 2001, on the dissolution of Petro-Canada Limited. Marketable bonds issued in New Zealand dollars and euro medium-term notes issued in Japanese yen were converted into U.S.-dollar liabilities through cross-currency swaps.

The Treasury bills balance at March 31, 2007, consists of $16,200 million in odd issue bills, $36,800 million in three-month bills, $28,600 million in six-month bills, and $52,500 million in 364-day bills.

Canada Savings Bonds are redeemable on demand by the holder, with accrued interest calculated to the end of the previous month (no interest is paid if redeemed during the first three months following the date of issue).

Non-marketable bonds and notes are interest-bearing certificates of indebtedness issued by the Government of Canada exclusively to the CPP Investment Fund and are redeemable at face value plus accrued interest.

Canada bills are short-term certificates of indebtedness issued by the Government of Canada in the U.S. money market under the government's foreign currency borrowing program. Canada bills provide Canada with an additional source of short-term U.S. funds.

The year-end balance of Canada bills payable in U.S. dollars was translated into Canadian dollars using the closing rate of exchange at March 31, 2007.

Canada notes are issued by the Government of Canada under the government's foreign currency borrowing program. Canada notes provide Canada with an additional source of medium-term foreign funds. The year-end balances of Canada notes were translated into Canadian dollars using the closing rate of exchange of the appropriate currency at March 31, 2007.

Euro medium-term notes are issued by the Government of Canada in the euro markets under the government's foreign currency borrowing program and thus provide Canada with an additional source of medium-term foreign funds. The year-end balances of euro medium-term notes were translated into Canadian dollars using the closing rate of exchange of the appropriate currency at March 31, 2007.

At March 31, the amount outstanding is:

			Face value	Unamortized discounts  (premiums)	Net book value  2007	Net book value  2006
			($ thousands)
Domestic debt:
Treasury bills			134,100,000	(1,568,140)	132,531,860	130,230,290
Marketable bonds			257,909,160	(5,081,326)	252,827,834	256,492,455
Retail debt			15,175,014	—	15,175,014	17,342,186
Non-marketable bonds			1,742,344	—	1,742,344	3,094,626
Promissory notes			—	—	—	7,561
			408,926,518	(6,649,466)	402,277,052	407,167,118
Foreign debt:
Marketable bonds			6,652,578	(502)	6,652,076	7,598,793
Canada Notes			489,950	501	490,451	497,009
Canada Bills			1,847,360	(10,440)	1,836,920	4,703,406
Euro Medium-Term Notes			1,627,701	500	1,628,201	1,502,792
			10,617,589	(9,941)	10,607,648	14,302,000
			419,544,107	(6,659,407)	412,884,700	421,469,118
Less: Government's holding					(50,000)	—
Less: Securities held for the retirement of unmatured foreign debt					(245,382)	(248,320)
					412,639,318	421,170,798
Cross-currency revaluation (receivables of $35,561,484; payables of $34,470,570)					(1,090,914)	(2,258,427)
					411,548,404	418,912,371
Market value					449,977,772	460,249,498

Contractual maturities of unmatured debt by currency over the next five years, at face value, are as follows:

Maturing year	Canadian dollars[4]	U.S. dollars[5]	Japanese yen[6]	Euro[7]	Total
	($ thousands)
2008	163,436,971	2,215,675	—	85,301	165,737,947
2009	32,498,728	2,886,500	489,950	3,154,466	39,029,644
2010	20,822,669	182,306	—	1,542,400	22,547,375
2011	19,491,730	—	—	—	19,491,730
2012	21,547,208	—	—	—	21,547,208
2013 and beyond	151,129,212	60,991	—	—	151,190,203
	408,926,518	5,345,472	489,950	4,782,167	419,544,107

The effective average annual interest rates are as follows:

	2007	2006
	(in %)
Treasury bills	4.20	3.52
Marketable bonds—domestic	5.24	5.26
Retail debt	3.54	3.84
Non-marketable bonds	10.37	10.02
Marketable bonds—foreign	5.14	5.13
Canada bills	5.11	4.63
Foreign currency notes	3.92	3.85

ii. Derivative financial instruments

a) Swap agreements

Government debt is issued at both fixed and variable interest rates and is denominated in Canadian dollars, U.S. dollars and other currencies. The government has entered into interest rate and cross-currency swap agreements to facilitate management of its debt structure. In the case of interest rate swap agreements, fixed interest rate funding has been converted to variable rates tied to the Banker's Acceptance rates of London Interbank Offered Rates (LIBOR). In the case of cross-currency swap agreements, Canadian-dollar and other foreign-currency debt has been converted into U.S. dollars or other foreign currencies with either fixed interest rates or variable interest rates. As a normal practice, the government's swap positions are held to maturity. The government does not enter into swap agreements for speculative purposes.

