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SECTION III: Supplementary Information

CRTC Organization Chart

CRTC Organization Chart - Reporting to the Chairperson: Vice-Chairperson, Broadcasting; Vice-Chairperson, Telecommunications; Commissioners; Executive Director, Broadcasting; Executive Director, Telecommunications; Executive Director, Policy Development & Research; Secretary General; Senior General Counsel; and Director General, Strategic Communications & Parliamentary Affairs.

Table 1: Comparison of Planned to Actual Spending


($ millions) 2005-2006 2006-2007 2007-2008
Actual Actual Main
Estimates
Planned
Spending
Total
Authorities
Actual
Regulation of Communications in the Public Interest 46.5 47.6 45.9 45.8 56.5 55.6
Less: Respendable Revenue (note 1 & 2) 38.6 39.9 40.2 40.1 40.2 40.2
Net Expenditures 7.9 7.7 5.7 5.7 16.3 15.4
Adjustments:
Supplementary Estimate
Operating Budget Carry Forward 1.1
Compensation adjustments 0.2
Funding to address the increased workload in delivering on legislative and regulatory responsibilities (note 3) 8.0
Employee Benefits Plan (EBP) 0.4
Total Net Expenditures 7.9 7.7 5.7 15.4 16.3 15.4
Less: Non-Respendable revenue (note 2) 123.1 135.9 - 14.0 16.0 16.0
Plus: Cost of services received without charge (note 4) 15.5 15.2 - 15.7 15.3 15.3
Net cost (note 5) (99.7) (113.0) 5.7 17.1 15.6 14.7

 


Full-Time Equivalents (note 6) 396 409 - 440 - 414

Note 1 The CRTC has vote-netting authority. Vote-netting is a means of funding government programs or activities whereby Parliament authorizes a department or agency to apply revenues towards costs directly incurred for specific activities. The Part I broadcasting licence fees and the telecommunications fees are used to finance the Commission's operating budget.

Note 2 For more information on CRTC revenues, refer to the section entitled "Explanation of Revenue".

Note 3 In November 2007, Treasury Board approved a two-year increase to the Commission's budget for fiscal years 2007-2008 and 2008-2009. The full cost of this resource request including EBP and PWGSC accommodation factors is $8.5M ($4.5M Broadcasting, $4M Telecommunications) for 2007-2008 and $10.4M ($5.5M Broadcasting, $4.9M Telecommunications) for 2008-2009. The Commission's actual expenses associated with this resource increase are recovered as part of the annual billing adjustments for telecommunication industry in 2008-2009 and 2009-2010 and for broadcasting-licence fee payers in 2009-2010 and 2010-2011.

Note 4 The costs of services provided by other departments includes: the regulation of the Broadcasting Spectrum by Industry Canada; the accommodation provided by Public Works and Government Services Canada; the employer's share of employees' insurance premium paid by Treasury Board Secretariat and Workers' Compensation paid by Human Resources and Social Development Canada.

Note 5 Brackets indicate that the revenue received exceeds the gross costs of program.

Note 6 Full time equivalents (FTEs) reflect the human resources that the CRTC uses to deliver its program and services. The number is based on a calculation that considers full-time, part-time, term and casual employment. The CRTC is no longer required to control the number of FTEs it uses. Rather, CRTC manages a personnel budget within its operating expenditures and has the latitude to manage as needed. This data is included for information purposes only.

Table 2: Voted and Statutory Items

This table provides information regarding that portion of the Commission's budget that is funded through appropriations.


($ millions)   2007-2008
Vote or
Statutory Item
Canadian Radio-television and Telecommunications Commission Main
Estimates
Planned
Spending
Total
Authorities
Actual
40 Program expenditures 10.8 9.9
(S) Contributions to employee benefit plans 5.7 5.7 5.5 5.5
  Total 5.7 5.7 16.3 15.4

Sources of Respendable and Non-Respendable Revenue

For supplementary information on the CRTC's Sources of Respendable and Non-Respendable revenue please visit: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp.

User Fee Act

For supplementary information on the CRTC's User Fees, please visit: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp.

Service Standards for External Fees

For supplementary information on the CRTC's Service Standards for External Fees, please visit: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp.

Travel Policies

The CRTC follows and uses the Treasury Board Secretariat (TBS) travel policies. This includes the TBS Special Travel Authorities and the TBS Travel Directive, Rates and Allowances.

Explanation of Revenue

The CRTC collects fees under the authority of the Broadcasting Act and Telecommunications Act and the regulations made pursuant to these Acts, namely the Broadcasting Licence Fee Regulations, 1997 and the Telecommunications Fee Regulations, 1995. For fiscal year 2007-2008, the Part I broadcasting licence fees total $28.1 million. The figure includes a $1.6-million annual adjustment for the year 2005-2006 and is made up of $20.7 million in respendable and $7.4 million in non-respendable revenues. For the same period, telecommunications fees totalled $26.1 million, including a $1-million annual adjustment for the year 2006-2007. The $26.1-million figure is made up of $19.5 million in respendable and $6.6 million in non-respendable revenues.

Broadcasting Licence Fees

Section 11 of the Broadcasting Act empowers the Commission to make regulations respecting licence fees. These regulations apply to all licensees other than those classes of undertakings specifically exempted under section 2 of the fee regulations. Every licensee subject to the regulations is required to pay a Part I and a Part II licence fee to the Commission annually. For 2007-2008 the CRTC collected a total of $28.1 million in Part I fees and $674,000 in outstanding Part II licence fees pertaining to the 2005 and 2006 return years. The Commission did not assess or collect revenues for Part II licence fees for 2007-2008 as a result of the Federal Court decision in effect at that time.

The Part I fee is based on the broadcasting regulatory costs incurred each year by the Commission and other federal departments or agencies, excluding Industry Canada spectrum management costs (which are recovered as a component of Part II licence fees). The Part I fee is equal to the aggregate of:

  • the costs of the Commission's broadcasting activity
  • the share of the costs of the Commission's administrative activities that is attributable to its broadcasting activity, and
  • other costs included in the net cost of the Commission's program attributable to its broadcasting activities, excluding the costs of regulating the broadcasting spectrum.

The estimated total broadcasting regulatory costs of the Commission are set out in the Commission's Expenditure Plan published in Part III of the Estimates of the Government of Canada (i.e. Part III Report on Plans and Priorities). There is an annual adjustment amount to the Part I fee to adjust estimated costs to actual expenditures. Any excess fees or shortfalls are credited or charged to the licensee in a following year's invoice.

The Part II fee is calculated at 1.365% of a licensee's gross revenue derived from broadcasting activities in excess of an applicable exemption limit. The CRTC collects the Part II fees on behalf of the government and all collected revenues are deposited to the Government of Canada's Consolidated Revenue Fund. The rationale for assessing the Part II licence fee is three-fold:

  • to earn a fair return for the Canadian public for access to, or exploitation of, a publicly owned or controlled resource (i.e. broadcasters use of the broadcasting spectrum),
  • to recover Industry Canada costs associated with the management of the broadcasting spectrum, and
  • to represent the privilege of holding a broadcasting licence for commercial benefit.

Part II Fee and Legal Proceeding

Several legal proceedings have been filed in the Federal Court of Canada by broadcasters challenging the legality of the Part II Licence Fee. These claims also seek the return of fees paid pursuant to section 11 of the Broadcasting Licence Fee Regulations, 1997 from 1998 to 2006, plus interest and costs.

On December 14, 2006, the Federal Court Trial Division ruled that the CRTC's Part II licence fees collected by the federal government from broadcasters and broadcast distributors were an illegal tax. The Crown appealed that decision to the Federal Court of Appeal. On April 28, 2008, the Federal Court of Appeal overturned the earlier ruling of the Federal Court Trial Division and declared that the Part II licence fees are valid regulatory charges and are not a tax. In June 2008, the plaintiffs filed applications for leave to appeal, of the Federal Court of Appeal decision, to the Supreme Court of Canada.

Telecommunications Fees

Section 68 of the Telecommunications Act sets out the authority for collecting telecommunications fees from carriers that the Commission regulates. Each company that files tariffs must pay fees based on its operating revenue, as a percentage of the revenue of all the carriers that file tariffs. For 2007-2008, the CRTC collected $26.1 million in telecommunications fees.

The annual fees the CRTC collects is equal to the aggregate of:

  • the cost of the Commission's telecommunications activity
  • the share of the costs of the administrative activities that is attributable to its telecommunications activity, and
  • the other costs included in the net cost of the Commission's program that are attributable to its telecommunications activity.

The Commission's estimated total telecommunications regulatory costs are set out in the its expenditure plan published in Part III of the Estimates of the Government of Canada (i.e., Part III Report on Plans and Priorities). There is an annual adjustment amount to the telecommunications fees to bring in line estimated costs and actual expenditures. Any excess fees or shortfalls are credited or charged to the carriers in a following year's invoice.

Dispute Resolution-Fee Assessment

Under the CRTC's dispute-resolution process regarding the assessment of broadcasting licence fees and telecommunications fees:

  • the first point of contact for fee payers concerning issues related to fee assessment or collection is the Commission's Assistant Director, Financial Operations and Licence Fee Processing followed by the Director General Finance and Administrative Services. Fee payers may raise their concerns either by telephone conversation, e-mail or letter. To date, most fee-payers' concerns have been resolved at the staff level.
  • Where an issue cannot be satisfactorily resolved at the staff level, fee payers are requested to document the nature of their concern in writing and submit it to the CRTC's Secretary General for formal consideration. CRTC responds to all such letters.

Table 3: Policy on Service Standards for External Fees

Service Standards

Broadcasting - Part I Licence Fees


Broadcasting Services Service Standards Stakeholders Method of annual consultation
1. Administrative Route Applications that do not require a public process, including transfer of ownership:

80% in 2 months
90% in 3 months

Broadcasting industry

Canadian public

Public notice process (See note)
2. Public Notice Route (excluding license renewals) Applications that do not give rise to opposing interventions or policy issues:

80% in 6 months
90% in 8 months

Applications that give rise to opposing interventions, but do not raise policy issues:

80% in 8 months
90% in 10 months

Applications that raise policy issues:

In such a case, the CRTC will advise the applicant within 30 days that its application raises policy issues.