The interest paid or payable and the interest received or receivable on all swap transactions are recorded as part of public debt charges. Unrealized gains or losses due to fluctuations in the foreign exchange value of the swaps are presented in the cross-currency swap revaluation account and are recognized as part of foreign exchange revenues in the Statement of Operations and Accumulated Deficit.

Swaps with contractual or notional principal amounts outstanding at March 31, 2007, are as follows:

	2007		2006
Maturing year	Interest rate swaps	Cross-currency swaps	Interest rate swaps	Cross-currency swaps
	($ thousands)
2007	—	—	—	2,346,928
2008	29,269	5,452,725	29,609	2,983,471
2009	1,385,520	2,705,375	1,401,600	2,653,411
2010	—	3,577,985	—	3,380,298
2011	—	2,743,881	—	2,571,392
2012	—	2,261,822	—	1,399,661
2013 and beyond	—	16,313,993		10,881,744
	1,414,789	33,055,781	1,431,209	26,216,905

b) Credit risk to swap agreements

The government manages its exposure to credit risk by dealing principally with financial institutions having credit ratings from at least two recognized rating agencies, one of which must be Moody's or Standard & Poor's. At the time of inception of the agreement, the credit rating of the institution must be at least A–.

The government does not have a significant concentration of credit risk with any individual institution and does not anticipate any credit loss with respect to its swap agreements.

The following table presents the notional amounts of the swap agreements by ratings assigned by Standard & Poor's:

	2007	2006
Standard & Poor's
	($ thousands)
AA+	9,649,000	2,896,000
AA	6,170,000	5,855,000
AA–	16,085,570	13,593,114
A+	2,393,000	5,304,000
A	173,000	—
	34,470,570	27,648,114

c) Fair value of financial instruments

The following table presents the carrying value and the fair value of financial assets and liabilities. Fair values are government estimates and are generally calculated using market conditions at a specific point in time where a market exists. Fair values of instruments with a short lifespan or of a non-negotiable nature are assumed to approximate carrying values. Fair values may not reflect future market conditions nor the actual values obtainable should the instrument be exchanged on the market. The calculations are subjective in nature and involve inherent uncertainties due to unpredictability of future events.

2007				2006
	Carrying Value	Fair Value	Difference	Carrying Value	Fair Value	Difference
($ thousands)
Foreign Exchange Accounts	44,178,099	44,058,945	–119,154	40,826,522	40,765,334	–61,188
Unmatured Debt	411,548,404	449,977,772	38,429,368	418,912,371	460,249,498	41,337,127

d) Fair value of financial instruments—Derivative financial instruments

The following table presents the fair value of derivative financial instruments with contractual or notional principal amounts outstanding at March 31, 2007:

	2007		2006
	Notional Value	Fair Value	Notional Value	Fair Value
	($ thousands)
Interest rate and cross-currency swaps	34,470,570	1,734,309	27,648,114	2,717,742

Fair value of the swap agreements are the estimated amount that the government would receive or pay, based on market factors, if the agreements were terminated on March 31. They are established by discounting the expected cash flows of the swap agreements by using fiscal year-end market interest and exchange rates. A positive (negative) fair value indicates that the government would receive (make) a payment if the agreements were terminated.

iii. Managing foreign currency risk and sensitivity analysis to foreign currency exposures

Interest rate and foreign currency risks are managed using a strategy of matching the duration structure and the currency of the Exchange Fund Account (EFA) assets and the related foreign currency borrowings of the Government of Canada. As at March 31, 2007, the EFA assets and the liabilities funding these assets were effectively "matched," which means that most price changes would affect both sides of the Statement of Financial Position equally. Assets related to the International Monetary Fund are only partially matched because they are denominated in Special Drawing Rights.