3. Licence renewals by public notice route Applications that do not raise policy issues:

80% in 8 months
90% in 10 months


Note: In Call for comments on the Commission's service standards, Broadcasting Public Notice CRTC 2006-16, 10 February 2006, the Commission proposed service standards for the issuance of decisions on broadcasting applications in a timely manner and according to a predictable schedule.

As set out in Introduction of service standards for certain broadcasting applications, Broadcasting Circular CRTC 2006-2, 5 April 2006, the comments received from the broadcasting industry supported the Commission's commitment to ensure that decisions on broadcasting applications are issued in a timely fashion. According to the parties, improved efficiency and accountability in the Commission's licensing activities would provide for greater certainty in a rapidly changing industry. Certain parties called for even more stringent service standards than those proposed and suggested that additional measures should be put in place by the Commission to streamline its procedures.

In Circular 2006-2, the Commission introduced new service standards for its processing of certain types of applications filed after March 31, 2006. These include applications for license amendments and license renewals currently processed using the public notice approach, as well as applications processed using the administrative approach that dose not entail a public process.

Quarterly report on streamlined processes for
broadcasting amendment applications
1 April 2007 to 31 March 2008

The streamlining processes below are mentioned pursuant to Streamlined processes for certain broadcasting applications, Broadcasting Circular CRTC 2006-1.

Streamlined Processes-Applications Received


Processing routes/Measureable indicators Q1 Q2 Q3 Q4 Year to Date

1. Administrative Route


Received 33 28 52 39 152
Returned (d) 4 8 2 4 18
Total to be processed 29 20 50 35 134
Incomplete at reception 12 7 13 14 46
Indicator: Letter of clarification sent within 15 business days (c) 9 of 12
(75%)
5 of 7
(71%)
12 of 13
(92%)
9 of 14
(64%)
35 of 46
(76%)
Complete at reception 17 13 37 21 88
Indicator: Letter of approval issued within 15 days (b) 16 of 17
(94%)
12 of 13
(92%)
36 of 37
(97%)
19 of 21
(90%)
83 of 88
(94%)

2. Public notice route (excluding renewals/do not give rise to policy issues)


Received 39 28 36 27 130
Returned (d) 3 4 5 2 14
Total to be processed 36 24 31 25 116
Incomplete at reception 26 11 21 15 73
Indicator: Letter of clarification sent within 15 business days (c) 21 of 26
(81%)
10 of 11
(91%)
19 of 21
(90%)
14 of 15
(93%)
64 of 73
(88%)
Complete at reception 10 13 10 10 43
Indicator: Public Notice issued within 15 business days (a) 10 of 10
(100%)
10 of 13
(77%)
5 of 10
(50%)
8 of 10
(80%)
33 of 43
(77%)

Only applications received after March 31, 2007, are considered in these reports.

Indicators: Under Broadcasting Circular CRTC 2006-1, the objective is to ensure that within 15 business days of receiving an application as described, the Commission will issue one of the following:

  1. a public notice announcing the application
  2. a letter approving the application
  3. a letter requesting clarification, or
  4. a letter returning an application that is deemed incomplete.

Quarterly report on service standards for processing
broadcasting amendment and license renewal applications
1 April 2007 to 31 March 2008

The service standards below are monitored pursuant to Introduction of service standards for certain broadcasting applications, Broadcasting Circular CRTC 2006-2.

Service Standards - Applications Decided


Processing routes/Measureable indicators

Q1

Q2

Q3

Q4

Year to Date


1. Administrative route


Decided 28 24 55 28 135
Service standards
80% in 2 months
64% 86% 95% 96% 85%
90% in 3 months 79% 100% 100% 96% 94%

2. Public notice route (excluding renewals/ do not give rise to policy issues)


Decided (without opposing interventions) 18 26 9 13 66
Service standards
80% in 6 months
100% 96% 100% 100% 100%
90% in 8 months 100% 100% 100% 100% 100%

 


Decided (with opposing interventions) 8 13 11 20 52
Service standards
80% in 8 months
63% 62% 91% 65% 70%
90% in 10 months 100% 100% 100% 100% 100%

3. Licence renewals by public notice route


Decided 63 80 5 2 150
Service standards
80% in 8 months
100% 81% 40% 100% 80%
90% in 10 months 100% 100% 80% 100% 95%

Only applications received after March 31, 2007, are considered in this report.

Q1 = 1 April 2007 to 30 June 2007
Q2 = 1 July 2007 to 30 September 2007
Q3 = 1 October 2007 to 31 December 2007
Q4 = 1 January 2008 to 31 March 2008

Service Standards: Under Broadcasting Circular CRTC 2006-2, the Commission has set service standards for the processing of these applications as described in the table above.

Quarterly report on service standards for
processing telecommunications retail tariff applications
1 April 2007 to 31 March 2008

Service Standards 1 and 2 below are monitored pursuant to Introduction of a streamlined process for retail tariff filings, Telecom Circular CRTC 2005-6 and confirmed in Finalization of the streamlined process for retail tariff filings, Telecom Circular CRTC 2005-9, while Service Standard 3 is monitored pursuant to the Telecommunications Act.


Service Standards Measurable indicators Q1 Q2 Q3 Q4 Year to date
Retail tariff filings received subject to 10-business day reporting   (188) (163) (185) (146) (682)
1. Ten business-day initiative - inform applicant of status            
a) Interim decision issued 85% of interim decisions issued in 10 business days 99%
(156 of 158)
95.8%
(136 of 142)
92.0%
(138 of 150)
99%
(121 of 122)
(96%)
(551 of 572)
b) Issues identified (letter) 85% of letters issued in 10 business days 100%
(26 of 26)
100%
(16 of 16)
96.9%
(31 of 32)
100%
(16 of 16)
98.9%
(89 of 90)
c) Interrogatories (letter) 85% of letters issued in 10 business days 100%
(0 of 0)
100%
(2 of 2)
100%
(2 of 2)
100%
(7 of 7)
100%
(11of 11)
d) Closed as deficient (letter) 85% of letters issued in 10 business days 100%
(4 of 4)
100%
(3 of 3)
100%
(1 of 1)
100%
(1 of 1)
100%
(9of 9)
2. Average processing time for initial disposition* of applications 30 business days 11 9.9 9.4 9.3 9.9
3. Initial dispositions issued 85% in 45 business days 96% 98.2% 97.8% 99% 97%

(n) = Number of applications received from April 1, 2007. Applications received after that date only are considered in these service standards.

Q1 = 1 April 2007 to 30 June 2007
Q2 = 1 July 2007 to 30 September 2007
Q3 = 1 October 2007 to 31 December 2007
Q4 = 1 January 2008 to 31 March 2008

* Initial disposition could be an interim or a final decision, or a letter to the applicant indicating that the file will be closed as the application is deemed deficient.

1. Under Telecom Circulars CRTC 2005-6 and 2005-9, the CRTC must inform the applicant(s) of the status of applications within 10 business days of receipt of a complete application. The CRTC is to issue one of the following:

  • an order granting the application interim approval
  • a letter stating that it intended to dispose of the application within 45 business days of receipt of the application, setting out the reasons why interim approval was not granted
  • a letter either with interrogatories included or confirmation that interrogatories were to follow within five business days, and an indication that it still intended to dispose of the application within 45 business days, or
  • a letter indicating that the file was being closed due to deficiencies in the application, identifying the specific deficiencies.

Service Standard 1 measures the CRTC's ability to produce results within 10 business days. Results may be produced, but if they are not issued within 10 business days, then they are not counted as successes in the report.

2. Also, under Telecom Circulars CRTC 2005-6 and 2005-9, the CRTC intends to reduce the average processing time for tariff applications. Before 1 April 2005, the average processing time was greater than 55 business days. The CRTC expects to reduce its average time to dispose of retail tariff applications by 50% over the next 12 months from April 25, 2005, the date of Telecom Circular CRTC 2005-6.

3. Under the Telecommunications Act, the CRTC is required to issue, within 45 business days of receipt of a tariff application, a decision on the application, or if it cannot do that, a letter indicating when it will issue a decision.

Report on service standards for processing
telecommunications retail tariff applications
2005-2008


Service Standards Measurable indicators 2005/2006 2006/2007 2007/2008
Retail tariff filings received subject to 10-business-day reporting (441) (700) (682)
1. 10-business-day initiative
- inform applicant of status
     
a) Interim decision issued 85% of interim decisions issued in 10 business days 94%
(309 of 329)
99%
(520 of 523)
96%
(551 of 572)
b) Issues identified (letter) 85% of letters issued in 10 business days 97.4%
(74 of 76)
96%
(118 of 123)
98.9%
(89 of 90)
c) Interrogatories (letter) 85% of letters issued in 10 business days 100%
(13 of 13)
100%
(16 of 16)
100%
(11of 11)
d) Closed as deficient (letter) 85% of letters issued in 10 business days 100%
(23 of 23)
97%
(37 of 38)
100%
(9of 9)
2. Average processing time for initial disposition* of applications 30 business days 8 days 8.9 days 9.9 days
3. Initial dispositions issued 85% in 45 business days 99.8% 99.9% 97%

* Initial disposition could be an interim or a final decision, or a letter to the applicant indicating that the file is being closed because the application has been deemed deficient.

Canadian Radio-television and Telecommunications Commission
Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2008 and all information contained in these statements rests with the CRTC departmental management. These financial statements have been prepared by the CRTC management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

The CRTC 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 the CRTC management's best estimates and judgment and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, the CRTC 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 Departmental Performance Report is consistent with these financial statements.

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

The financial statements of the Commission have not been audited.