The Government of Canada's foreign currency assets and liabilities are held mainly in three currency portfolios: the U.S. dollar, the euro and the Japanese yen. At March 31, 2007, a one per cent appreciation of the Canadian dollar versus the U.S. dollar, the euro, and the Japanese yen would have resulted in a foreign exchange loss of $19 million due to the unmatched exposure of the U.S. dollar portfolio and in a foreign exchange loss of $4 million due to the unmatched exposure of the euro portfolio. The Japanese portfolio was matched in terms of currency exposure at March 31, 2007.

17. Other liabilities

Other liabilities consist of the following:

		2007	2006
		($ thousands)
Deposits:
	Canada Eldor Inc. (Note 17a)	43,500	53,500
	Canada Hibernia Holding Corporation (Note 17b)	78,478	74,740
	Collateral deposits (Note 17c)	—	77,311
		121,978	205,551
Other Liabilities:
	Common school funds—Ontario and Quebec (Note 17d)	2,678	2,678
	Foreign Claims Fund (Note 17e)	179	179
	War Claims Fund—World War II (Note 17f)	2,861	2,861
Total Other Liabilities		124,839	208,412

The deposits from two wholly-owned subsidiaries of the Canada Development Investment Corporation are non-interest bearing and are repayable. The collateral deposit was received as credit support under a collateral agreement and paid interest at prime less 0.5%

a)  Canada Eldor Inc.—Holdback—Privatization—Canada Development Investment Corporation

This account was established pursuant to subsection 129(1) of the Financial Administration Act. This special purpose money is to be used to meet costs incurred on the sale of Crown corporations and demand for payment by purchasers pursuant to the acquisition agreement and costs incurred by the Canada Development Investment Corporation in connection with their sale.

b)  Canada Hibernia Holding Corporation—Abandonment reserve fund

This account was established to record funds that will be used to defray the future abandonment costs that will occur at the closure of the Hibernia field.

c)  Swap collateral deposit

This account was established to record cash received as credit support under a collateral agreement with a financial institution. This amount was reimbursed in full by June 2006.

d)  Common school funds—Ontario and Quebec

This account was established under 12 Victoria 1849, Chapter 200, to record the proceeds from the sale of lands set apart for the support and maintenance of common schools in Upper and Lower Canada, now Ontario and Quebec. Interest of $133,889—apportioned on the basis of population—is paid directly to these provinces on a semi-annual basis, at the rate of 5 per cent per annum, and is charged to interest on the public debt.

e)  Foreign claims fund

This account was established by Vote 22a, Appropriation Act No. 9, 1966, to record (a) such part of the money received from the Custodian of Enemy Property, proceeds of the sale of property, and the earnings of property and (b) all amounts received from governments of other countries pursuant to agreements entered into after April 1, 1966, relating to the settlement of Canadian claims and also records payment of claims submitted, including payment of the expenses incurred in investigating and reporting on such claims.

f)  War claims fund—World War II

This account was established by Vote 696, Appropriation Act No. 4, 1952, to record moneys received from the Custodian of Enemy Property or from other sources and payments (a) to eligible claimants for compensation in respect of World War II; (b) of a supplementary award amounting to 50 per cent of the original award (PC 1958-1467, October 23, 1958); and (c) of expenses incurred in investigating and reporting on claims. The War Claims Commission was established to enquire into and report on claims made by Canadians arising out of World War II for which compensation may be paid from this or any other fund established for the purpose. The expenses of the Commission are chargeable hereto.

18. Employee benefits

a)  Pension benefits

The Department of Finance Canada's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 per cent 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 Plan benefits and they are indexed to inflation.

Both the employees and the Department contribute to the cost of the Plan. The expense amounted to $8,668 thousand in 2006–07 ($9,210 thousand in 2006), which represents approximately 2.2 times (2.6 times in 2006) the contributions made by employees.