Konrad von Finckenstein, Q.C.
Chairman

Gatineau, Canada

Date: July 10, 2008

Robert A. Morin
Secretary General

Table 4: Financial Statements - Year ended March 31, 2008

Canadian Radio-television and Telecommunications Commission
Statement of Operations (Unaudited)
For the Year Ended March 31, 2008
(in dollars)


2007-08 2006-07
Broadcasting
(Note 1)
Telecommunications
(Note 1)
Total
Expenses
Salaries and employee benefits 20,707,471 20,229,092 40,936,563 40,531,413
Spectrum management cost (Note 10) 10,000,000 - 10,000,000 10,000,000
Professional and special services 3,318,999 3,047,226 6,366,225 4,215,918
Accommodation 1,457,648 1,457,647 2,915,295 2,708,000
Travel and relocation 1,171,040 1,004,026 2,175,066 1,599,949
Information, advertising and communications services 1,556,237 417,952 1,974,189 1,668,786
Repair and maintenance 771,754 828,143 1,599,897 692,006
Furniture and equipment 747,484 747,468 1,494,952 345,730
Amortization 336,881 336,881 673,762 708,706
Materials and supplies 257,818 251,608 509,426 402,201
Rentals 211,034 70,191 281,225 297,184
Bad debt 48,254 15,703 63,957 (53,048)
Other 1,516 1,010 2,526 12,154
Total expenses 40,586,136 28,406,947 68,993,083 63,128,999
Revenues
Regulatory fees 28,079,631 26,159,573 54,239,204 53,587,451
Rights and privileges (Note 11) 673,954 - 673,954 121,850,542
Other revenues 70,027 1,327 71,354 29,024
Total revenues 28,823,612 26,160,900 54,984,512 175,467,017
Net cost (results) of operations 11,762,524 2,246,047 14,008,571 (112,338,018)
The accompanying notes form an integral part of these financial statements

Canadian Radio-television and Telecommunications Commission
Statement of Financial Position (Unaudited)
As at 31 March, 2008
(in dollars)


2007-08 2006-07
ASSETS
Financial assets
Accounts receivables and advances (Note 4) 637,208 738,052
Total financial assets 637,208 738,052
Non-financial assets
Prepaid expenses 149,639 -
Tangible capital assets (Note 5) 2,192,703 1,100,091
Total non-financial assets 2,342,342 1,100,091
Total Assets 2,979,550 1,838,143
LIABILITIES
Accounts payable and accrued liabilities (Note 7) 7,133,185 3,184,068
Deferred revenue (Note 6) 1,091,826 26,110
Vacation pay and compensatory leave 2,049,943 2,114,470
Accrued employee severance benefits (Note 8(b)) 6,834,470 7,362,397
Total Liabilities 17,109,424 12,687,045
Equity of Canada (14,129,874) (10,848,902)
Total Liabilities and Equity of Canada 2,979,550 1,838,143
Contingent liabilities (Note 9)
The accompanying notes form an integral part of these financial statements

Canadian Radio-television and Telecommunications Commission
Statement of Equity of Canada (Unaudited)
As at 31 March, 2008
(in dollars)


2007-08 2006-07
Equity of Canada, beginning of year (10,848,902) (10,425,378)
Net (cost) results of operations (14,008,571) 112,338,018
Current year appropriations used (Note 3) 15,441,427 7,712,095
Revenue not available for spending (14,947,890) (135,601,317)
Change in net position in the Consolidated Revenue Fund (Note 3) (5,077,315) (79,130)
Services received without charge from other government    
departments (Note 10(a)) 15,311,377 15,206,810
Equity of Canada, end of year (14,129,874) (10,848,902)
The accompanying notes form an integral part of these financial statements

Canadian Radio-television and Telecommunications Commission
Statement of Cash Flow (Unaudited)
For the Year Ended March 31, 2008
(in dollars)


2007-08 2006-07
Operating activities
Net cost (results) of operations 14,008,571 (112,338,018)
Non-cash items
Services provided without charge by other government departments included in the Statement of Operations (Note 10(a)) (15,311,377) (15,206,810)
Amortization of tangible capital assets (Note 5) (673,762) (720,205)
Gain (loss) on disposal and write-off of tangible capital assets 469 (10,117)
Variation in Statement of Financial Position
Increase (decrease) in accounts receivable and advances (100,844) 162,918
Increase in prepaid expenses 149,639 -
Increase in liabilities (4,422,379) (253,864)
Cash provided by operating activities (6,349,683) (128,366,096)
Capital investment activities
Acquisition of tangible capital assets (Note 5) 1,771,268 397,744
Proceeds from disposal of tangible capital assets (5,363) -
Cash used by capital investment activities 1,765,905 397,744
Financing activities
Net cash provided to Government of Canada (4,583,778) (127,968,352)
The accompanying notes form an integral part of these financial statements

Notes to the Financial Statements (unaudited)
Year ended March 31, 2008

1. Authority and Objectives

CRTC was created by Parliament in 1968 under the Canadian Radio-television and Telecommunications Commission Act. The CRTC reports to Parliament through the Minister of Canadian Heritage.

The CRTC is vested with the authority to regulate and supervise all aspects of the Canadian broadcasting system, as well as the telecommunications services providers and common carriers that come under federal jurisdiction. The CRTC's powers in the area of broadcasting regulation derive from the Broadcasting Act. Its powers over telecommunications come from the Telecommunications Act and from various special acts of Parliament passed for specific telecommunications companies.