The Department'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 Department of Finance Canada provides severance benefits to its employees based on eligibility, years of service, and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, is as follows:

		2007	2006
		($ thousands)
Accrued benefit obligation, beginning of year		12,995	11,929
Expense for the year		2,019	2,438
Benefits paid during the year		(1,410)	(1,372)
Accrued benefit obligation, end of year		13,604	12,995

19. Equity of Canada

The Department of Finance Canada includes in its revenues and expenses the transactions of certain consolidated other liabilities. The Government of Canada's own legislation requires that the revenues of these accounts be earmarked and the related expenses be charged against such revenues.

		2007	2006
		($ thousands)
Equity, excluding consolidated other liabilities		(373,853,054)	(383,932,731)
Consolidated other liabilities:
	Canadian Commercial Bank and Northland Bank Holdback Account (Note 19a)	246,223	246,223
	Investors' Indemnity Account (Note 19b)	45	45
		246,268	246,268
Equity		(373,606,786)	(383,686,463)

a)  Canadian Commercial Bank and Northland Bank Holdback Account

This account was established to record the amount held from the recovery of monies received on the windup of the Canadian Commercial Bank and Northland Bank. The monies are used to pay claims from depositors of Canadian Commercial Bank, CCB Mortgage Investment Corporation, and Northland Bank pursuant to the Financial Institutions Depositors Compensation Act.

b)  Investors' Indemnity Account

This account was established pursuant to the Financial Administration Act for the payment of any losses sustained by subscribers of Government of Canada securities who have paid all or part of the purchase price but did not receive the security or repayment of the amount paid and losses sustained by any person in the redemption of securities.

20. Contingent liabilities

a)  Litigation

In the normal course of its operations, the Department of Finance Canada becomes involved in various legal actions. Some of these potential liabilities 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 on the Department's financial statements.

As at March 31, 2007, the Department has contingent liabilities of $207 million ($127 million in 2006) based on the Department's legal assessment of the potential exposure. The existence and amount of the liability depend upon the future outcome of these legal actions, which are not currently determinable. No accrual for these contingent liabilities has been made in the financial statements.

b)  Callable share capital

The Department has callable share capital in certain international organizations that could require payments to those organizations. At March 31, 2007, callable share capital is $6,613 million ($6,689 million in 2006).

c)  Loan guarantees

The Department of Finance Canada guarantees loans insured by the Mortgage Insurance Company of  Canada and the Genworth Financial Mortgage Insurance Company Canada. At March 31, 2007, the contingent liability related to the guarantees is $1,706 million ($962 million in 2006). Losses on loan guarantees are recorded in the accounts when it is likely that a payment will be made to honour a guarantee and where the amount of the anticipated loss can be reasonably estimated. The amount of the allowance for losses is determined by taking into consideration historical loss experience and current economic conditions.

The Department manages guarantees to the Canadian Wheat Board for the repayment of the principal and interest of all receivables resulting from sales made under the Credit Grain Sale Program for an amount of $1,541 million ($2,795 million in 2006) and a portion of credit sales made under the Agri-Food Credit Facility, which amounted to $65 million ($56 million in 2006).

The Department administers the government's compensation arrangement regarding Export Development Canada's sovereign loans and guarantees. Under this arrangement, the government fully compensates Export Development Canada for the cost of existing debt reduction commitments and shares losses with Export Development Canada on new debt reduction on obligations contracted before March 31, 2001. The government has also agreed to share losses with Export Development Canada in the event of unilateral debt reduction on debts contracted after March 31, 2001. Total funds covered under this agreement amount to $1,780 million ($2,297 million in 2006).

A total liability of $500 million ($873 million in 2006) was recorded.

21. Contractual obligations

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

	2008	2009	2010	2011 and  thereafter	Total
	($ thousands)
Undisbursed Loans and Advances
International Development Association	318,000	0	0	0	318,000
Transfer Payments
International Development Association	0	25,000	29,000	36,000	90,000
African Development Fund	7,000	8,000	10,000	13,000	38,000
Total	325,000	33,000	39,000	49,000	446,000

22. Related party transactions

The Department is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The Department enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, during the year, the Department received services that were obtained without charge from other government departments as presented below.

Services provided without charge

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

	2007	2006
	($ thousands)
Accommodation	9,718	9,762
Employer's contribution to employee health and dental insurance plans	4,898	4,951
Legal services	4,158	2,128
Total	18,774	16,841

The Government of Canada has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all departments without charge. The cost of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada, are not included as an expense in the Statement of Operations.

23. Comparative Information

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

Table 13: Response to Parliamentary Committees and Audits and Evaluations for the 2006–07 Fiscal Year

Response to Parliamentary Committees

1. Standing Committee on the Status of Women Government Response to a Report entitled Gender-Based Analysis: Building Blocks for Success The Standing Committee presented reports to the House in April 2005 and in May 2006. In July 2005, in response to the recommendations contained in the first report, the Department of Finance Canada committed to appoint a gender-based analysis (GBA) champion, to conduct a pilot project to train analysts and managers in GBA, and to continue to hold pre-budget consultations with various groups. The Department has fulfilled all three commitments. The Department responded, in August 2006, to the second report and committed to post examples of good GBA analysis on the Department's internal website, to provide GBA training workshops to branches other than Tax Policy, to include GBA in the training curriculum for new employees, and to report on progress made in its departmental performance report (DPR). The Department is working toward fulfilling these commitments and will report on all of them in next year's DPR. 2. Standing Committee on Finance Report 14—Study on Income Trusts (adopted by the Committee on February 22, 2007; presented to the House on February 28, 2007) Government Response: 14th Report of the Standing Committee on Finance, Taxing Income Trusts: Reconcilable or Irreconcilable Differences? (Presented to the House on July 18, 2007)

Response to the Auditor General of Canada, including to the Commissioner of the Environment and Sustainable Development (CESD)

Advertising and Public Opinion Research (February 2007 Status Report, Chapter 1) See http://www.oag-bvg.gc.ca/domino/reports.nsf/html/20070201ce.html Expenditure Management System at the Government Centre (November 2006, Chapter 1) See http://www.oag-bvg.gc.ca/domino/reprots.nsf/html/20061101ce.html

Reviews, Audits, and Evaluations

In 2006–07, the Tax Policy program published two reports on the impact of the tax system on aspects of the Canadian economy. One of the reports compared marginal effective tax rates across countries in the manufacturing sector and their impact on business investment, while the other report examined the impact of the income tax system on the decision of young Canadians to undertake post-secondary education. The reports are available in the 2006 Tax Expenditures and Evaluations publication (see http://www.fin.gc.ca/toce/2006/taxexp_e.html). An external review of Receiver General cash management was completed, which was generally favourable with respect to the government's current polices and practices in this areas. The evaluation report is posted on the Department of Finance Canada's website (see http://www.fin.gc.ca/efa/Report2006_e.html). As part of the 2005–06 fiscal year Risk-Based Audit Plan, the Department of Finance Canada's Audit and Evaluation Committee authorized a review of administrative controls over international obligations and subscription payments. The review was undertaken during fiscal year 2006–07 and the report is scheduled to be tabled for approval to the Committee in fiscal year 2007–08. An external evaluation of the Exchange Fund Account completed in 2006 concluded that the government's policies and practices are sound and in keeping with those of other comparable countries. The evaluation report is available on the Department of Finance Canada's website (see http://www.fin.gc.ca/efa/EFA2006_e.html). The CPP triennial review was completed in June 2006. Federal and provincial ministers of Finance reviewed the CPP Investment Board's accountability and governance framework in the context of the government's proposals for the Federal Accountability Act. Ministers reviewed in particular the areas of codes of conduct, conflict of interest, and disclosure policies and practices and concluded that they meet or exceed practices of public- and private-sector pension funds. Ministers also endorsed the CPP Investment Board's fiduciary investment mandate and its Policy on Responsible Investing adopted in October 2005. On an ongoing basis, the CPP Investment Board is achieving strong results and improving the sustainability of the CPP. A general link to evaluations conducted as part of the Treasury Evaluation program (TEP) can be found on the web (see http://www.fin.gc.ca/access/audit_e.html#Treasury). Internal Audits Audit of Administrative Controls Over Financial Debt Instruments: Foreign Debt Portfolio and Foreign Currency Asset Reserve (completed and posted on the Web at http://www.fin.gc.ca/access/audit_e.html) Audit of Accounts Payable: A preliminary survey has been completed; the detailed examination phase has been deferred until 2008–09. Other Projects Review of Administrative Controls Over International Obligations and Subscription Payments (to be tabled for approval in the fall of 2007) Review of Translation and Editing Services (to be tabled for approval in the fall of 2007) Development of the Department of Finance Canada Risk-based Audit Plan (completed)