The following are the program activity descriptions for the CRTC:

  • Regulation and Supervision of the Canadian Broadcasting Industry
    • Supervise and regulate all aspects of the Canadian broadcasting system to implement the broadcasting policy set out in the Broadcasting Act.
  • Regulation and Monitoring of the Canadian Telecommunications Industry
    • Ensure the implementation of objectives set out in the Telecommunications Act and ensure that Canadian carriers provide telecommunications services and charge rates on terms that are just and reasonable, and do not unjustly discriminate or provide an unreasonable preference toward any person.

2. Summary of Significant Accounting Policies

The financial statements have been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

(a) Parliamentary appropriations and vote-netting: the CRTC is financed in part by the Government of Canada through Parliamentary Appropriations (e.g. Statutory Vote for Employee Benefits Plans (EBP)) and the balance by vote-netted fees it collects from the regulated industries. Vote-netting is a means of funding selected programs or activities wherein Parliament authorizes a department to apply revenues collected from fee payers towards costs directly incurred for specific activities. CRTC has the authority to use a portion of the Part I licence fees collected from broadcasters and a portion of the annual telecommunications fees collected from telecommunications carriers to finance the costs it incurs in regulating the broadcasting and telecommunications industries (the Commission refers to these fees as respendable revenue). The balance of these two fees recovers the costs for items funded through appropriations (e.g. EBP) and costs incurred by other government departments on the CRTC's behalf and is classified as non-respendable revenue.

The accounting of fees collected and the charges to the appropriations in a given year does not parallel financial reporting according to generally accepted accounting principles since they are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through fee collection and the appropriation from Parliament. Note 3 to these financial statements provides information regarding the source and disposition of these authorities as well as a reconciliation between net cash provided to government to current year appropriation used.

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

(c) Change in net position in the Consolidated Revenue Fund is the difference between the net cash provided to government and appropriations used in a year, excluding the amount of non-respendable revenue recorded by the CRTC. The discrepancy results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.

(d) Broadcasting Licence Fee Regulations, 1997 and the Telecommunications Fee Regulations, 1995. These fees are accounted for in the period in which the underlying transaction or event occurs that gives rise to the revenues. Revenues that have been received but not yet earned are disclosed in the Statement of Financial Position as deferred revenue.

(e) Expenses are recorded on the accrual basis:

  • vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment, and
  • Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans, spectrum management and worker's compensation are recorded as operating expenses at their estimated cost.

(f) Employee future benefits

  • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada. The CRTC's contributions to the plan are charged to expenses in the year incurred and represent the total departmental obligation to the plan. Current legislation does not require the CRTC 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 as a whole.

(g) Accounts receivables are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.

(h) Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. For matters that are within the normal course of operations, to the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements. Matters that are outside of the normal course of operations or for which the potential impact could be significant to the government are disclosed in the notes to these financial statements, but they are recorded, if required, only at the Government of Canada level.

(i) Tangible capital assets: All tangible capital assets with an initial cost of $5,000 or more are recorded at their acquisition cost. The CRTC does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value.

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
Informatics equipment 3 years
Informatics software 5 years
Vehicles 5 years
Equipment 5 years

(j) Measurement uncertainty: The preparation of these financial statements in accordance with Treasury Board accounting policies (which are consistent with Canadian generally accepted accounting principles for the public sector) requires management to make estimates and assumptions that affect the reported amounts 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, the liability for employee severance benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary Appropriations

CRTC receives the major portion of its funding through fees assessed against the regulated industries-broadcasting and telecommunications-as well as a portion from Parliamentary appropriations. Since Parliamentary appropriations are not calculated on the accrual accounting basis, there is a difference between appropriations used and: (a) net cost (results) of operations; and (b) net cash provided to Government of Canada. The differences are reconciled below.


(a) Reconciliation of net cost (results) of operations to current year appropriations used
2007- 2008 2006-2007
(in dollars)
Net cost (results) of operations 14,008,571 (112,338,018)
Adjustments for items affecting net cost (results) of operations but not affecting appropriations:    
Add (Less):    
Employee severance benefits 527,928 (12,136)
Services provided without charge (15,311,377) (15,206,810)
Amortization of tangible capital assets (673,762) (708,707)
Bad debt expenses (63,957) 53,049
Refund of prior years expenses and adjustment to payables at year end 20,228 280,642
Reversal of legal expenses charged to Justice appropriation - (148,715)
Revenue not available for spending 14,947,890 135,601,317
Gain (loss) on disposal and write-down of tangible capital assets 469 (10,117)
Vacation pay and compensatory leave 64,530 (184,656)
Sub-total (488,051) 119,663,868
Adjustments for items not affecting net cost (results) of operations but affecting appropriations:    
Add:    
Acquisitions of tangible capital assets 1,771,268 386,245
Prepaid expenses 149,639 -
Sub-total 1,920,907 386,245
Current year appropriations used 15,441,427 7,712,095