Table 14: Sustainable Development Strategy

"Sustainable development" is defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs, and it is a key commitment of all federal departments. In 1995, the Auditor General Act was amended to require each department to prepare and update a sustainable development strategy (SDS). These strategies are tabled in the House of Commons, and the Commissioner of the Environment and Sustainable Development monitors the progress toward their implementation.

An SDS is intended to outline a department's goals and action plans for integrating sustainable development into its policies, programs, and operations over three-year planning periods. The first Department of Finance Canada SDS, which was tabled in the House of Commons in 1997, helped show how the federal government's fiscal and economic plans contributed to sustainable development in Canada, outlined the Department's approach and contribution to international sustainable development issues, and showed how the Department would improve environmental performance in its operations.

The Department of Finance Canada's updated strategy for 2004–06 was completed in December 2003. It built upon the solid foundation provided by the previous two versions and focusses on those areas where the Department can make unique and important contributions to sustainable development in Canada and around the world. The Department's 1998–2000, 2001–03, and 2004–06 strategies can be found on the web (see http://www.fin.gc.ca/purl/susdev-e.html).

The Department has implemented a renewed management strategy for the SDS. This consists of a departmental sustainable development champion, a core working group of officials with representatives from all branches, and documented reviews of sustainable development progress and planning by a senior management committee. The Department has also continued to raise awareness of the departmental process for fulfilling the Department's obligations under the Cabinet Directive on Strategic Environmental Assessment.

Strategic Outcomes

The Department of Finance Canada confirmed two key goals in its 2004–06 SDS: to promote intergenerational equity through effective fiscal management and to continually strive to more fully integrate economic, social, and environmental considerations and objectives into policy making.

Key Issues

To help focus on these goals, the 2004–06 SDS identifies four themes or key issues on which to base departmental actions over the next three years: Building the Future, Integrating the Economy and the Environment, Integrating Sustainable Development into the Global Economy, and Greening Operations. The Department's action plan for sustainable development sets out a number of objectives and targeted actions in each of these four areas over the planning period. The following describes the Department's four key issues and how they relate to the two broad sustainable development goals:

Building the future highlights how the Department contributes to intergenerational equity by demonstrating the sustainable development impacts of the government's key priorities in areas where the Department has a mandated responsibility. Commitments in this area include improving fiscal health, solidifying major social programs, and implementing some of the government's key environmental sustainable development priorities.

Integrating the economy and the environment involves building on the Department's analytical foundation and broadening its knowledge base in support of progress in integrating environmental and economic considerations into tax, spending, and related policies. Commitments in this area include expanding analytical abilities, conducting further analytical work on environmental issues such as climate change, and raising awareness of the departmental process for implementing the 1999 Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals.

Integrating sustainable development in the global economy involves participating in efforts to address globalization of the world economy and the links to environmental concerns and international competitiveness. Commitments in this area include continuing to examine the linkages between trade and the environment and increasing knowledge of the relationship between financial services and international environmental practices. The Department of Finance Canada will also continue to participate in preparing for and negotiating international environmental agreements.

Greening operations involves identifying and acting to address the negative environmental impacts of the Department's operations and promoting best practices within the Department.

Targets and Reporting

A detailed outline of the Department's objectives, targets, and results for planned activities in 2006–07 to implement the 2004–06 SDS is available at http://www.fin.gc.ca/purl/susdev-e.html.

A detailed outline of the Department's objectives, actions, and planned results in its SDS in 2007–08 and the highlights of its new 2007–09 SDS are available on the web (see http://www.fin.gc.ca/purl/susdev-e.html).

Table 15: Travel Policies

The Department of Finance Canada follows and uses the Treasury Board policy parameters.

Comparison to the Treasury Board Travel Directive, Rates and Allowances

The Department of Finance Canada follows and uses the Treasury Board policy parameters.

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