(b) Appropriations provided and used
Program expenditures and transfer from Treasury Board Votes 10,603,798 2,778,301
Statutory amounts 5,700,587 5,374,297
Total appropriation available 16,304,385 8,152,598
Less:    
Appropriations available for future years (862,958) (440,503)
Total appropriations used 15,441,427 7,712,095

(c) Reconciliation of net cash provided to Government to current year appropriations used
Net cash provided to Government of Canada (4,583,778) (127,968,352)
Revenue not available for spending 14,947,890 135,601,317
10,364,112 7,632,965
Change in net position in the Consolidated Revenue Fund
Variation in accounts receivable and advances 100,844 (162,918)
Disposal of tangible capital assets 5,363 -
Variation in accounts payable and accrued liabilities 3,949,121 57,071
Variation in deferred revenue 1,065,716 -
Refund of prior years expenses 20,228 280,643
Reversal of payments to Department of Justice - (148,715)
Variation in bad debt expenses (63,957) 53,048
5,077,315 79,130
Current year appropriation used 15,441,427 7,712,095

4. Accounts Receivable and Advances


  2007-08 2006-07
(in dollars)
Receivables from other Federal Government departments and agencies 599,931 605,095
Receivable from external parties 65,800 88,902
Other 4,028 57,390
  669,759 751,387
Less: Allowance for doubtful accounts on external receivables (32,551) (13,335)
Total 637,208 738,052

5. Tangible Capital Assets
(in dollars)


Capital asset class Cost Accumulated amortization 2008 2007
Opening balance Acquisi-
tions
Disposals and write-offs Closing balance Opening balance Amorti-
zation
Disposals and write-offs Closing balance Net book
value
Net book value
Equipment 128,778 91,589 - 220,367 40,041 35,878 - 75,919 144,448 88,737
Vehicles 45,406 32,635 24,471 53,570 38,881 7,071 19,577 26,375 27,195 6,525
Informatics Equipment 688,428 989,500 56,304 1,621,624 511,933 136,804 56,304 592,433 1,029,191 176,495
Informatics Software 2,495,558 657,544 - 3,153,102 1,667,224 494,009 - 2,161,233 991,869 828,334
Total 3,358,170 1,771,268 80,775 5,048,663 2,258,079 673,762 75,881 2,855,960 2,192,703 1,100,091

Amortization expense for the year ended March 31, 2008, is $673,762 (2007 - $708,706).

6. Deferred Revenue

Deferred revenue represents the balance at year-end of unearned revenue as a result of an over collection of the estimated telecommunications costs. This over collection is credited to applicable telecommunications carriers as part of the subsequent year's billing process for CRTC telecommunications fees.


  2007-08 2006-07
(in dollars)
Opening balance 26,110 -
Telecommunications fees 1,091,826 26,110
Revenues recognized 26,110 -
Closing balance 1,091,826 26,110

7. Accounts Payable and Accrued Liabilities


  2007-08 2006-07
(in dollars)
Accounts payable - other Federal Government departments and agencies 516,482 215,434
Accounts payable - external parties 4,472,635 1,301,177
Accruals:    
Salaries 1,543,866 1,561,420
Operating and Maintenance 600,202 106,037
Total accounts payable and accrued liabilities 7,133,185 3,184,068

8. Employee Benefits

(a) Pension benefits: The CRTC'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 year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada and Qubec Pension Plans benefits and they are indexed to inflation.

Both the employees and the CRTC contribute to the cost of the plan. The 2007-08 expense amounts to $4 million (as compared to $4 million in 2006-07), which represents approximately 2.1 times (2.2 times in 2006-2007) total contributions by employees.

The CRTC'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 CRTC 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, are as follows:


2007-08 2006-07
(in dollars)
Accrued severance liabilities, beginning of year 7,362,397 7,350,261
Expense for the year 69,654 979,600
Benefits paid during the year (597,581) (967,464)
Accrued severance liabilities, end of year 6,834,470 7,362,397

9. Contingent Liabilities

As at 31 March 2008, the Government of Canada (for matters involving the CRTC) had one claim outstanding as a result of litigation which pertains to a challenge of the CRTC's Part II broadcasting licence fees. In December of 2006, the Federal Court Trial Division ruled that the CRTC's Part II licence fees collected by the federal government from broadcasters and broadcast distributors were an illegal tax. The Crown appealed that decision to the Federal Court of Appeal. On April 28, 2008, the Federal Court of Appeal overturned the earlier ruling of the Federal Court Trial Division and declared that the Part II licence fees are valid regulatory charges and are not a tax. In June 2008, the plaintiffs filed applications for leave to appeal, of the Federal Court of Appeal decision, to the Supreme Court of Canada. The CRTC has not recorded a provision for this contingent liability in these financial statements.

10. Related Party Transactions

As a result of common ownership, CRTC is related to all Government of Canada departments, agencies and Crown corporations. CRTC enters into transactions with these entities in the normal course of business and on normal trade terms.

a. Services provided without charge:

During the year, CRTC received services without charge from other departments for items such as accommodation, the employer's contribution to the health and dental insurance plans. The services provided without charge that have been recognized in the department's Statement of Operations are as follows:


  2007-08 2006-07
(in dollars)
Spectrum Management expenses 10,000,000 10,000,000
Accommodation expenses 2,915,295 2,708,000
Health & Dental expenses 2,352,000 2,456,000
Worker's Compensation expenses 44,082 42,810
Total 15,311,377 15,206,810

Industry Canada is responsible for the management of the broadcasting spectrum. As part of this responsibility, the department issues technical certificates that accompany the broadcasting licences issued by the CRTC where the use of broadcasting spectrum is required, and monitors for interference that could affect spectrum use. Total costs related to Industry Canada's broadcasting spectrum management are reported to the CRTC on an annual basis. These costs are a component of the Part II broadcasting licence fees collected by the CRTC on behalf of the government. Other services provided without charge to the CRTC as noted above are a component of the Part I broadcasting licence fee and the annual telecommunications fee collected by the CRTC.

The government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these activities on behalf of all without charge. The costs of these services, which include payroll and cheque-issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General of Canada, are not included as expenses in the CRTC's Statement of Operations, nor are they recovered as a component of the CRTC Part I broadcasting licence fee or annual telecommunications fee.

b. Receivables and payables outstanding at year-end with related parties:


  2007-08 2006-07
(in dollars)
Accounts receivable from other government departments and agencies 599,931 605,095
Accounts payable to other government departments and agencies 516,482 215,434

11. Revenues-Rights and Privileges

Fee revenues for rights and privileges decreased significantly in 2007-08 versus 2006-07, as a result of a decision of the Federal Court Trial Division in December 2006. In that decision, the Court declared that section 11 of the Broadcasting Licence Fee Regulations, 1997 was ultra vires and that the Part II licence fees collected by the federal government, pursuant to these regulations, were an illegal tax. The declaration was suspended for nine months in order to allow the government time to react. During this time period, the CRTC collected $673,954 in outstanding Part II licence fees pertaining to the 2005 and 2006 return years. In November 2007, the CRTC did not assess or collect any Part II licence fees, as a result of the Federal Court decision in effect at that time.

On April 28, 2008, the Federal Court of Appeal (FCA) overturned the earlier ruling of the Federal Court Trial Division and declared that the Part II licence fees are valid regulatory charges and are not a tax. On May 5, 2008 the Canadian Association of Broadcasters publicly announced that it would seek leave to appeal this decision to the Supreme Court of Canada (SCC). As a result, the CRTC announced on this date that it would not resume any collection action for Part II licence fees until the issue is resolved in a final manner (i.e. until the earliest of: the matter being settled, the application for leave to appeal to the SCC is denied or the judgment of the FCA is affirmed by the SCC).

12. Comparative Information

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

Table 5: Response to Parliamentary Committees, Audits and Evaluations


2005-11 OAG Chapter 5 - Support to Cultural Industries 2005-11 BVG Chapitre 5 - Le soutien accord aux industries culturelles
5.99 Recommendation . The Canadian Radio-television and Telecommunications Commission should inform the Canadian Television Fund of the amount each cable or satellite distribution company should have paid it the previous year, and should require confirmation from the Canadian Television Fund that it received those amounts. 5.99 Recommandation. Le Conseil de la radiodiffusion et des tlcommunications canadiennes devrait informer le Fonds canadien de tlvision des sommes que les entreprises de distribution par cble et par satellite auraient d lui verser durant la dernire anne et exiger que le Fonds canadien de tlvision lui confirme les sommes qu'il a reues.
Entity(ies): Canadian Radio-television and Telecommunications Commission Entit(s) : Conseil de la radiodiffusion et des tlcommunications canadiennes
Update N/A: Mise jour S/O :
First evaluation year - No previous update / Premire anne d'valuation - aucune mise jour antrieure
OAG Assessment N/A:

First evaluation year - No previous assessment

valuation du BVG S/O :

Premire anne d'valuation - aucune valuation antrieure

Update 2007 : Mise jour 2007 :
On March 15, 2007, the CRTC provided the Canadian Television Fund (CTF) with a document that details the amounts that the CTF should expect to have received for the 2005 Broadcast year. The information was made available on a licensee-specific basis. Upon confirmation by the CTF of the amounts it received, the CRTC will follow up as necessary with those distribution companies who have not contributed the expected amounts. Le 15 mars 2007, le CRTC a remis au Fonds canadien de tlvision (FCT) un document prcisant les montants que le FTC aurait d recevoir pour l'anne de radiodiffusion 2005, par titulaire. Ds que le FTC lui confirmera les montants reus, le CRTC assurera le suivi ncessaire auprs des entreprises de distribution n'ayant pas vers les montants prvus.

Financial Information & Summary Tables

A graphical representation of the accountability and activity structure, including resource levels, is presented below.

CRTC Accountability Activity Structure

Business Line - Regulation of Communications in the Public Interest: Planned spending = $45.8 million; Total authorities = $56.5 million; 2006-2007 Actual = $55.6 million. Accountability Structure - Chairperson, Commissioners. Organizational Activities - Broadcasting, Telecommunications, Communications, Legal, Policy Development and Research, Secretariat, Corporate Services.

Note: The CRTC reports to Parliament through the Minister of Canadian Heritage